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The Electronic Signatures in Global and National Commerce Act, which former President Bill Clinton aptly signed into law in June of 2000 using digital signature technology, has been slow to transform how home mortgages are closed, especially in New England. “All of us in the industry,” said Edmond R. Browne, vice president for legal and industry affairs for Connecticut Attorneys Title Insurance Co. (CATIC), “got caught up in the hype,” predicting the law would prompt an immediate groundswell of support for electronic closings. “In the lending community, there’s a tremendous amount of money that can be saved” by going paperless, Browne proclaimed. “Having said all of that, there are a lot of practical barriers to implementing electronic transactions” that still remain. Not the least of which is that town halls across the state currently don’t have the capability to accept deed filings via the Internet and don’t seem to have much impetus to do something about it, some industry officials say. Still, Browne and others view electronic closings as an eventuality that will become widely accepted within a matter of years. And like title insurers across the nation, CATIC is attempting to make sure its attorney-agents do not get left behind. On Feb. 6 and 7, the Rocky Hill, Conn.-based company held its first training session for lawyers interested in being on the cusp of that change. TOWNS HOLD THE KEY “I don’t anticipate that by the end of the year we’re going to have 500 law firms in Connecticut able to do electronic closings,” acknowledged Mark Bellenger, president of Vested Technologies Inc., a technology-solutions company wholly owned by CATIC. Three law firms attended the training exercise, which Bellenger said was targeted to only a handful of attorneys ready and willing to make the leap. (CATIC is teaming with Baltimore-based eOriginal, Inc. to provide its agents with electronic transaction capabilities.) “Early adopters,” as Bellenger calls them, expect to be able to market their capability to close deals electronically, once mortgage lenders move in that direction. “It’s definitely a positioning strategy right now to make sure the attorney-agent stays in the loop,” he said. One of the biggest hurdles that stand in their way, however, is standardization — or a lack thereof, said Browne. The Mortgage Industry Standards Maintenance Organization is looking to bring some order by drafting guidelines for the electronic transmission of loan documents. So is a nationwide group of county land recorders. “But getting from here to there is not all that easy,” Browne noted. “Clearly an important part of this puzzle,” said Norman H. Roos, state chairman of the American College of Mortgage Attorneys, “is the town clerks and public records administrators.” Large county recorders in other parts of the country, including Broward County, Fla., and southern California, have implemented pilot programs, in which documents are recorded electronically. But for many town clerks in New England, “it’s sort of an additional expense and hassle” because they aren’t besieged by the same volume of deed recordings that spur large countywide systems to seek greater efficiencies, Browne maintained. In New England, he added, “it’s less of an issue,” especially for states — such as Connecticut — where land records are maintained by each individual town. Roos, of Brown Raysman’s Hartford, Conn., office, takes a different view, having recently convened a state task force to look into the issue of electronic land recordings. “There seems to be some interest in moving into the 20th century at some point,” he said of the town clerks and public record administrators on the panel. Many town clerks, he said, realize they have more pressing matters to attend to and could benefit from the timesaving achievable through technology. “But obviously,” Roos conceded, “some towns are more well-funded than others.” On the legislative front, 38 states have adopted the Uniform Electronic Transaction Act, which sets rules on issues such as what happens when electronic documents are mistakenly transmitted. Connecticut, however, isn’t one of them, said CATIC Legislative and Regulatory Counsel Richard A. Hogan, who sat on a state Law Revision Commission study panel that helped draft legislation submitted to the General Assembly last session. It was passed in the House, but not the Senate, and is being resubmitted this year with the backing of the Connecticut Business and Industry Association and other interested parties, according to Hogan. How fast change comes also will be largely a matter of market acceptance, Roos noted. In Browne’s view, the secondary market is “sitting on the sidelines” by not adopting its own electronic transfer standards. Until secondary market lenders Fannie Mae and Freddie Mac set such guidelines, mortgage banks, he predicted, will continue to be hesitant to embrace the technology, even though the banking industry is estimated to spend nearly $1 billion a year on overnight delivery charges. Nobody, he said, wants to invest in technology and “find out the rest of the industry is going in a different direction.” Roos said it’s difficult to predict how long it will take for electronic closings to become commonplace. “On the early side, we’re probably talking … two to three years. All we need is one of the major institutions — Fannie or Freddy — to have a successful pilot program.” “You have seen a sea change in the way closings have been conducted in Connecticut over the past 30 years,” Roos added. But how fast attorneys will respond to this latest movement is a matter of debate. Vested Technologies’ Bellenger said many attorneys may jump onboard for fear that lenders will attempt to cut them out of the closing process if they don’t. Roos, however, said paperless closings won’t eliminate the need for legal counsel. “I don’t see any immediate, short-term implications” for lawyers, he said. Though Browne envisions the technology will trim the post-closing process, and rid attorneys of the burden of having to overnight loan packages, closings themselves will remain mostly as is, he said. “We’re a long way away from people sitting in their living rooms and doing their closings over the Internet,” he said of consumer mentality. “Some people,” Roos noted, “they only want to get a paper deed.”

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