Who sets the industry standards for eMortgages?
Does Fannie Mae accept electronic signatures on mortgage closing documents?
What laws form the basis for eNotes and eSignatures?
Are eNotarizations allowed in my state?
Which counties allow eRecording?
What are the requirements for delivering eMortgages to Fannie Mae?
Which type of mortgage loans can be delivered to Fannie Mae as eMortgages?
What are the steps of an eMortgage delivery process?
Does Fannie Mae allow third parties to act as custodians of eNotes?
What is the MERS eRegistry?
Which parties are required to register with MERS®?
What is a Bailee and Bailee Letter?
Can a Bailee Letter be submitted by a warehouse bank for eNotes?
An eClosing is the act of closing a mortgage loan electronically. This occurs through a secure digital environment where some or all of the closing documents are executed and accessed electronically.
This is often a hybrid process in which certain key documents, such as the promissory note and security instrument, may be printed to paper and wet-signed, while other documents are signed electronically.
eClosings result in eMortgages only if the promissory note is signed electronically.
The term "eMortgage" generally refers to the use of electronic processes and signatures in the mortgage production process. More specifically, it refers to electronically-signed closing documents paired with an original electronic promissory note (eNote) signed on an eClosing platform and registered with the MERS eRegistry® upon execution. The term "eMortgage" is often used to indicate an eNote even though eMortgage is the broader term for the electronic process that includes the eNote and the electronic security instrument.
Based on feedback Fannie Mae has received from lenders conducting eClosings, here are some of the reasons why they chose to implement eClosings within their businesses:
In some cases, a borrower may still want the option of a paper closing, and lenders should address this need as part of their eClosing strategy and processes. However, Fannie Mae does not require lenders to perform paper loan transactions.
The Mortgage Industry Standards Maintenance Organization® (MISMO) eMortgage work group was formed in 2001 to develop standards for efficient eMortgage processes, transactions, and XML data protocol.
Fannie Mae leverages MISMO specifications for producing and executing eNotes utilizing MISMO SMARTDoc V1.02 standard. The MISMO eMortgage Guidelines and Recommendations are available at www.mismo.org.
Yes. Per the Selling Guide, we accept eSignatures on most documents used to originate or service a loan. However, lenders seeking to service or deliver eNotes, must seek prior approval. See the Selling Guide for specific exceptions. Lenders seeking to originate and deliver eNotes must seek prior approval. Refer to Selling Guide sections A2-5.1-03 (Electronic Records, Signature, and Transactions) and A2-5.1-04 (Lender's or Document Custodian's Electronic Transactions with Third Parties).
Both federal and state legislation form the legal basis for eNotes and eSignatures. In 2000, Congress passed the Electronic Signatures in Global and National Commerce Act (ESIGN). Forty-seven states, DC and the U.S. Virgin Islands have adopted state laws modeled on the Uniform Electronic Transactions Act (UETA). The remaining three states (WA, IL, and NY) each have their own statutes regarding electronic signatures. Please consult your legal advisor for more details about these laws.
In order to be truly paperless, the mortgage or security instrument must be electronically notarized prior to recording. ESIGN has provisions regarding electronic notarization.
Below are outside resources that may track this information by state. Lenders should check with their specific statutory authority to confirm the most current data. Pennsylvania Association of Notaries (PAN) and Property Records Industry Association (PRIA).
eRecording is permitted in approximately two-thirds of the U.S. population.
Coverage has steadily increased year over year and continues to do so. To determine if your jurisdiction allows eRecording, please consult with the recording official of your jurisdiction or visit the eRecording County List published by the Property Records Industry Association (PRIA).
We can neither endorse technology vendors nor establish compliance checks for technology solution provider systems, including correspondents and third-party originators systems.
However, we include a list of technology solution providers that have conducted technical integration testing with Fannie Mae. Please note that it is up to the lender to ensure that their specific provider meets their legal and regulatory requirements around electronic signatures.
