I have spoken to many financial institutions over the years about the enforceability of electronic signature on loan documents. Many of these financial institutions wanted to use this technology because it would save time and money, but they were very uncomfortable with the idea. They were concerned that a written signature is stronger than an electronic signature when used on loan documents that were being challenged in court. The fact is that the e-signature is every bit as strong as the paper signature.
The bill that ensures e-signatures are legit is the Electronic Signatures in Global and National Commerce Act or ESIGN Act, which was passed by Bill Clinton in 2000. There is conflicting information available about whether or not an e-sign consent document needs to be signed by the borrower in ink to validate the customers understanding that they are signing electronically. It is clear in this law that the signature is still binding even if an option to sign with pen and paper was not provided. I encourage you to read this piece of legislation for yourself.
If you’d like to learn more about the e-signature law, here are two other helpful resources:
