In a move that will make the application process for Federal Housing Administration (FHA) mortgage insurance easier for borrowers and faster for lenders, HUD

released a mortgagee letter Thursday saying that FHA will begin accepting electronic signatures on third party documents originated and signed outside a lender’s control.

“This is just the beginning of FHA’s commitment to use more electronic documents in our loan approval process,” said FHA Commissioner David Stevens. “Over time, we

will be expanding the number and types of documents with electronic signatures which will be acceptable to FHA.”

The new policy is in accordance with the Electronic Signatures in Global and National Commerce Act and the Uniform Electronic Transaction Act, as applicable. It is effective immediately for FHA-forward mortgages as well as Home Equity Conversion Mortgages.

FHA expects lenders to employ the same level of care and due diligence with electronically-signed documents as for paper documents with ink signatures. Lenders are reminded that the electronic signature and date should be clearly visible in the document, and that electronic documents will be subject to the same document retention requirements as paper documents.

“This is a great step forward in speeding up the real estate transaction and making it easier for buyers, sellers, and real estate professionals to complete transactions timely and efficiently,” said Vicki Cox Golder, president of the National Association of Realtors. “We applaud FHA’s refreshing attitude toward modernization and making electronic signature capabilities acceptable for its mortgage transactions.”