FHA Expands e-Signature Authority

The Federal Housing Administration (FHA) has announced that it is granting expanded authority to lenders to accept electronic signatures (e-Signatures) on documents associated with mortgage loans. The new policy allows e-Signatures on origination, servicing, and loss mitigation documents, as well as FHA insurance claims, real estate-owned (REO) sales contracts and related addenda. Current FHA policy allows for electronic signatures only on third-party documents such as sales contracts and other documents not controlled by the lender. “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 FHA, it also allows for greater efficiency in the homebuying and loss mitigation process”. Lenders choosing to employ e-signatures may begin using this policy immediately for single family forward mortgages and FHA’s reverse mortgage products, Home Equity Conversion Mortgages (HECM). Lenders are required to adhere to the Electronic Signatures in Global and National Commerce Act (ESIGN), have specific technology and operational capabilities and controls, documented quality control processes, and the ability to adapt e-Signature to FHA’s existing record retention processes. The e-Signatures policy will help streamline the origination process and help reduce document submission timeframes for borrowers seeking options to avoid foreclosure. Initially, e-Signatures will not be accepted on the mortgage note itself. FHA plans to begin accepting e-Signatures on forward mortgage notes at the end of the year.