Lenders should be sure to choose a solution that fits their respective needs and adheres to the representation and warranty framework and Selling Guide. Take advantage of our Decision Support Selection Tool (DSST) which can provide you clarity by helping you identify and select technology solution providers that support eMortgage submissions.
Below are considerations for choosing eClosing solution providers:
Once a lender obtains Fannie Mae's approval to deliver eMortgages, standard Selling Guide requirements regarding underwriting and eligibility for delivery apply. Additional eMortgage-specific delivery guidelines and technical requirements are contained in the Guide to Delivering eMortgage Loans to Fannie Mae.
Most conventional first mortgages can be delivered as eMortgages. This includes fully amortizing fixed-rate and adjustable-rate monthly payment mortgages, and fixed-rate and adjustable-rate bi-weekly payment mortgages.
Some products that require additional or special purpose legal documents (such as HomeStyle® Construction-to-Permanent mortgages, co-op properties and mortgages secured by Puerto Rico properties) may not be delivered as eMortgages. Please consult the Selling Guide and the eMortgage Guide for additional information.
A lender delivering an eMortgage would follow this general process:
We currently act as custodian for all of the eNotes we purchase, but rely upon third-party custodians to certify eNotes at delivery.
For Whole loan deliveries:
For MBS deliveries:
The MERS eRegistry® is the system of record identifying the owner and location of the eNote. The MERS eRegistry allows eNotes to be registered and uniquely identified for tracking and verification. Fannie Mae's eMortgage Delivery technology (eMD) and processes are integrated with the MERS eRegistry.
Are lenders required to use and be setup for the MERS eRegistry when delivering eMortgages to Fannie Mae? Yes. Lenders must become a MERS member to use the MERS eRegistry. Lenders can request a membership application from MERS by calling 1-800-646-MERS or downloading the application from www.mersinc.org. Access to the MERS eRegistry requires system integration and a testing cycle.
Lenders: Must register with MERS. They are required to register the eNote on the MERS eRegistry immediately after closing. To deliver eMortgages to Fannie Mae, lenders must use MERS eDelivery to deliver the eNote and then initiate a request with the MERS eRegistry to transfer ownership of the eNote.
A "Bailee" is an individual who temporarily gains possession, but not ownership, of a good or other property. The Bailee is entrusted with the possession of property by another individual known as the bailor.
A Bailee Letter is a communication that notifies the recipient of a promissory note that a third party has a security interest in the note. The letter allows interested investors to review the note, while protecting the security holder's interest in the note.
In lieu of a Bailee Letter, we utilize a tri-party funding agreement between the lender, Fannie Mae, and the warehouse funding provider.
The Funding Agreement serves the following roles:
We have published a list of approved servicers on the eClosings and eMortgages page, and are actively working with new servicers for eNote approval.
Minimum requirements for servicing eNotes are published in the Guide to Delivering eMortgage Loans to Fannie Mae, and includes having access to an eVault with connectivity to the MERS eRegistry in order to maintain eNotes and effect status updates.
We are happy to work with your servicing partner(s) to help them become approved to service eMortgages.
Standard servicing requirements apply when servicing eMortgage loans. In addition, servicers must identify their eMortgages on their servicing systems.
Servicers must have access to an eVault (either their own or a third party's) which is fully integrated with the MERS eRegistry to enable them to record payoffs, charge-offs, or loan assumptions for eMortgage loans. Prior to transferring servicing portfolios that contain eMortgages, the transferring servicer must ensure that the transferee servicer knows that there are eMortgages in the portfolio and is able to service them.
In the event of a foreclosure, there are special loss mitigation procedures servicers must follow, such as contacting their Fannie Mae Servicing Consultant and working with our designated attorneys.
Yes. We are actively purchasing eNotes that meet our published guidelines, through both Whole loans and MBS executions.
We purchased the first two eMortgages on the secondary market in 2003, and continue to purchase eNotes every day. Our updated guidelines are detailed in our eMortgage Guide to Delivering eMortgage Loans to Fannie Mae.