DS News

DS News January 2021

DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.

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Page 35 of 99

34 HISTORY OF THE EMORTGAGE Our industry facilitates the origination and enforcement of mortgages and notes—the paper variety. Electronic, or paperless, mortgages and notes are more rarely seen on the enforcement side. Fannie Mae defines an eMortgage as "a loan for which the promissory note and possibly other documents (such as the security instrument and loan application) are created and stored electronically rather than by traditional paper documentation that has a pen and ink signature. Because some recording jurisdictions will not yet accept electronic documents for recordation, eMortgages may consist of a paper security instrument and an electronic note (eNote)." 1 In 2000, the U.S. Congress passed the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. §7001, et seq. (ESIGN), which allows electronic signatures on contracts and retention of electronic records as long as those records are accessible to the parties and can be accurately reproduced by electronic transmission or by printing on paper. Introduced in 1999, the model Uniform Electronic Transactions Act (UETA) established the legal equivalence of electronic records and signatures with paper records and physical signatures in order to facilitate electronic commerce. Only two states, Illinois and New York, haven't adopted UETA in some form. 2 ESIGN and UETA closely resemble each other: their objective is to legitimize the use of electronic records in commerce throughout the United States. Fannie Mae and Freddie Mac, who collectively own almost half of the American residential mortgage market (or a combined $5.5 trillion), worked at the direction of their conservator, FHFA, to look at barriers to electronic mortgages and notes. e GSEs formed the Uniform Mortgage Data Program (UMDP), which published the eMortgage Foreclosure Educational Aid on March 30, 2017. 3 KEY TERMS RELATING TO EMORTGAGES AND ENOTES » Transferrable record: An electronic record that would be a note under Article 3 of the Uniform Commercial Code (UCC) if it were in writing. Borrower must agree it is transferable record related to a loan secured by real property. See, ESIGN 15 U.S.C. §7021; UETA §16. » Control or controller: Person having control, in the MERS eRegistry (eRegistry evidencing transfer of interests in eNotes), controller, of a transferable record is the equivalent of a "holder," as described in UCC, with same rights and defenses as a holder; a person has control of a transferable record if the system employed for evidencing the transfer of interests in the transferable record reliably establishes Legal Industry Update DIGITAL TRANSITIONS: THE FUTURE OF eMORTGAGE LAWS AND ADOPTION BY STATE 1 https://singlefamily.fanniemae.com/media/4601/display 2 https://www.uniformlaws.org/committees/community-home?CommunityKey=2c04b76c-2b7d-4399-977e-d5876ba7e034 3 http://www.freddiemac.com/singlefamily/sell/pdf/eMortgage_Foreclose_Educational_Aid.pdf NATIONAL FOCUS By: Legal League 100 Special Initiatives Working Group

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