Technology: Lenders Should Not Destroy Original Documents for 'Electronic' Loans.(Brief Article)

It is important to remember that while the E-sign law makes it possible for electronic mortgages, it did not change the Federal and other laws on what creates a mortgage.

Carmento Bramante, Fannie Mae's director of e-commerce, told the Mortgage Bankers Association of America's Secondary Mortgage Market Conference here that there are a number of misconceptions going around about e-signatures and electronic mortgages.

For example, there is a belief that the law will allow the lender or document custodians to scan existing mortgage notes and destroy the original paper version.

This is wrong; if the note is destroyed, the debt is extinguished, he said.

A second misconception is that all that is required to create an electronic mortgage is to have the consumer digitally sign the documents. Mr. Bramante reminded the audience that local laws are still in force, including the requirement to have a notary present.

The senior vice president and general manger of E-Original, Baltimore, Joseph P. Bryant, Jr., had his own list of misconceptions.

The electronic mortgage, he said, is not about the signature. That is the easy part. The key is the transfer of the document.