Last week in his blog, John Abbott briefly talked through our new ‘Sign Your Mortgage Deed’ service which is coming to the market later in the year. It caused quite a lot of interest, so I want to provide some more detail.
The way the service works sounds quite simple. A conveyancer creates a digital version of a mortgage deed (the document that promises the repayment), the borrower signs the deed online, and the conveyancer makes the deed effective on completion of the transaction. In reality, there are complex layers of assurance and security that sit behind the service. For example, the point where the borrower uses the new digital service to ‘sign’ their deed.
To undertake this process in the most secure way possible, the borrower will first need to confirm their identity using GOV.UK Verify. To date, 1.9 million accounts have used GOV.UK Verify to perform over five million secure transactions. So we know our service will be fast and secure.
This important additional identity verification step doesn’t happen in the paper world.
Paper vs digital
Currently, when signing a paper deed, a borrower just needs to get their signature witnessed. I know from speaking with conveyancers that this doesn’t always go to plan.
The witness confirms the person borrowing the money signed the deed in their presence. However, it’s not unknown for a deed to be accidentally signed by a witness and not, as it should be, by the borrower.
The witnessing process might have served its purpose in a bygone era, but with the increase in property fraud, I’m firmly of the view that it makes much more sense to have some form of identity verification at the point of signature. GOV.UK Verify will do this for the Digital Mortgage service in the way that a witness can’t. In fact, in terms of fraud, there have been zero examples of fraud identified through the use of GOV.UK Verify to date.
GOV.UK Verify also provides us with secure deed matching, ensuring that the borrower is presented with the correct mortgage deed for their transaction. For this, we cross match the data that comes from GOV.UK Verify to other data that we hold as part of the transaction.
How it works for borrowers
We have tested our service with dozens of potential borrowers to ensure that it’s simple to use.
The borrower's access to the service always sits behind a secure Verify account, so they don’t need to create a separate account with HM Land Registry. And because Verify is used across government, they can also use the same details to access other government services safely, securely and entirely online.
I think the idea of using one government assured account to access multiple government services makes a lot more sense than needing a separate user login for each service.
Looking into the future
Conveyancers will still have a role to play in identity verification as they will continue to undertake the identity checks that they currently do as part of their due diligence. This will help to ensure the digital service remains as secure as it can be, giving assurance to lenders, conveyancers, and homeowners.
Digital Mortgage will be another step on HM Land Registry’s journey to become the world’s leading land registry for speed, simplicity and an open approach to data by helping to improve the end-to-end transaction times for residential remortgages.
The transition to digital is an opportunity to strengthen the integrity of the register. It allows us to make things easier while introducing new safeguards. We will regularly review how the service is working, from creating a deed up to the point of registration. This will help to give everyone involved the right level of confidence and make it simpler and faster for people to remortgage their homes.
16 comments
Comment by C.mattison posted on
How does the new digital system prevent identity theft, i.e. if a fraudster were to go to a financier and get a large loan against someone else’s property by pretending to the rightful owner and producing counterfeit documents. The fraudster then disappears with the money from the loan whilst the financier contacts the rightful owner of the mortgaged property and asks for repayment of the loan?
Comment by Shaun Ewings posted on
In order to protect our registered owners and the security of the register, it is not possible to disclose details of any of HM Land Registry's counter-fraud measures. As part of the Digital Mortgages product, we do require borrowers to verify their identity through GOV.UK Verify. You can find more information about the Verify service by following this link GOV.UK Verify checks identity providers must perform
Comment by David Jabbari posted on
Would it not make sense to make this service available to law firms as a means of doing their initial identity checks? This would be incredibly beneficial for firms and clients in that it would remove the need for the risky and cumbersome existing practices around certification of identity. As I understand it, some firms do use Experian to do this. If the Land Registry have this system in place, why not make it available to firms?
Comment by Shaun Ewings posted on
We have identified that GOV.UK Verify provides the assurance that we need at the point of signature in our new service, but fully understand that identity assurance is an ongoing issue for the whole conveyancing industry.
Whilst there are no easy answers, we recognise that we must all work together – HM Land Registry, conveyancers, lenders and others in the conveyancing industry – to make ID assurance work as well as possible.
As we take our digital services forward, we will be keen to explore how we can support safe and secure identity verification in property transactions.
Comment by David Jabbari posted on
Many thanks for your reply Shaun. I just wonder what really stands in the way of making this available more widely in the very near future? It is already in existence and being used on a very large scale to confirm ID for the purposes of applying to do a tax return online. Also if you have it in place just for the signing of the Mortgage Deed, then it means doing two separate ID checks: one at matter inception by the firm and then one later at the point of signing the Mortgage Deed by the LR.
Comment by Shaun Ewings posted on
GOV.UK Verify currently works with the government service that it has been integrated with.
