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E-Note Lenders and Fully Digital Closings

What’s that about e-Vaults and MERS? Is that all part of the gradual movement to “e-Note” closings that I’m hearing about?

Yes. It is expected that more and more lenders will eventually become e-Note lenders, thereby digitizing the loan package and rendering the closing process paperless. One hallmark of an e-Note closing is that the electronically signed note is stored in an “e-Vault.” MERS is a national leader in the e-Vaulting of electronic notes.

Why do some lenders allow me to use RON for their loan packages, but most don’t? Does that have something to do with Fannie Mae and Freddie Mac?

Yes. Most, but not all, residential mortgages are sold by the originating lenders to Fannie Mae and Freddie Mac. The GSE’s have long-stated that unless the “seller” of the loan is an approved e-Note lender, they will insist that the promissory note be delivered in wet-signed form. For lenders that warehouse their loans and do not seek to sell them to the GSEs, they may allow for the loan documents, including the note, to be signed digitally.
Before proceeding with an all-digital loan closing, confirm with the lender that it will accept an electronically signed note and other loan documents.