New eSignature Requirements for Lenders
DocuSign joins the rest of the United States real estate industry in applauding the Federal Housing Administration (FHA) Office of Single Family Housing’s expansion of lender authority to accept electronic signatures on documents associated with mortgage loans. The publication of Mortgagee Letter 2014-03 is the latest in a series of promised changes to advance eSignature acceptance on FHA-backed mortgages – making it easier, faster, more convenient, and secure than ever to close home loans with DocuSign.
FHA’s new policy complements and improves upon its earlier policy Mortgagee Letter 2010-14 – which was developed in close partnership with DocuSign – that only allowed for eSignatures on third party documents such as purchase and sale contracts and others not controlled by lenders. The recent Mortgagee Letter 2014-03 encourages eSignatures on origination, servicing, and loss mitigation documents, as well as FHA insurance claims, REO sales contracts, and related addenda. The terms of Mortgagee Letter 2010-14 will continue to stand as well, so real estate professionals can work with confidence that eSignature acceptance is expanded to include a broader range of mortgage documents.
“FHA’s broader acceptance of eSignature for mortgage lenders is a great step forward for brokers, agents, lenders, and their clients,” said Ken Moyle, chief legal officer, DocuSign. “DocuSign is pleased to have helped shape this progressive legislation on behalf of our customers and partners. As the real estate industry standard for eSignature, DocuSign helps mortgage companies comply with all FHA eSignature requirements.”
In a newsletter issued last week (FHA INFO #14-05), the U.S. Department of Housing and Urban Development stated, “The eSignatures policy announced today will help streamline the origination process and help reduce document submission timeframes for borrowers seeking options to avoid foreclosure,” removing barriers to close one of the most important documents individuals and couples will ever DocuSign – a mortgage.
The new FHA policy opens technology and innovation to facilitate and accelerate transactions with, for, and by mortgage lenders. It does not change the current process in which real estate professionals DocuSign purchase and sale agreements and other real estate documents.
DocuSign helps mortgage companies comply with all of the new criteria set forth in Mortgagee Letter 2014-03, including:
• Associating an eSignature with the Authorized Document: Documents must be presented to the signer before an eSignature is obtained and the eSignature must be attached to, or logically associated with the document.
• ESIGN Act Compliance: eSignature technology used must comply with all the requirements of the ESIGN Act, including those related to disclosures, consent, signature, presentation, delivery, and retention.
• Intent To Sign: The mortgagee must be able to prove that the signer certified that the document is true, accurate, and correct at the time signed.
• Single Use of Signature: Mortgagees must require a separate action by the signer, evidencing intent to sign, in each location where a signature or initials are to be applied.
• Authentication: The mortgagee must confirm the identity of the individual(s) signing by authenticating data provided by the individual with data maintained by an independent source.
• Attribution: Mortgagees must maintain evidence sufficient to establish that the electronic signature(s) is attributed to the individual(s) purported to have signed.
• Credential Loss Management: Mortgagees must leverage an eSignature system that ensures the security of all issued credentials.
• Integrity of Records: Mortgagees must ensure that documents signed electronically cannot be altered.
• Record Retention: Mortgagees must maintain origination case binders in hard copy or electronic format for a period of two years.
Companies interested in learning more about DocuSign’s eSignature platform for real estate may visit www.docusign.com.
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