FHA Expands Electronic Signature Program

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 its rules.

“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.