FHA Guidance on eSignatures a Close Match to Industry Practices
The Federal Housing Administration (FHA) now accepts electronic signatures (eSignatures) on many more loan documents based on a set of guidelines that closely track industry-standard best practices. Effective immediately, the Federal Housing Agency (FHA) will accept eSignatures on servicing and loss mitigation documents, as well as IRS Form 4506-T, FHA insurance claims, REO sales contracts and related addenda. eSignatures are 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.
Jeff Knott, Assistant Vice President of Product Management at Equifax Verification Services, noted that 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 Consumer Financial Protection Bureau’s (CFPB) new rule stating that all closing documents must be delivered at least 72 hours prior to closing. A fully electronic process makes it easier to meet the deadline and provides documentation that it was met. For details, read Equifax’s latest compliance bulletin.
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