MPF Announcement 2019-07

The MPF Program Answers Frequently Asked Questions Regarding Electronic Mortgages/Signatures

Effective Date: Immediately

The following information is being provided in an effort to provide guidance and clarity to PFIs as to loans eligible for delivery under the MPF Program. 

What is an eMortgage?

An “eMortgage” is typically understood to be a loan for which the note and/or security instrument are created at closing through the use of electronic processes and signatures.

If the security instrument is “wet signed” by the borrower, then the document is scanned to the county recorder to be electronically filed, is the loan an eMortgage? 

An eMortgage comes in to existence as a result of, among other things, an signature being placed into the loans documents electronically.  If the note and security instrument are “wet signed” (i.e. signed by the borrower with a pen on hard copy paper) at closing, they are not eSigned and the loan is not typically considered an “eMortgage.”

 What is an electronic signature (i.e. eSignature)?

An electronic signature (sometimes referred to as an eSignature) is the process by which a document is signed online, where a software product creates the signature that is placed on the document.  In order to create a legally binding eSignature, a process must meet various federal and state laws, including the ESIGN Act and UETA.  PFIs and Servicers using or accepting documents with electronic signatures should consult their legal counsel to ensure compliance with all Applicable Laws.

Is typing a name an eSignature?

Typing a name into a document does not meet the requirements necessary to create a binding eSignature.  PFIs and Servicers using or accepting documents with electronic signatures should consult their legal counsel to ensure compliance with all applicable laws.

Are facsimile signatures considered eSignatures?

No.  Facsimile signatures are typically stamps of a signature, not signatures electronically placed on documents.  The MPF Guides have provisions, including Chapter 10 of the MPF Traditional Selling Guide, permitting use of facsimile signature on endorsements, if certain requirements are met.

Which loan-related documents can use electronic signatures (i.e. a document where the signature is placed on the document by an application, and not signed by the borrower with an ink pen on hard copy paper)?

The MPF Guides, including Chapter 7 of the MPF Program Guide, provide that electronic signatures are acceptable on most borrower facing documents used in the origination and servicing of loans delivered under the MPF Program if certain requirements are met.

The MPF Guides specifically provide that electronic signatures are not permitted on certain documents, including:

• The Note, Security Instrument, Assignment, Note endorsement, or any document modifying or supplementing the Note or Security Instrument.
• Any notice of default, acceleration, repossession, foreclosure, eviction, or the right to cure.

If MPF product specific investor, guarantor, insurer or Government Agency (as applicable) permit electronic signatures, their requirements for the use of such electronic signatures must also be met.

Which MPF Program related documents (i.e. non-borrower facing loan related documents) can use electronic signatures (i.e. a document where the signature is placed on the document by an application, and not signed by the borrower with an ink pen on hard copy paper)?

Various FHLBs have adopted policies and procedures for accepting certain electronically signed MPF Program related documents.  PFIs should contact their FHLB to ensure compliance.

Are representations and warranties different delivering or servicing a loan  that has eSigned documents?

The Originator, PFI and Servicer, and their processes, must be in full compliance with Applicable Laws, and MPF program requirements as provided for in the MPF Guides.  By delivering or servicing Mortgage Loans with electronically signed documents, the PFI and Servicer acknowledge and understand that the MPF Banks and the MPF Provider will rely conclusively on the accuracy, authenticity, integrity, and validity of the electronic records (including any delivery instructions) and that the MPF Bank and MPF Provider are under no obligation to verify or authenticate inaccuracies or inconsistencies through any communication, review or authentication method.

For further information PFIs and Servicers  are encouraged to consult their legal counsel or compliance teams.