DENVER — Loan modifications are completed in five days when signed electronically at Bellco CU here — perhaps saving 50% of the costs associated with paper-based execution.
Members have taken to electronic signatures for loan modifications since the service was introduced in April — more than three-quarters of all modifications are signed electronically, according to Ryan Klassen, director, lending services, at the $2-billion CU. E-sign is also routine for business loans, with a nearly 90% usage rate, he said.
"Credit unions need to get over their fear of e-signatures and the potential cost and time for IT," suggested Klassen. "E-signatures are legal, and they enable efficiencies and next-generation lending."
Bellco was up and running in 30 minutes with its web-based electronic signature and contract execution solution, provided via software-as-a-service by Seattle-based DocuSign, Klassen said.
Although e-sign is available for other loan types, it's not as commonly used, he said. Loan modifications and business loans see more e-sign activity because the e-sign process has been formalized. "We wanted to start with loan modifications and business loans to ensure that the e-sign process was proven and see the level of acceptance from our members." With the success of e-sign for modifications, the CU is working to formalize the service for other loans.
E-sign for loan modifications is encouraged by federal legislation, said Ken Moyle, chief legal officer, DocuSign. "The Home Affordable Modification Program is set up for a 21st Century way of doing business. The program makes it clear that electronic means can be used to execute and transmit documents and paves the way for electronic signatures and contracts."
Bellco calls members to tell them they can electronically sign an approved modification. Members then follow an email link to an online portal to review the documents and create and use an electronic "signature," after authenticating and agreeing to disclosures.
"It's a same-day, one-phone-call modification," said Klassen. "The member can sign the document while we're on the phone with them." The member can save or print the documents; meanwhile, Bellco saves the electronic documents to its imaging system for easy retrieval, he said.
Timing is everything when it comes to loan modifications: the sooner a member signs a modification, the less chance there is that the member will drop the ball and consequently fall behind on payments, Klassen explained. The "wet" signature process can take an average of 20 days because of "all the back and forth" with paper documents, he added.
A wet signature requires Bellco to fill out and print a Microsoft Word form and, depending on the member's preference, fax, mail, overnight or courier the form, said Klassen. The member then signs it and sends it back - but "this is where it can fall apart. The member can drop out of the process and not sign the form for days, weeks - or ever."
Klassen said he thinks that Bellco members who aren't using DocuSign are simply more comfortable with face-to-face interactions.
DocuSign has made tracking easy for Bellco by reporting which employee sends which documents to which member; when documents are received; and the document status, said Klassen.
The CU uses DocuSign to complete all types of documents, including payment protection, unsecured consumer loan, unsecured business and commercial loan and IRA documents, saving 50% of the costs related to the document execution process, said Klassen.
While it's still too early to confirm how much e-sign will save for modification documents, "I can only imagine we're going to see a big impact," said Klassen.
