Federal Housing Administration to Accept eSignature for Real Estate Contracts

This is a great day for eCommerce.

As the chief legal officer at DocuSign, I'd like to share my thoughts, as we applaud FHA's action today. Their decision to clarify their position on electronic signatures will help streamline the sale and financing of homes across the country. Buyers, sellers and agents can use DocuSign's online process to eliminate the time, expense and environmental impact of printing, delivering and signing large stacks of paper documents, and mortgage lenders can take comfort in knowing that DocuSign's e-signature process is designed to be legally compliant in all 50 states and is fully evidenced by a comprehensive audit trail.

The last time Federal Housing Administration released any formal guidance on electronic signatures was way back in 1996.  Over the past 18 months, DocuSign's real estate and mortgage origination customers have made it clear that FHA urgently needed to update and clarify its position on electronic signatures.  And we heard you.

It's now OFFICIAL: E-signed third-party documents, including real estate contracts, are now being accepted by the Federal Housing Administration (FHA).

FHA's lack of guidance was not at the forefront of anyone's mind a couple of years ago when the agency was only involved in two percent of home loans.  But the collapse of financial markets in late 2008 catapulted FHA into the mortgage spotlight almost overnight.   As the new #1 source of funding for nearly half of first time home buyers in 2009, FHA's inability to articulate a clear process for accepting electronically processed documents became a very real problem for those who depended on the agency as a downstream partner.   In fact, in early 2009 we saw some major FHA lenders retreat from their progressive policies toward e-commerce, as they waited for a signal from FHA.

To their credit, staff at the FHA have been pushing for progress for over two years.  It took some early encouragement and help from many concerned parties to help them get this done.  DocuSign began direct conversations with FHA on this issue back in October of 2008, and we shared this blog post about FHA and Lender Acceptance of electronic signature back in July of last year.

DocuSign spearheaded an industry-wide effort to move the FHA to formally recognize e-signed third-party documents, and the April 8, 2010 dated FHA mortgagee letter is the first in what is expected to be a series of responses to this initiative. With this policy statement from the nation's largest mortgage insurer, real estate professionals can use DocuSign to get real estate contracts, addenda and other documents signed electronically, and their buyers can apply for FHA insurance with confidence. The FHA mortgagee letter can be found at http://nhl.gov/offices/adm/hudclips/letters/mortgagee/files/10-14ml.pdf.

Thank you to everyone who participated by calling DocuSign and emailing the FHA, NAR or ESRA over the past several months - the FHA mortgagee letter is a result of your support throughout this effort!