This is a great day for eCommerce.

As the chief legal officer at DocuSign, I’d like to share my thoughts, as we applaud FHA’s action today. Their decision to clarify their position on electronic signatures will help streamline the sale and financing of homes across the country. Buyers, sellers and agents can use DocuSign’s online process to eliminate the time, expense and environmental impact of printing, delivering and signing large stacks of paper documents, and mortgage lenders can take comfort in knowing that DocuSign’s e-signature process is designed to be legally compliant in all 50 states and is fully evidenced by a comprehensive audit trail.

The last time Federal Housing Administration released any formal guidance on electronic signatures was way back in 1996.  Over the past 18 months, DocuSign’s real estate and mortgage origination customers have made it clear that FHA urgently needed to update and clarify its position on electronic signatures.  And we heard you.

It’s now OFFICIAL: E-signed third-party documents, including real estate contracts, are now being accepted by the Federal Housing Administration (FHA).

FHA’s lack of guidance was not at the forefront of anyone’s mind a couple of years ago when the agency was only involved in two percent of home loans.  But the collapse of financial markets in late 2008 catapulted FHA into the mortgage spotlight almost overnight.   As the new #1 source of funding for nearly half of first time home buyers in 2009, FHA’s inability to articulate a clear process for accepting electronically processed documents became a very real problem for those who depended on the agency as a downstream partner.   In fact, in early 2009 we saw some major FHA lenders retreat from their progressive policies toward e-commerce, as they waited for a signal from FHA.

To their credit, staff at the FHA have been pushing for progress for over two years.  It took some early encouragement and help from many concerned parties to help them get this done.  DocuSign began direct conversations with FHA on this issue back in October of 2008, and we shared this blog post about FHA and Lender Acceptance of electronic signature back in July of last year.

DocuSign spearheaded an industry-wide effort to move the FHA to formally recognize e-signed third-party documents, and the April 8, 2010 dated FHA mortgagee letter is the first in what is expected to be a series of responses to this initiative. With this policy statement from the nation’s largest mortgage insurer, real estate professionals can use DocuSign to get real estate contracts, addenda and other documents signed electronically, and their buyers can apply for FHA insurance with confidence. The FHA mortgagee letter can be found at http://nhl.gov/offices/adm/hudclips/letters/mortgagee/files/10-14ml.pdf.

Thank you to everyone who participated by calling DocuSign and emailing the FHA, NAR or ESRA over the past several months – the FHA mortgagee letter is a result of your support throughout this effort!

About Ken Moyle, Chief Legal Officer, DocuSign and Public Policy Chair, Electronic Signatures and Records Association (ESRA)

Ken Moyle joined DocuSign® in July 2006 with more than 15 years of high-tech industry experience. He is responsible for planning and directing finance, operations, legal and corporate affairs for DocuSign.

Mr. Moyle was previously general counsel and secretary at Insightful Corporation, a publicly traded software and services company specializing in predictive analytics. As top legal and compliance officer, Moyle was responsible for all corporate legal matters, including IP licensing, mergers and acquisitions, distributor contracts, copyright and trademark issues, patents, SEC reporting, corporate governance, risk management, litigation, and investor relations. He also oversaw human resources and facilities. Ken was also instrumental in converting a remote operating division of Insightful into the corporate headquarters of a public company. He oversaw numerous strategic acquisitions and established all of the company’s foreign subsidiaries.

Moyle represents DocuSign on the board of directors of the Washington D.C. based Electronic Signatures and Records Association (ESRA) and is chairman of ESRA’s Public Policy Committee. He is also a member of the Mortgage Bankers Association’s MISMO eMortgage Legal Issues workgroup. He has lectured on legal topics including ESIGN/UETA, electronic signatures in academic lending, open source software licensing and application service provider (ASP) business models and has spoken on a variety of public interest topics to audiences around the country.

Mr. Moyle holds a J.D. from the University of Washington. He is a member of the Washington Bar Association and is admitted to practice before the Supreme Court of the State of Washington.

Attendees of the 10^th CSO Council Bay Area event on Electronic and Digital Signatures will learn the pros and cons of electronic versus digital signatures from the identity, evidence, and operational perspectives.

This year’s special guests are two federal magistrate judges. Magistrate Facciola (S.D.N.Y.) recently digitally signed the first judicial order in US history, which he will discuss in his keynote. Attendees can also witness a mock trial and ask questions of a judicial panel.

