Despite the passage of the federal ESIGN Act nine years ago, HUD currently maintains a general policy that fails to officially recognize electronically signed documents that are submitted to FHA. With the recent explosion in FHA's market share for single-family home loans, FHA needs to change its policy about accepting electronically signed documents to avoid further disruption in e-commerce nationwide. Over the past five years, hundreds of thousands of real estate documents have been signed by buyers and sellers using electronic signatures, and not one of these transactions has failed due to fraud or unenforceability arising from use of the electronic signature. These otherwise valid and enforceable contracts - completed and closed prior to mortgage approval - are now being rejected by some lenders who are concerned that the mortgage loan will be flagged as deficient by FHA solely because the purchase and sale contracts were signed electronically. This confusion threatens to set e-commerce back years. The practical effect of lenders rejecting electronically signed real estate contracts is to force parties to the sale (not necessarily parties to the loan) to re-execute their transactions on paper with manual signatures, despite clear support for the enforceability of these contracts historically and legally. This is at odds with directives of the 2000 ESIGN Act and the GPEA, which require government to facilitate e-commerce. FHA’s rapid rise to prominence in the real estate ecosystem has exposed this urgent need for updated guidance. Immediate action is essential in order to stem the current confusion in the marketplace:

1. Clarify its policy with respect to electronic records and signatures, recognizing the difference between a mortgage closing document (such as an electronic note) and an ancillary document (such as a real estate contract, addendum or disclosure).
2. Clear the way at HUD to re-establish a channel for lenders to submit electronically signed real estate contracts and other ancillary documents to the FHA as part of paper or electronic case binders, without penalty.
3. Communicate this policy in a Mortgagee Letter as soon as possible in order to prevent further erosion into the use of electronic records and signatures in commerce.

Share your story with the FHA. Your email will help escalate this issue and highlight the serious financial impact affecting real estate professionals all across the country. Tell your story (or use our template to copy & paste or use as inspiration) to ask the FHA to take action:

1. Email the FHA to immediately send a Mortgagee Letter to the lending industry that outlines their acceptance of electronic signatures in FHA loans.
2. Address your email to: esra@esignrecords.org
3. Don’t wait. Send your email today!

ESRA will present every email to the decision makers in Washington D.C. and at the FHA. And DocuSign will be working closely with ESRA in this mission.
Together, we can make a difference.