Freddie Mac Single-Family Seller/Servicer Guide 1402.2 — eMortgage Technical and Process Requirements

Freddie Mac Single-Family Seller/Servicer Guide 1402.2 — eMortgage Technical and Process Requirements

Effective 2025-12-17 · Freddie Mac's stamp for this section

This section contains technical and process requirements related to: ■ eClosing Systems ■ eNote Vault Systems ■ eClosing Systems/eNote Vault Systems information security ■ eClosing and eNote Vault Systems review ■ Notice of significant changes to eClosing System and/or eNote Vault System ■ Ongoing reviews ■ Requirements for eMortgages that are Wholesale Home Mortgages (a) eClosing Systems (i) eClosing System requirements The eClosing System used by the Seller/Servicer to originate eMortgages must meet the following requirements: Requirements for Seller/Servicer eClosing system in eMortgage origination System Requirement Description Verify Borrower’s identity Verify Borrower’s identity and authority to sign the eNote and other Electronic Records Obtain Borrower’s consent to use electronic signatures ■ Before each Borrower uses an eClosing System, the Borrower must be given a “Consumer Consent Form,” including a “clear and conspicuous” disclosure statement in accordance with the requirements in Section 101(c)(1) of E-SIGN ■ Each Borrower must electronically sign the Consumer Consent Form before signing the eNote or any other Electronic Record. If the Borrower consent to electronically sign eNote and other Electronic Records was obtained prior to the closing, and the Borrower has not revoked the consent there is no need to obtain another signed Consumer Consent Form at the closing. ■ The signed Consumer Consent Form must be securely stored either with the eNote or with other Electronic Records Clearly identify the Electronic Signature symbol and purpose Clearly identify the symbol or Process used as an Electronic Signature by the Borrower and the purpose of the Electronic Signature Assure that the Borrower is aware of the legal consequences of the use of an Electronic Signature The eClosing System and/or Process used for electronically signing eNotes and other Electronic Records with Electronic Signatures must: ■ Provide the Borrower with notice of the effect the Electronic Signature will have ■ Provide a mechanism or process for the Borrower to confirm that the Borrower intends to electronically sign the Electronic Record(s) presented ■ Provide the Borrower with notice that an Electronic Signature will be attached to, or logically associated with, an eNote and other Electronic Records, as applicable, and ■ Capture the Borrower’s acknowledgment that his or her Electronic Signature has been attached to, or logically associated with, the eNote or other Electronic Records, as applicable Requirements for Seller/Servicer eClosing system in eMortgage origination System Requirement Description Present Electronic Records in compliance with Applicable Laws Present Electronic Records in compliance with all applicable laws concerning the content, display and format of information and retention (as required for paper Records). As an illustration only, some of the formatting and display requirements that must be observed include: ■ Physical location of particular information, such as disclosures that are required to appear just above the signature line, and ■ Requirements that certain information is boxed, segregated, or separately displayed Present each Electronic Record individually and clearly identify it for Borrower to review and sign ■ For each Electronic Record that is required to be signed, the eClosing System must require Borrower to take an action (e.g., “I agree” button etc.) that expresses the Borrower’s intent to sign the Electronic Record being presented ■ Note: A single Electronic Signature must not be applied to multiple Electronic Records when one or more of those Records must be separately signed by the Borrower. Attach Electronic Signature to the signed Electronic Record ■ Attach the Borrower’s Electronic Signature to, or associate the Electronic Signature with, the eNote and any other Electronic Records that must be executed by the Borrower ■ For Electronic Records signed electronically at closing, the eClosing System must have evidence (e.g., audit logs, etc.) to show the Borrower’s intent to affix such Borrower’s Electronic Signature to a particular Electronic Record and to be bound by it Establish that the Borrower signed Electronic Records Establish to Freddie Mac’s satisfaction, that the Borrower electronically signed the Consumer Consent Form, eNote and any other related Electronic Records. Example: The Borrower may enter information into the System that is personal and attributable only to the Borrower such as, a confidential user ID, password and/or PIN before electronically signing an eNote or any other Electronic Record. Requirements for Seller/Servicer eClosing system in eMortgage origination System Requirement Description Include Borrower’s Printed Name Include the Borrower’s printed name in a visible and legible manner on the Electronic Record Record execution Time and Date Record the time and the date of Borrower’s execution of the eNote and any other Electronic Records Apply Tamper Seals ■ Apply a Tamper Seal to the eNote and any other SMART Documents after each Borrower signs and immediately after the last Borrower signs