June 3rd, 2016 | Paperless Loans!
National Mortgage News reports on May 20, 2016 that in addition to electronic Mortgage Applications, two recent court rulings affirmed that lenders can enforce electronically signed and transferred notes, laying important groundwork for wider adoption of electronic mortgage technology that could improve the customer experience for borrowers and save lenders and servicers a bundle.
In separate foreclosure cases in New York and Florida, judges ruled that the electronic transfer histories of loans originated with e-signatures proved the plaintiffs had standing to foreclose. This should help put to rest many of the concerns held by investors about buying loans secured with e-notes, and suggests further clarity may have to come from case law.
Margo Tank, a financial services attorney and partner with BuckleySandler LLP who specializes in electronic signatures, says "The courts are going to be leaders in the electronic records and signatures space. It should give a lot of comfort to the mortgage industry."
In the New York case, a state court of appeals overturned a lower court decision regarding a loan currently held by New York Community Bank. The bank is seeking to foreclose on a loan to a Brooklyn, N.Y., woman that was originated by the now-failed AmTrust Bank and involved an e-signature.
The decision laid out the transfer history of the loan from AmTrust to NYCB through the Federal Deposit Insurance Corp. and established that an e-note is a "transferable record" under U.S. code.
"The transfer history, together with the copy of the e-note itself, were sufficient 'to review the terms of the transferable record and to establish the identity of the person [or entity] having control of the transferable record,'" the court wrote in its April 13 decision.
"This evidence was sufficient to establish the plaintiff's standing as the holder of the e-note and rendered the lack of proof of valid assignment irrelevant," the ruling continued.
Another case decided in April, this time in a Florida state appeals court, similarly upheld an e-note for a mortgage serviced by Wells Fargo. In that case, the court found that Wells Fargo provided "competent, substantial evidence that Fannie Mae owned the e-note and authorized the bank to pursue the foreclosure."
With these two decisions, many doubts circling e-notes can be laid to rest, making the mortgages they pertain to more palatable to secondary market investors, and hence to originators.
And while the decisions occurred at the state level, they still can act as a guide post for judges in other jurisdictions in how they should approach these matters.
The timing of the decision is also particularly fortuitous as the mortgage industry starts to digitize through innovations...according to Allison Schoenthal, a New York-based attorney with the law firm Hogan Lovells.
1 STOP Mortgage offers Electronic Applications as well as "the Old-Fashioned" Applications. It's up to you...your Choice!