US standardizes digital mortgages while UK waits on digital ID strategy

Electronic mortgage adoption continues to accelerate, with advances in digital identity and standardization putting identity in a key infrastructure role for future real estate transactions. The issue is no longer whether mortgages can be digitized, but whether the surrounding trust ecosystem is mature enough to support fully digital property transactions. Work is in progress to find an answer – but different jurisdictional contexts mean that digital ID for real estate looks different in the U.S. than in the UK.

MISMO update to SMART Doc 1.02 guidance reflects industry shift

The Mortgage Industry Standards Maintenance Organization (MISMO), which deals in standards for the U.S. mortgage finance industry, has released updated implementation guidance for the SMART Doc 1.02 standard, as reported by National Mortgage Professional. The updated guidance signals the industry’s focus has shifted from “adopting eMortgages to standardizing digital closings at scale,” says the piece.

The updated SMART Doc 1.02 Implementation Guide provides operational and technical guidance for implementing electronic mortgage documents, including eNotes, across the mortgage lifecycle. More than 3.2 million eNotes have now been registered through the MERS eRegistry, the U.S. mortgage industry’s national registry. The guide offers lenders and technology providers new operational recommendations on how to handle the increasing volume.

The revisions, the piece says, are indicative of a shift across the sector. “Just a few years ago, many lenders were still evaluating whether eNotes were ready for mainstream adoption. Today, the conversation has largely moved to standardizing implementation as digital mortgage volumes continue to climb.”

Charlie Epperson, co-chair of MISMO’s eMortgage Community of Practice, says that “eNote volumes have continued to grow in the industry, and this guide gives lenders and their partners more clarity and practical guidance learned from years of implementations.”

MISMO says the guidance aligns with its broader digital mortgage strategy, which aims to extend standardized digital documentation across the broader mortgage closing process.

UK digital ID sector waiting on strategy, amendments from government

The UK’s relationship with digital real estate transactions is somewhat more fraught. There have been questions about very low use of Qualified Electronic Signatures (QES) at the UK Land Registry (HMLR), which registers ownership of land and property in England and Wales. Appeals from the UK’s digital identity sector continue to urge HMLR to make better use of available technology by amending rules around the use of QES, and to generally come into alignment with the vision of the Digital Property Market Steering Group formed to drive crucial digital transformation in the land and property market.

Regardless of the tangles, the UK’s certified Digital Verification Service (DVS) providers remain available to provide digital verification services for conveyancing – and now no longer face the specter of government digital identity as a competitor, with Keir Starmer’s national digital ID plan (and its Department of Science, Innovation and Technology) tossed in the trash bin at the hands of new Prime Minister Andy Burnham.

An article in Mortgage Soup offers a spoonful of clarification for those in doubt, confirming that government digital ID was “separate from the digital verification services already used by financial services firms for customer onboarding, identity checks and fraud prevention.”

The piece likewise quotes David Jones, CEO of Click2Check, who says Starmer’s scuttled scheme “should not be confused with digital identity verification, which is being used every day by millions of people to prove who they are securely when buying property, opening bank accounts, starting employment or accessing professional services.”

It also notes that HM Land Registry “permits conveyancers to verify borrowers and other transaction parties digitally where its identity standard is satisfied.”

The long and the short of it in the UK, then, is that the mature identity verification market and expertise exists to support real estate transactions – but it is being fumbled or underused, due to legislative and structural hurdles. Particularly now that the old PM’s digital ID project has been scrapped, it is a case of showing the government what it already has, and teaching it how to implement it to everyone’s economic and administrative advantage.

Article Topics

digital identity  |  electronic-signature  |  identity verification  |  Qualified Electronic Signatures (QES)  |  real estate  |  UK digital ID  |  United States