This event is on the first day of the RSA conference, which is mostly an open and free day.

If you are interested in attending, please register by clicking the graphic below:

Today we hear from Ken Moyle, DocuSign’s Chief Legal Officer and noted electronic signature law expert. In addition to serving as the Public Policy Chair of the Electronic Signature and Records Association (ESRA), Ken also often teaches continuing legal education classes and seminars regarding esignature and ESIGN.

Often, Ken is asked questions about when electronic signatures can be used to create a binding agreement. We all want to know how and when we can use eSignatures to create a binding agreement, so without further ado, Ken’s thoughts:

Consent to do Business With eSignature
Like most popular phenomena, the electronic signature movement is sometimes susceptible to rumor and misinformation. For example, there are still a few folks in the real estate and mortgage industries who insist that a real estate transaction cannot executed electronically unless there is a paper-and-ink contract confirming the parties’ agreement to go paperless.

This myth has been making the rounds for years in the Pacific Northwest and in some other small pockets of the country. I did a lot asking around to find out where this came from. The main source appears to be from an early Multiple Listing Service interpretation of the federal ESIGN Act, which provided an instant 50-state baseline for enforceability of electronic contracts (Washington is one of three states that have not adopted some form of the Uniform Electronic Transactions Act, the state precursor to ESIGN).

The confusion seems to come from this statement, which was forwarded to me recently by a real estate agent in Oregon who received it from a representative of her MLS:

“Electronic signatures can be used to create a binding real property purchase agreement, but only if the parties have a signed, written agreement to that effect in place before they use the electronic signatures.”

On its face, this statement is not inconsistent with the federal ESIGN Act or the state UETAs, since under these laws a “writing” is given the same effect regardless of whether it is on paper or electronic. But in the above case the statement was invoked to convince the agent that the “signed, written agreement” must be on paper.

The federal ESIGN Act requires that parties consent to do business electronically, but there is no requirement that a separate paper contract be in place in order to manifest such consent. In the case of a consumer transaction (such as a residential real estate sale) where a party is required by law to provide information that is otherwise required to be provided in writing and on paper, certain disclosures about engaging in business electronically must be provided to the consumer before the consumer consents to do business electronically. See ESIGN 101(c)(1). In addition, the consumer must “affirmatively” consent, but there is no requirement that the consent be documented in a [separate] “signed, written agreement.” ). In fact, section101(c)(1)(C)(ii) of the federal law requires that the consent be given electronically and not on paper, in order to demonstrate the consumer’s technical capacity to engage in business electronically. In business to business transactions and in transactions where a signature is the only legal requirement (even if a consumer is involved), the consent does not have to be explicit at all. It may be found based on the facts and circumstances surrounding the transaction, and in most cases the fact that both parties used electronic means to execute the contract in the first place is more than enough to demonstrate that the parties consented to engage in business electronically as well as consented to the terms of the agreement.

But what if ESIGN doesn’t apply? Isn’t the state’s law going to vary these requirements? In order to promote e-commerce nationwide, the ESIGN Act takes full advantage of the Commerce Clause of the Constitution in order to preempt state laws that would threaten the 50-state baseline. Any state electronic signature law that would impose burdens or increased costs on the use of electronic records could cause the state law to be preempted by ESIGN. To the extent that a state law requires a paper agreement to get consent to business electronically, such requirement would presumably be preempted.

Fortunately, an association or MLS has no authority to determine the enforceability of a real estate contract. If two parties, after agreeing to transact business electronically, enter into a real estate contract by electronic means, the electronically signed contract will be valid, effective and enforceable.

YES.

I know I’m biased, but with so many benefits including time savings, document storage and management, and increased customer or client satisfaction, I think businesses and professionals should strongly consider going paperless and adopting electronic signature technology.

Benefits of DocuSign Electronic Signature Service:

• Removes pen and paper from the paperwork process
• Eliminates print-sign-scan-fax process
• No need to shred physical documents once you’ve digitized them – they’ve been electronic records the entire time
• Document content is clear and easy to read – no more fax distortion
• Integration with forms creation software such as WINForms, zipForms, IRES, and others maintains the integrity of the paperless process
• Contracts and extensions can be signed and returned by out-of-town or traveling clients in fewer than 10 minutes
• No more missed signatures or initials due to DocuSign’s yellow stick-e-tabs
• 100% audit trail and three levels of authentication available: Email, PIN number and ID Check

Additional Information:

• Cost: Pricing starts at $15.95/month with a pre-paid, annual plan. With a DocuSign Free Trial, you can try DocuSign risk-free for 30 days. The Free Trial pricing starts automatically at the basic month to month rate, with an option to upgrade to an Advanced plan or switch to annual pricing. This provides subscribers with a high level of flexibility.
• Electronic signature acceptance: DocuSign has teamed up with the Electronic Signature and Records Association (ESRA) to have productive discussions with the FHA regarding electronic signatures on real estate contracts and they are working together to come up with a rapid solution.

