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15.4 ELECTRONIC SIGNATURES
Rural Development will accept electronic signatures for origination, loan closing, and servicing documents unless otherwise prohibited by law or program. This guidance is limited to lenders. Agency staff will continue to follow internal policy.
7 CFR 3555 does not prohibit or consent to electronic signatures. Lenders may use electronic signatures when the lender perfects and maintains a first lien position, an enforceable promissory note, and meets all other agency requirements. This includes electronic promissory notes (eNotes), deed of trust, and other documents relevant to the loan transaction. Lenders should be familiar with the securitization requirements of government sponsored enterprises (GSE), such as Ginnie Mae, regarding the transferability of eNotes.
Lenders who choose to accept electronic signatures must meet the standards and requirements set forth in the E-Sign Act, as well as all other applicable federal and state regulations and guidelines. Lenders are charged with the same responsibility of due diligence with electronically signed documents as they are with paper documents.
If any electronically signed document is deemed unenforceable (e.g. the promissory note, mortgage, or deed of trust) and is connected to any fraud, misrepresentation, or negligent servicing, the lender bears the risk that any loss claim submitted in relation to the unenforceable document will be denied or reduced in accordance with applicable regulations. The lender’s failure to collect on the promissory note or enforce the security instrument because of its electronic signature will be treated as negligent servicing under SFHGLP regulations.
Failure to comply with any Federal statute or regulation could result in the denial of a loan guarantee or claim, withdrawal of lending authority, and/or debarment from Federal programs.