and deliver it to Seller/Servicer’s eNote Vault System, which must then register the eNote with the MERS® eRegistry ■ Log any interim and all final Tamper Seals of eNotes and any other SMART Documents Create and store eClosing Transaction Records ■ Create and store a Record of each eNote and Electronic Record presented and signed (“eClosing Transaction Record”). The eClosing System must also, among other things, track and log actions related to the creation, signing and transferring of the eNote and other Electronic Records using the System. Such information must be contained in the eClosing Transaction Record. ■ The eClosing Transaction Record must be retained and maintained by the Seller/Servicer and each subsequent Transferee Servicer. The eClosing Transaction Record, at all times, must be stored and maintained in a manner that preserves the integrity and reliability of the eClosing Transaction Record for at least the life of the applicable eMortgage plus seven years or longer as may be required by law. Provide security against Unauthorized Access or Alteration Provide reasonable evidence that Electronic Records created and maintained by the System are not (and have not been) subject to unauthorized access or Alteration. In the event of unauthorized access or Alteration, the System Provider must have processes in place to promptly notify, and has an obligation to notify, affected Seller/Servicers, Borrowers, other parties, and Freddie Mac, as applicable. Accurately reproduce Electronic Records ■ Be capable of accurately reproducing the fonts, styling, margins, formatting, and other features of the eNotes and other Electronic Records when electronically displayed Requirements for Seller/Servicer eClosing system in eMortgage origination System Requirement Description and printed post-execution and as required by applicable law ■ Permit the party viewing or printing the Electronic Record to ascertain: ❑ The content of the Electronic Record ❑ The name of the Borrower signing the Electronic Record and the legal capacity in which the Borrower signed, and ❑ The time and date the Electronic Record was signed (ii) Mandatory Electronic Record types and Tamper Seals The Seller/Servicer must use the following Electronic document types: ■ The eNote must be a valid, Version 1.02 MISMO Category 1 SMART Document, signed using an Electronic Signature process, and secured by a Tamper Seal; and ■ All other Mortgage File Documents in Electronic form may be MISMO Category 1, Category 2 or 4 Version 1.02 SMART Documents or an Electronic format (e.g., portable document format (PDF)) acceptable to Freddie Mac (iii)Document licenses All eNotes and other Electronic Records, regardless of format, must have no licensing conditions that would prohibit, limit or inhibit Freddie Mac from using the eNote and other Electronic Records for any customary business purpose or otherwise prevent Freddie Mac from selling or transferring any or all of its ownership interests in an eNote or eMortgage and related Electronic Records. The Seller/Servicer must also ensure that Freddie Mac will not be required to pay any royalties or any other fees for its use of the eNotes and Electronic Records and agrees to indemnify Freddie Mac for any such royalties or other fees that might be assessed against Freddie Mac for its use of the eNotes, eMortgages and related Electronic Records delivered to, or serviced for, Freddie Mac by Seller/Servicer. (iv) Ineligible types of Electronic Signatures Freddie Mac will not purchase an eMortgage if it includes or is logically associated with any of the following as Electronic Signatures: ■ An audio or video recording; or ■ Signatures solely created using a biometric (such as fingerprint, voice, facial, or retinal) data recognition system (b) eNote Vault Systems The eNote Vault System used by the Seller/Servicer to originate eMortgages must meet the following requirements: eNote Vault System requirements System Requirement Description Interface with MERS® eRegistry ■ Facilitates registration of eNote with the MERS eRegistry ■ Enables transfer of eNotes and other Electronic Mortgage File Documents to another eNote Vault System via MERS eDelivery Support MISMO standard Supports the MISMO industry standard document version in which the eNote and other Electronic documents were originally created for the life of loan plus seven years Document Integrity Verification Verifies document integrity including, but not limited to, compliance with eNote Document Type Definition (DTD) or schema and eNote Tamper Evident Seal before accepting documents Tamper Seal Logging Logs the re-computations and validations of eNotes’ and any other SMART Documents’ Tamper Seals and permits Seller/Servicer and Freddie Mac to verify the same Data Security Prevents unauthorized viewing of the most sensitive data and documents through restricted access Authoritative Copy Identification Provides a screen that clearly states whether the eNote being viewed is the Authoritative Copy or a Copy of the Authoritative Copy Accurate Reproduction Capable of accurately reproducing the fonts, styling, margins, formatting, and other features of the eNotes and other Electronic Records accurately when electronically displayed and printed post-execution and as required by eNote Vault System requirements System Requirement Description applicable law Content Identification