If you have any questions or comments, please leave us a comment. If you’re interested in connecting in real life, DocuSign will be in San Diego at RE Bar Camp San Diego on November 12th, and at NAR EXPO November 13th – 16th.

DocuSign Fall Product Release 9

Earlier this week, Tom Gonser, Founder and VP of Product Strategy, shared some exciting new electronic signature features developed by DocuSign. These features were built based on customer feedback, so don’t be shy about telling us how we can improve DocuSign! A “designed for mobile” experience, fax capability, and resizable electronic signature are only a few of the new features Tom discussed. For more information, read “DocuSign ESignature Fall Release Highlights” from Tom Gonser.

DocuSign iPhone App Launch – ESIGNControl

ESIGNControl, a new iPhone application from Smart Mobile Solutions is now available from the iTunes store. This app enable you to use your iPhone to track, view and control documents sent for electronic signature. Smart Mobile Solutions specializes in mobile application development and created ESIGNControl with DocuSign’s software development kit in conjunction with participation in the DocuSign DevCenter. To learn more, read “Smart Mobile Solutions Launches New iPhone App for DocuSign.”

California Association of REALTORS® EXPO 2009

This week, Ken Moyle, Dave Thorpe, Suzanne Alberti, Jim Custer and I attended the California Association of REALTORS EXPO, or CAR EXPO. Ken Moyle, DocuSign’s Chief Legal Officer and Public Policy Chair of the Electronic Signatures and Records Association (ESRA), gave a well recieved talk: “Legality of Electronic Signatures in Real Estate.” More details can be found by reading the quick recap of Ken Moyle’s Tech Tuesday Talk.

Did you miss us at CAR EXPO? Keep an eye on our blog for more from CAR EXPO – we’ll add video testimonials, pictures and more shortly!

DocuSign on YouTube

This week, we’ve launched our own YouTube channel, to be a centralized resource for “How-To” videos, clips about electronic signature and videos about how electronic signature has impacted business. Visit and subscribe to the DocuSign YouTube channel here.

We hope your week has been as busy and productive as ours. With DocuSign electronic signature, you can save time AND get your documents e-signed within minutes.

The email address for ESRA is: ESRA@esignrecords.org.

Are you having problems using e-signatures with clients who have FHA loans? Are your clients losing their rate locks? Do they have to go back and re-sign with a “wet signature” because some lenders are unwilling to accept e-signatures? Has this affected your income? 

We are working to help you. 

At DocuSign, we heard you loud and clear and have teamed up with ESRA (Electronic Signature & Records Association, www.esignrecords.org) to bring this message to the FHA. ESRA’s mission is to educate its members, the public, and the government with respect to the legal, regulatory and operational aspects of the use and acceptance of electronic signatures and records. DocuSign, ESRA and the FHA are having very productive discussions on the issue of electronic signatures on real estate contracts, and they are working together to come up with a rapid solution.

We need your help.

As you know, electronic signatures are not new. Signed into law in 2000 by President Clinton, the ESIGN act provided for documents and signatures in electronic form to have the same legal standing as paper documents and handwritten signatures.  FHA leadership wants to make progress toward compliance with the spirit of ESIGN, and has been working to recognize these 100% valid transactions. Let FHA know that you support this effort.

What you can do.

Tell your story of customer frustration, economic loss-whether it is lost commissions, increased fuel costs, or hours/time lost in closing because of lender acceptance problems. Ask the FHA to publicly state its policy regarding e-signature acceptance.  The only way to effectively turn the wheel of change from “status quo“ to “e-signature acceptance“ is to stand up and be heard.

You can use our template to copy and paste into your email or just use it for inspiration.

Address your email to ESRA: ESRA@esignrecords.org.

ESRA will submit ALL of your emails to FHA on your behalf.

Act now! The FHA needs to hear from you. Send your email today.

