I gleefully reported in late January that FHA has opened the door to the broader use of electronic signatures in the mortgage space. The time for lenders to adopt e-signatures is today. There is huge ROI to be gained.
Specifically, back in January the FHA Mortgagee Letter (ML) announced that FHA will accept electronic signatures conducted in accordance with the performance standards outlined in this ML on documents requiring signatures included in the case binder for mortgage insurance, servicing and loss mitigation documentation, FHA insurance claim documentation, and on HUD’s Real Estate Owned (REO) Sales Contract and related addenda unless otherwise prohibited by law.
Let’s dig a little deeper. I know that you want to know what documents is FHA talking about in this letter. FHA goes on to say:
FHA will accept electronic signatures on the documents referenced below (collectively referred to as “Authorized Documents”), provided that the mortgagee complies with standards outlined in this ML.
>> Mortgage Insurance Endorsement Documents: Electronic signatures will be accepted on all documents requiring signatures included in the case binder for mortgage insurance except the Note. As of December 31, 2014, FHA will accept electronic signatures on the Note for forward mortgages only. FHA will not accept electronic signatures on HECM notes.
>> Servicing and Loss Mitigation Documentation: Electronic signatures will be accepted on any documents associated with servicing or loss mitigation services for FHA-insured mortgages.
>> FHA Insurance Claim Documentation: Electronic signatures will be accepted on any documents associated with the filing of a claim for FHA insurance benefits, including the Form HUD-27011, “Single Family Application for Insurance Benefits.”
>> HUD Real Estate Owned Documents: Electronic signatures will be accepted on the HUD REO Sales Contract and related addenda.
Great, FHA is onboard. So, what’s next? The closing process of course. We know that the FHFA is hard at work trying to develop the Common Securitization Platform (CSP). If there was a standard way to compile and submit e-mortgages to any investor, surely the industry will adopt. Well, maybe not, but if the investor mandates it, it’ll happen, and something tells me that it is not going to be built just so early adopters can use it, it’s being built so everyone uses it.
In this issue my good friend Jeff Lebowitz argues that the government should not build this platform because it has a bad track record of successfully deploying technology. I agree, but I would also note that lenders have an equally bad track record when it comes to deploying technology. The bottom line, as I see it, is that this platform is something that the industry needs. It’s long overdue. So, regardless of who builds it, to the coming CSP, I say: It’s about time.
About The Author
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at email@example.com.