FHA Opens the Door to Mortgage Lenders Using eSignLive E-Signatures

MONTREAL, QC, February 5, 2014 – Silanis Technology, the e-signature choice for business, welcomes the Federal Housing Administration’s (FHA) decision to accept electronic signatures on documents required with FHA-backed mortgage loans for Single Family Housing. With the organization’s publication of the Mortgagee Letter 2014-03, the FHA continues to advocate for the advancement of the e-mortgage, taking significant strides past its previous policy outlined in Mortgagee Letter 2010-14, wherein only third party documents including real estate purchase and sales contracts were permitted to be e-signed. Now, the FHA will allow e-signatures on origination, servicing, and loss mitigation documents, as well as FHA insurance claims, REO sales contracts and related addenda.

Documents now authorized by the FHA include all those required in the case binder for mortgage insurance except for the mortgage note, which will only be accepted on forward mortgages starting December 31, 2014. Also included are documents for servicing and loss mitigation, FHA insurance claims, HUD real estate-owned sales contracts and related addenda. 

“Silanis has been involved for over a decade in shaping e-signature policies as a founding member of the Electronic Signature and Records Association (ESRA), the association which spearheaded the discussions with the FHA on behalf of the industry,” said Silanis Vice President and co-founder Michael Laurie. “With a large portion of our customers representing the top banks, lenders and credit unions, Silanis has long advocated to bring e-mortgages to the forefront, such as working with the Mortgage Industry Standards Maintenance Organization (MISMO) to create technical standards around e-signatures – it’s great to see these best practices represented in the FHA’s letter.”

Importance to Realtors

Prior to this mortgagee letter, the FHA only allowed certain third-party documents such as the sales contract to be e-signed. Realtors were reluctant to start the paperwork electronically because if the buyer received FHA approval, all remaining documents had to be provided on paper, negating any value from starting the transaction electronically. With the FHA’s recent announcement, realtors will be encouraged to start the process electronically knowing lenders have option to continue with a electronic mortgage process.

Importance to Lenders and Brokers

The mortgage lending market is well established with the use of e-signatures and e-delivery in both the mortgage application disclosure and closing processes. In fact, Silanis currently provides e-signature, e-delivery, e-closing and e-vaulting solutions to major banks, correspondent lenders and credit unions who originate, buy and sell mortgage loans. Through the use of e-SignLive™ with e-mortgages, Silanis customers already meet and exceed the FHA’s performance standards as outlined in ML 2014-03 and benefit from a faster, more efficient and compliant process.

FHA Electronic Signature Performance Standards

In ML 2014-03, the FHA details the following performance standards for the use of e-signatures on documents that will be accepted for FHA loan insurance:

• Complying with all requirements of the ESIGN Act;
• Associating an electronic signature with a document;
• Demonstrating intent to sign;
• Requiring the single use of a signature;
• Authenticating an individual’s identity;
• Attributing the individual’s signature to their identity;
• Managing issuance, use and loss of credentials;
• Maintaining integrity of records and auditability of the electronic process.

In addition, the FHA requires that Quality Control Plans reflect the new electronic signature processes and their record retention requirements continued to be followed.

With over two decades of experience in electronic signature solutions, e-SignLive has been proven to meet and exceed the FHA performance standards, enabling realtors and lenders alike to benefit from significant cost savings and shortened time to closing business.

Lenders looking to exceed the FHA’s electronic signature requirements may visit www.silanis.com.

About Silanis Technology

Businesses of all sizes choose Silanis Technology when e-signatures matter. With more than 600 million documents processed every year, e-SignLive™ is the most widely used e-signature solution around the world. Thousands of organizations, big and small, including the leading banks, insurers, credit providers, pharmaceutical and government agencies trust e-SignLive as their platform to make business digital. On premise or in the cloud, e-SignLive delivers the best customer experience while improving legal and regulatory compliance. Learn more: www.silanis.com, Twitter, LinkedIn, Facebook and Google+.