The Federal Housing Administration (FHA) recently expanded its acceptance of electronic signatures (eSignatures) on documents associated with mortgage loans. The new policy allows for eSignatures on origination, servicing and loss mitigation documents, as well as FHA insurance claims, REO sales contracts and related addenda. eSignatures are still not allowed on the mortgage note itself, but FHA said in a press release that it plans to begin accepting eSignatures on forward mortgage notes at the end of the year.
This move by the FHA changes the entire mortgage process and is leading the way for industry-wide acceptance of electronic signatures. An electronic process offers obvious benefits to borrowers and lenders in speed and convenience, but it also provides compliance benefits for lenders. For example, an electronic process automatically gives lenders a time stamp so they can easily validate that documents were delivered on time. The time stamp is invaluable in light of the CFPB’s new rule stating that all closing documents must be delivered 72 hours prior to closing. A fully electronic process makes it easier to meet the deadline and provides documentation that it was met.
FHA now accepts eSignatures on:
- Origination, servicing and loss mitigation documents
- IRS Forms 4506-T and 4506T-EZ
- FHA insurance claims
- REO sales contracts and related addenda
- Mortgage insurance endorsement documents
- HUD real estate owned documents