The Federal Housing Authority (FHA) announced last week that it is significantly expanding the number of electronically signed documents it will allow lenders to accept. The move is part of the agency’s modernization initiative and is another step toward creating completely electronic mortgage transactions in which all documents are created, signed and notarized electronically.
The FHA’s move is significant because it backs approximately 40 percent
of the new mortgages, and lenders originating FHA loans must abide by
“By extending our acceptance of electronic signatures on the majority
of single family documents, we are bringing our requirements into
alignment with common industry practices,” said FHA Commissioner Carol
Galante. “This extension will not only make it easier for lenders to
work with the FHA, it also allows for greater efficiency in the
home-buying and loss mitigation process.”
The expanded e-Signatures policy
is designed to help streamline the mortgage origination process and
help reduce document submission time frames for borrowers seeking options
to avoid foreclosure.
E-Signatures initially will be accepted on origination, servicing, and
loss mitigation documents, as well as other FHA documents — but not the
mortgage note itself. The FHA plans to begin accepting e-Signatures on
forward mortgage notes at the end of the year.
Michael Lewis is Managing Editor at the National Notary Association.