Permits the party viewing or printing the Electronic Record to ascertain: ■ The content of the Electronic Record ■ The name of the Borrower signing the Electronic Record and the legal capacity in which the Borrower signed and ■ The time and date the Electronic Record was signed (c) eClosing Systems/eNote Vault System information security The Seller/Servicer must ensure that the Systems comply with the information security and business continuity planning requirements in Chapter 1302. In addition, Seller/Servicer must ensure that the Systems meet the following minimum encryption and information security requirements with respect to the protection of sensitive data and information: eClosing Systems/eNote Vault System information security requirements System Requirement Description Encryption Standards ■ Uses encryption algorithms compliant with National Institute of Standards and Technology (NIST) and Federal Information Processing Standards (FIPS) 140-2 guidance, as may be amended, updated or superseded by subsequent NIST FIPS guidance ■ TLS sessions that use a minimum of 2048-bit Rivest–Shamir–Adleman public-key cryptosystems (RSA) key and 128-bit AES key ■ Data must be encrypted both while in transit and at rest Digital Certificates X.509 digital certificates for device/server-based TLS/SSL session authentication which support a minimum SHA-256 signing hash Multifactor Authentication Supports multifactor authentication methods such as combinations of unique user ID/password, S/Key, password tokens, biometrics, Smart Card Authentication and X.509 digital certificates System Integrity Protects System integrity through appropriate measures, including, but not limited to: ■ Safeguarding against malware; and ■ Use of firewall and network perimeter security controls, etc. Concurrent Sessions Has parameters in place to limit the number of concurrent sessions. Disaster Recovery and Business Continuity Has disaster recovery, business continuity, redundancy, data back-up, archival and retrieval capabilities, and be supported by well-documented plans and annual tests The Seller/Servicer must conduct due diligence on a digital certificate issuing authority’s compliance with industry standards. Failure to do so may result in greater susceptibility to encryption eavesdropping (such as man-in-the-middle attacks) and fraudulent Digital Signatures, which increases the risk to data integrity and confidentiality. The Seller/Servicer is responsible for losses due to such noncompliance. (d) eClosing and eNote Vault Systems review As part of Freddie Mac’s review and approval process to determine a Seller/Servicer’s eligibility to sell eMortgages, Freddie Mac will conduct an initial review of the eClosing System and eNote Vault System to assess compliance with requirements specified in Sections 1402.2(a) and 1402.2(b). Additionally, Freddie Mac may, in its discretion, conduct periodic and as needed reviews of the eClosing System and eNote Vault System to confirm continued compliance with Freddie Mac eMortgage requirements. The following table outlines the eClosing Systems and eNote Vault System review process requirements for Seller/Servicers , depending on whether these systems have been previously reviewed by Freddie Mac: eClosing system and eNote vault System review process requirements If the eClosing System and eNote Vault System were not previously reviewed by Freddie Mac (Note: Some of these steps can be performed simultaneously): If the eClosing System and eNote Vault System were previously reviewed by Freddie Mac (https://sf.freddiemac.com/working-withus/electronic-loan-documents/emortgageready-participants#vendors): ■ The Seller/Servicer must (or cause its System Provider to) provide a demonstration of these Systems for Freddie Mac’s review ■ The Seller/Servicer must complete testing that includes verification of integration with MERS® eRegistry and eDelivery systems, among other things ■ If using System Provider’s Systems, the Seller/Servicer must submit to Freddie Mac an attestation executed by the System Provider’s Chief Technology/Security Officer (or comparable titled officer of the System Provider) using the attestation letter provided by Freddie Mac ■ If using proprietary Systems, the Seller/Servicer must submit to Freddie Mac an attestation executed by the Seller/Servicer’s Chief Technology/Security Officer (or comparable titled officer of Seller/Servicer) using the attestation letter provided by Freddie Mac ■ Freddie Mac may, in its sole discretion, request additional information concerning the Systems and associated processes and procedures for further analysis. ■ The System review process will consist only of testing to verify integration of the Systems with MERS eRegistry and eDelivery systems ■ If significant changes, as detailed in Section 1402.2(e), are made to a Freddie Mac reviewed System: ❑ The Seller/Servicer must (or cause its System Provider to) provide a demonstration of these modified Systems for Freddie Mac’s review ❑ The Chief Technology/Security Officer (or comparable titled officer) of Seller/Servicer (or its System Provider) must execute and submit an attestation letter provided by Freddie Mac ■ Freddie Mac may, in its sole discretion, request additional information concerning the Systems and associated processes and procedures for further analysis If Freddie Mac, in its sole