Fannie Mae issues eMortgage guidelines

WASHINGTON – The Electronic Signatures in Global and National Commerce Act (E-Sign) and the Uniform Electronic Transactions Act (UETA) opened the door to the origination of enforceable eMortgages. Fannie Mae has now issued a set of guidelines that will allow borrowers to preview their mortgage documents before closing and helps lenders create, sell, and deliver paperless mortgages through the secondary market to Fannie Mae. In the guidelines issued last month, Fannie Mae makes it clear that “any Fannie Mae-approved lender can deliver an eMortgage to us as either a cash delivery or an MBS pool delivery if it has obtained an amendment to its Master Agreement to specifically cover its eMortgage deliveries. Before a lender will be able to deliver eMortgages to Fannie Mae, it will first have to obtain a hardware token-based TrustIDT digital certificate from Digital Signature Trust Co. (DST). In addition, each user of Fannie Mae’s eMortgage Delivery application has to have a MORNETPlus User ID, which is part of the agency’s delivery applications, and present an individually issued digital certificate. While most conventional first mortgages will eventually be deliverable to Fannie Mae as eMortgages, initially an eMortgage will be closed by using a paper version of the security instrument for the jurisdiction where the property is located, and a paper version of any related riders needs for the specific product or property type. In all jurisdictions, Fannie Mae stressed that “a lender that delivers an eMortgage must use one of the electronic notes (Enote) that we have developed for use with the various mortgage products.” Likewise, “the lender must ensure that it has conducted the electronic signing of the eNote and related documents in such a way that it may be readily proven that the borrower did, in fact sign such document with the intent to be bound by them,” said Fannie Mae. In addition, Fannie Mae said it will not accept an eMortgage if the borrower signed any associated records by means of an audio or video recording. “The lender must ensure that it has conducted the electronic signing of the eNote and related documents in such a way that it may be readily proven that the borrower did, in fact, sign such documents with the intent to be bound by them.” When a lender is ready to sell an eMortgage to Fannie Mae, it will use the agency’s eMortgage Delivery application to complete the legal transfer of ownership of the mortgage. A lender is only eligible to sell an eMortgage to Fannie Mae if it registers the eMortgage in the interim registry that is part of the agency’s eMortgage Delivery application within five business days after it is closed. After the lender successfully completes the transaction, Fannie Mae will appear as the new owner of the eMortgage in its eMortgage Delivery application.