At HM Land Registry we are using GOV.UK Verify to provide us with an appropriate level of assurance at the point of signature. HM Land Registry is itself unable to offer the use of Verify for private sector consumption.
Comment by Ian Currie posted on
As a Conveyancer with 40 years experience of completing mortgage deeds, I can says there has not been a single occasion where I have been involved when the deed has not been executed correctly. I expect that to be universally the case.
'Currently, when signing a paper deed, a borrower just needs to get their signature witnessed' Presumably this comment is aimed at the general public who may not realise it is an intentionally misleading statement. All Conveyancers know better.
The present requirements to prove the identity of the signatory to the mortgage deed is a process which is secure and has been seen to work; there is no evidence to the contrary.
I am in favour of the principle of digital verification of identity but not to replace the existing (proven) paper form. if you are going to promote the former, do this by being accurate and not seeking to invent problems with the operation of an existing system where no such problems exist.
Comment by Shaun Ewings posted on
The comments in the blog above were based in part on the conversations that we had been having with conveyancers in the remortgage sector, and partly upon our own data.
Issues around the execution of deeds are one of the top five reasons that we need to raise requisitions with conveyancers. To put that into a numerical context, we raised over 70,000 requisitions relating to the execution of deeds in the last year.
Although that number includes more than just mortgages, having in place a technology that will reduce some of that number will benefit everyone involved. Conveyancers have told us anecdotally that they also resolve a lot of execution errors in mortgage deeds before they reach HM Land Registry.
Although the present requirement to prove the identity of a signatory to a mortgage does work in the majority of cases, it is a sad fact that property fraud in all of its forms is an ever-growing threat and HM Land Registry does see examples of remortgage fraud.
Many of our largest indemnity claims result from the registration of fraudulent applications, and fraud continues to be one of HM Land Registry’s biggest risks. In 2016-2017, HMLR paid out a total of £6.9m in indemnity which included £4.9m relating to fraudulent applications. The largest claim paid in this financial year was for £702,290, and related to a forged mortgage deed.
The introduction of new technology will help us in our continuing efforts to resolve these very real problems.
Comment by Gerry A posted on
Is ID verification through the government portal the only option, or will you open up to other API SaaS companies?
Comment by Shaun Ewings posted on
Identity assurance at the point of signature will need to be completed through GOV.UK Verify, due to the safeguards that exist with this service. We have no plans to change this.
Comment by Jacqueline posted on
I did my own conveyancing on my sale & purchase in 1994
As far as I can see today a DIY conveyancer now needs several ID checks. Online solicitors are quoting £60 - £100 for ID1 checks
A money laundering & ID check (for their buyers' solicitor & purchasers' solicitor) before contracts are exchanged.
They would also need 2 more separate land registry ID1 checks when selling (1 for completing AP1 forms) in terms of TR1 (transference) via their buyers' solicitor & another ID1 for completing AP1 forms in terms of transference etc. when purchasing (which could take place at the land registry during transfer etc.).
Comment by Anti Fraud Solution posted on
Identity thefts are getting out of hand and it is actually the biggest fraud of all time as well so, an anti-fraud solution is the need of the hour and we should use it.
Comment by Neill Pemberton posted on
How is a digital mortgage validly executed?
Section 52 of the Law of Property Act 1925 requires all conveyances of land and interests therein to be made by deed.
Section 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989 says that a document signed by an individual is validly executed as a deed if, and only if, it is signed before a witness (or at direction before two witnesses).
Do you also require a witness to sign digitally?
Comment by Shaun Ewings posted on
The statutory provision relevant to land registration is section 91 of the Land Registration Act 2002. Section 91(5) confirms that an electronic document will be regarded for statutory purposes as a deed if it complies with the provisions of that section. The section applies when an e-document purports to effect a disposition of a registered estate, charge, or a noted interest, or is a registrable disposition.
As well as other conditions set out in section 91, the section provides that the electronic document must have “the electronic signature of each person by whom it purports to be authenticated”, and each signature must be certified. Certification of an electronic signature takes the place of witnessing.
Comment by pj posted on
What about the fact that the negotiable instrument ('the note') which is a promise to pay under the 'agreement' is separated from the security instrument ('collateral' 'dwelling' etc ) agreement and sold to an investment bank to induce certificate holders in a trust to gain a return on their investment?
Should both documents always remain together to form 'the security' for whom ever is 'lending' the funds? Who owns the note when sold on? Does one without the other render the 'loan' null and void?
Comment by AdamH posted on
Pj - Thank you for your comment, would you be able to give a bit more detail to your question? To make sure that we respond to you correctly, could you please email DigitalMortgages@landregistry.gov.uk with a little more information and we will get back to you as soon as we can?