Together, let’s make a difference. Click here for more information about this initiative regarding esignatures and the FHA.

Recently, DocuSign joined ActiveRain. Why? With so many Realtors and real estate agents as customers, we want to understand the challenges they face so we can provide better service and create useful features. By following the vibrant discussions on ActiveRain, we hope to provide useful insight to help the real estate community where we can, especially regarding electronic signatures and online contract execution.

DocuSign continually innovates our electronic signatures and online contract execution service for real estate and has established real estate specific partnerships with many of the major forms providers such as IRES, Realfast, Reveal Systems (TrueForms), Ziplogix (Zipforms) and Fidelity National Real Estate Solutions. One of the many useful features DocuSign provides includes signing by multiple people with only one email address, as is the case when a husband and wife share an email address. DocuSign also works with ESRA, the Electronic Signature and Records Association, to establish clarity in policies regarding the use of electronic signature and electronic contract execution.

DocuSign’s commitment to providing an electronic signature and online contract execution tool that helps real estate agents save time, money and do more deals has brought us to ActiveRain. Please do stop by, say hello and let us know how we can help you.

Ken Moyle, DocuSign’s Chief Legal Officer, recently taught an online CLE (Continuing Legal Education) class, E-Commerce 2009: The State of the Law of Electronic Signatures and Records.

In addition to his role at DocuSign, Ken also serves as the Chairman of the Public Policy Committee for the Electronic Signature and Records Association (ESRA) of Washington D.C. Ken discussed information on the state and federal statutory framework, case law and regulatory updates. He also dispelled myths on evidence and proof, provided practice tips and shared practical considerations associated with electronic signatures and records.

CLE Course Highlights include:

• Statutory framework (state and federal) including Washington’s non-uniform statute
• Case law update
• Regulatory update
• Evidence and proof (dispelling myths)
• Practical considerations
• Practice tips

This course, offered through the Washington State Bar Association, was delivered to participants via hour-long webinar. As electronic signature technology evolves, understanding the legal landscape around electronic signatures and records positions you well to understand the implications and benefits of adoption electronic contract execution services. For more of Ken’s thoughts on electronic signature, online contract execution, and public policy, take a look at his previous blog posts.

The director of the home mortgage insurance division at FHA, Jo Ann Kuczma, acknowledged the need to work in a paperless environment:   

“Our goal is to receive all mortgage documents electronically and update FHA systems with all required information so that manual input of information by lenders is not required.”   

This year, the FHA plans to pilot-test fully electronic mortgages with an FHA-approved lender and has circulated a seven-page draft of its electronic signature specifications.   

Kim Weaver, the vice president of product management for Fiserv Inc.’s electronic lending platform, noted the significance of the FHA’s willingness to work on documents across the life cycle of the whole mortgage as “huge.”   

DocuSign’s Chief Legal Officer and Electronic Signature and Records Association’s (ESRA) Public Policy Chair, Ken Moyle, noted that the FHA wants the note to be a Smart Doc, a securable, manageable, archivable, retrievable and transferable document. However, that same clarity is lacking regarding the other documents – what standards are applied to which documents?  

Moyle said one of ESRA’s goals is “keeping technology neutral. If the FHA were to adopt a position that is simply compliant” with the Electronic Signatures in Global and National Commerce Act of 2000, “and the lender can assure that it obeys those structures, that’s great. But the more FHA defines standards instead of just having the lender certify to what’s out there, the more complicated it will become to adopt. … I’m certain the Obama administration doesn’t want to be a barrier to e-commerce, but they run the risk of doing that if the standards are too specific.”   

Weaver does not believe that anything the FHA does will be too difficult for lenders to adopt: “FHA is interested in coming up with standards that can be used,” she said. “I think they’ll encourage feedback from lenders and other industry participants. … Remember, they’re keen on getting this adopted.”   

The FHA’s draft electronic signature guidelines align with the standards set forth by the Mortgage Industry Standards Maintenance Organization and confirms the validity of the MERS loan-registration system’s Mortgage Identification Number. This indicates a willingness to work from what has succeeded rather than to reinvent the wheel.   

Weaver stated: “FHA knows that it will benefit from the standards that are already in place. Where they are treading on new water is standardizing the other mortgage documents outside of the note as Category 3 or 4 Smart Docs. What FHA is doing could be a blueprint for the entire mortgage industry to automate the process from start to finish.”