The move to all-digital loan closings is getting closer thanks to the federal government. The Federal Housing Administration (FHA) is in the process of developing electronic mortgage specifications. A drafted seven-page document describing the specifications is being circulated among industry and government officials. The goal of the specifications is to help the FHA cope with the projected 30 percent spike in mortgage originations by the end of the year.
Once the guidelines are approved and proven, FHA will join Freddie Mac, Fannie Mae and numerous financial institutions that routinely use eMortgages — essentially ensuring industry-wide adoption of paperless mortgage transactions. The upshot is that Notary Signing Agents should expect to see more paper-based closings replaced by transactions needing eNotarization.
The FHA draft guidelines embrace those of the Mortgage Industry Standards Maintenance Organization (MISMO), requiring that the note be compatible with Fannie Mae and Freddie Mac’s eLoans and that the two mortgage giants accept the validity of the MERS loan-registration system’s Mortgage Identification Number. Because of this, industry leaders see the guidelines as a means building on successful existing platforms, instead of creating something from scratch, according to media reports. A pilot program will likely be launched this summer.