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Digital Mortgages May Be Held Back By eNotes

November 6, 2019

The move towards a completely digital mortgage seemed closer to reality when Ginnie Mae announced in late October it was starting a pilot program to explore the issue. A new report from Fitch Ratings says electronic mortgages might be years away from widespread acceptance.


A report in Housing Wire says, “One of the main issues preventing the full digitization of the mortgage process was the use and acceptance of electronic promissory notes, also called eNotes.” The story adds it’s not as simple as having a digital promissory note. The eNote also needs to be stored in a way that ensures it has the same legal enforceability as a paper document.


Fitch claims, “Despite the industry’s enthusiasm for automation, widespread eMortgage adoption remains several years away, slowed by several obstacles. While the mortgage industry focuses on borrower-facing automated technology, full eMortgages have remained elusive in the non-agency space. Originators and servicers will need to address concerns regarding enforceability, required technology, system security and showing borrower consent.”


Fitch notes that the government-sponsored enterprises (Fannie Mae and Freddie Mac) are among the most active in the eMortgage space, having developed a “full framework” to accept eMortgages.


To learn more about digital mortgages, click on the image above.

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