From time to time, DocMagic's Compliance Department receives questions from customers regarding the U.S. Housing and Urban Development's ("HUD's") acceptance of disclosures via electronic delivery and electronic signatures in the context of FHA loans.  In summary, HUD has advised that electronic delivery of an FHA disclosure package is fine as long as it is not signed electronically.

Additionally, HUD's Director of the Home Mortgage Insurance Division advised that HUD is accepting electronic signatures on appraisals only, but has yet to authorize electronic signatures on loan documents and disclosures.  Furthermore, the HUD Director advised that HUD's exploration of its acceptance of electronic signatures has been in process for the past two years.  Before allowing electronic signatures, the Office of the Home Mortgage Insurance Division must be able to assure the U.S. Department of Justice ("DOJ") that its ability to prosecute will not be jeopardized by the use of electronic signatures.  In other words, the DOJ needs assurance that electronic signatures will be tamper-proof if used as evidence in a case.  Once they can resolve this issue, an official announcement regarding HUD's acceptance of electronic signatures will be made.

Meanwhile, as HUD accepts disclosures delivered to the borrower via electronic delivery, customers may use DocMagic's eDisclosure product to deliver predisclosure loan packages to the borrower.  In fact, eDisclosure has been used by customers for at least a couple of years, and there are no problems to report in terms of HUD accepting FHA predisclosure loan packages.  Note that electronic delivery does not eliminate the need for borrowers to sign and return to the broker or lender disclosures that are required to be signed by applicable law or regulation.

Please contact DocMagic's Compliance Department if you have any questions regarding the contents of this article.

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