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47 states and the District of Columbia have enacted state legislation adopting the UETA or some version of it9 (only Washington, Illinois, and New York have not adopted the UETA).10 However, those three remaining states each enacted similar legislation that provides the same authority and support, so eNotes are fully enforceable in every jurisdiction, the same as any other paper-based note. It's important to mention here that support for eNotes exists outside of, and even pre-dates, the UETA or ESIGN Act. There is nothing within the UCC that actually prohibits the formation of agreements by electronic means,11 nor does it require the contract itself be in writing—only that there be adequate evidence of its existence and its essential terms.12 In fact, neither common law nor the UCC requires a handwritten signature.13 For nearly 100 years, the courts have recognized that "a signature need not be written down in cursive form; signing a document is the act of putting down a person's name to attest to the validity of an instrument and that signature may be stamped, printed, or made legible by using any other device."14 Against this backdrop, the UETA and ESIGN Act incorporate pre-existing authority and provide uniform guidance for each sory note? An eNote constitutes a transferable record and can be treated as the equivalent of a negotiable, paper-based promissory note if: (i) the eNote contains only the same terms and conditions that are permitted in a paper negotiable note; (ii) the eNote is signed; (iii) the issuer of the eNote agreed it should be treated as a transferrable record; and (iv) the method used to record, register, or evidence a transfer of interests in the eNote reliably establishes the identity of the person entitled to "control" the eNote.18 A person deemed to have "control" over such an eNote is the equivalent of a note holder under the UCC. In order to adequately establish control, an eNote must be created, stored, and assigned in such a manner that: (i) a single "authoritative copy" of the eNote exists that is unique, identifiable, and unalterable; (ii) the authoritative copy identifies the person asserting control as either the person to whom the eNote was issued or most recently transferred; (iii) the authoritative copy is communicated to and maintained by the person asserting control or its designated custodian; (iv) copies or revisions that add or change an identified assignee of the authoritative copy can be made only with the consent of the person asserting control; (v) each copy of the authoritative In an age of exponentially increasing electronic transactions, eNotes are a natural step in mortgage lending toward increasing efficiency, reducing costs, and streamlining the loan origination and closing processes. jurisdiction in terms that are more applicable to the 21st century's electronic commerce. The primary goals of the UETA and ESIGN Act are to ensure that: (i) a record or signature will not be denied its legal effect or enforceability just because it may be in an electronic form and (ii) a contract not be denied any legal effect or enforceability solely because it relies upon an electronic record or signature.15 The UETA is not intended to displace the UCC when it comes to promissory notes since it is still the UCC that determines whether a promissory note is formed.16 The UETA expressly states it is not a general contracting statute and the substantive rules of contracts still remain unaffected by the UETA.17 Rather, it is simply there to ensure a promissory note cannot be denied any legal effect simply because it is an eNote. So how do the UETA or ESIGN Act create the electronic equivalent of a traditional promis- copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and (vi) any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision.19 These concepts of a transferable record and controller are essential to getting foreclosure off on the right foot. What's It Mean for Foreclosures? Satisfying the above criteria may establish your eNote as a transferable record entitled to enforcement, but not unlike traditional promissory notes, there are additional concerns. How can you prove which party is entitled to enforce the eNote? Is the eNote a valid and authentic copy or representation? What must be shown to prove possession? In addition to these typical issues, there are also entirely new concerns that arise due to the electronic nature of the eNote. How do you demonstrate possession of an electronic record like an eNote? Since an eNote lacks any indorsements or allonge, how can you determine whether a previous lender relinquished its rights? Fortunately, the UETA and ESIGN Act can point you in the right direction. A person who has control over an eNote is the equivalent of a traditional note holder, and therefore the controller is entitled to enforce the eNote. The allegations related to the plaintiff's right to foreclose should disclose up front that the indebtedness is in the form of an eNote and should incorporate the plaintiff's status as the controller of the eNote. From the perspective of avoiding or preventing litigation, it should be clear from the start of your case that any copy of the eNote used and circulated in the foreclosure is merely a copy of the authoritative copy of the eNote. Otherwise, you potentially jeopardize the plaintiff's status as the controller. Since the obligor of the eNote has the right to demand proof of control, the plaintiff's business records should be able to demonstrate the location of the authoritative copy, that the plaintiff is the most recent transferee, and that the plaintiff may even be required to provide access to the authoritative copy.20 When dealing with an eNote, the plaintiff should also be able to explain its processes and procedures of converting the eNote into a complete and accurate paper-based note upon which the court may rely. There may be additional concerns such as: (i) the type of technology or storage facility used to maintain the authoritative copy of the eNote and its related electronic records; (ii) the access to, and security of, the storage facility; and (iii) the reliability of the technology. Although these topics may be highly technical and beyond the scope of this article, they are worth mentioning here because they may also be additional hurdles to clear in order to properly establish a foundation for the plaintiff's business records. When it comes down to it, proving up your eNote should not be all that different from proving up the right to enforce a traditional note. Armed with the UETA and ESIGN Act, it is simply a matter of educating the courts on yet another aspect of the continually evolving mortgage lending industry. G. Stephen Caravajal Jr. is senior counsel at Freedman Anselmo Lindberg, LLC. He practices in the areas of mortgage and mechanics lien foreclosures, real estate law, consumer fraud, consumer finance litigation, and consumer collections. 9 See gen., Nat'l Conference of State Legislatures, www.ncsl.org/issues-research/telecom/uniform-electronic-transactions-acts.aspx. 10 See gen., Washington' Electronic Authentication Act, Illinois' Electronic Commerce Security Act, and New York's Electronic Signature and Records Act. 11 Alliance Laundry Sys., LLC, v. Thyssenkrupp Materials, NA, 570 F. Supp. 2d 1061, 1067 at FN3 (E.D. Wis. 2008). 12 Cloud Corp. v. Hasbro, Inc., 3 14 F.3d 289, 295 (7th Cir. 2002). 13 Id, at 296. 14 Nat'l City Bank v. Majerczyk, 2011 IL App (1st) 110640, at ¶3 (citing, A.T. Willett Co v. Indus. Comm'n, 287 Ill. 487, 493 (1919). 15 UETA §7; 15 U.S.C. §7001(a). 16 Alliance Laundry, 750 F. Supp. 2d at 1067. 17 UETA Prefatory Note at ¶3.18 UETA §16; 15 U.S.C. §7021; Security Instruments in Transferable Records Evidencing Residential Mortgage Lending Transactions and the Rights of Warehouse Lenders, MBA Residential Technology Steering Committee (2007). 19 Id.20 15 U.S.C. §7021(f). 60

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