discretion, determines that the Systems are acceptable, and the Seller/Servicer is otherwise in good standing with Freddie Mac, the Seller/Servicer will be approved to sell eMortgages to Freddie Mac, subject to any terms and conditions set forth in a term of business that will be issued to the Seller/Servicer. Despite Freddie Mac’s review of the Seller/Servicer and any System Provider, and the eClosing System and/or eNote Vault System: i. The Seller/Servicer remains solely responsible and liable for any error, omission, System malfunction and/or negligence caused by the System Provider, eClosing System, eNote Vault System, and/or Seller/Servicer; and ii. Freddie Mac undertakes no responsibility and/or liability whatsoever in connection with any error, omission, System malfunction and/or negligence caused by the System Provider, eClosing System, eNote Vault System, and/or Seller/Servicer in connection with Seller/Servicer’s use of such eClosing System and/or eNote Vault System (e) Notice of significant changes to eClosing System and/or eNote Vault System Significant proposed changes to the Seller/Servicer eClosing System and/or eNote Vault System are those that may materially and adversely affect the performance of the Seller/Servicer eClosing System and/or eNote Vault System, and include, but are not limited to, any change that would be reasonably likely to adversely affect the enforceability of the eNotes or other eMortgage documents or compliance with E-SIGN and/or the UETA. The Seller/Servicer must provide the Freddie Mac account representative 90 days’ advance written notice and complete the Freddie Mac review process outlined in Section 1402.2(d) for any significant proposed change to the: i. Seller/Servicer eClosing System and/or eNote Vault System; and ii. Seller/Servicer’s eClosing policies, procedures and/or processes Additionally, if Seller/Servicer wishes to use an eClosing System or eNote Vault System that is different from what was communicated by the Seller/Servicer at the time of initial approval, the Seller/Servicer must provide the Freddie Mac account representative 90 days’ advance written notice, and complete the Freddie Mac review and approval process outlined in Section 1402.2(d). (f) Ongoing reviews The Seller/Servicer must confirm compliance with Freddie Mac information security requirements as part of the Annual Certification Report as detailed in Section 2101.10. Freddie Mac may require an audit of the eClosing System and/or eNote Vault System conducted in accordance with the Statement on Standards for Attestation Engagements (SSAE) 18 or other comparable type of audit acceptable to Freddie Mac, in its sole discretion. A copy of the audit must be provided to Freddie Mac within 30 days of its completion. Freddie Mac will provide Seller/Servicer with 30 days’ notice before the Seller/Servicer (and/or the System Provider) is required to provide an SSAE 18 or other comparable type of audit report or information requested by Freddie Mac concerning the Systems and associated processes and procedures, unless such review is being conducted pursuant to Guide Series 1000, 2000 and/or 3000. (g) Requirements for eMortgages that are Wholesale Home Mortgages An approved eMortgage Seller/Servicer may also deliver eMortgages originated by the Seller/Servicer’s Correspondents and Mortgage Brokers to Freddie Mac, provided that: ■ The eClosing System and eNote Vault System used by the Correspondent or Mortgage Broker are either: ❑ Already listed as Freddie Mac reviewed eMortgage Systems (https://sf.freddiemac.com/working-with-us/electronic-loandocuments/emortgage-ready-participants#vendors); or ❑ Reviewed by Freddie Mac before the Seller/Servicer delivers eMortgages; and ■ All eClosing Systems and eNote Vault Systems used by the Correspondent or Mortgage Broker and Seller/Servicer comply (and remain in compliance) with the requirements in this chapter at all times The Seller/Servicer must require its Correspondents and Mortgage Brokers to agree in writing to: ■ Identify their eClosing and eNote Vault System Providers to the Seller/Servicer; ■ Represent and warrant to, and covenant with, the Seller/Servicer that: ❑ Each such eClosing System and eNote Vault System complies with E-SIGN and the applicable UETA and Freddie Mac’s requirements in this chapter; and ❑ All eMortgages sold to the Seller/Servicer by such Correspondent or Mortgage Broker and sold and delivered to Freddie Mac comply with all other applicable laws, regulations, and requirements in the Seller/Servicer’s Purchase Documents ■ Comply with the eNote recourse requirements in Section 1402.3(c)(v) and eNote transfer warranty requirements in Section 1402.3(c)(vii) The Seller/Servicer must always know and approve the eClosing Systems and eNote Vault Systems being used by its Correspondents and Mortgage Brokers. The Seller/Servicer is solely and absolutely responsible for: ■ All acts, omissions and errors of each Correspondent and Mortgage Broker in connection with eMortgages sold to the Seller/Servicer and which the Seller/Servicer delivers and sells to Freddie Mac; and ■ Its Correspondents’ and Mortgage Brokers’ eClosing Systems and eNote Vault Systems compliance with Freddie Mac’s requirements

Source: Freddie Mac Single-Family Seller/Servicer Guide 1402.2 — eMortgage Technical and Process Requirements · source URL · snapshot 4c94f67729042dd6