Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021. Please note that this change may affect the continued accuracy of this guidance as it pertains to the ECSA.

No, Illinois law does not require an inked signature on loan documents, although heightened requirements apply to electronic signatures on negotiable instruments and instruments of title.

The Illinois Financial Institutions Electronic Documents and Digital Signature Act permits financial institutions to use “digital signatures,” provided the digital signature “is unique to the person using it, is capable of verification, is under the sole control of the person using it, and is linked to data in such a manner that if the data are changed, the digital signature is invalidated.”

Under the Illinois Electronic Commerce Security Act, “where a rule of law requires a signature . . . an electronic signature satisfies that rule of law.” However, this law imposes stringent requirements on electronic signatures for records that confer title, including negotiable instruments conferring title (such as mortgage notes). If you will be using electronic signatures on promissory notes and vehicles of title, for example, this law requires that “an electronic version of such record is created, stored, and transferred in a manner that allows for the existence of only one unique, identifiable, and unalterable original with the functional attributes of an equivalent physical instrument, that can be possessed by only one person, and which cannot be copied except in a form that is readily identifiable as a copy.” Notably, the Illinois Secretary of State accepts electronic signatures through its Electronic Registration and Title system.

Below, we also highlight some guidances on the use of electronic signatures in mortgage loans, which you may find helpful in designing your auto loan electronic signature program.

For resources related to our guidance, please see:

• Financial Institutions Electronic Documents and Digital Signature Act:

• 205 ILCS 705/5 (Defines “digital signature” as “an encrypted electronic identifier, created by computer, intended by the party using it to have the same force and effect as the use of a manual signature.”)

• 205 ILCS 705/10(b) (“In any communication, acknowledgement, agreement, or contract between a financial institution and its customer, in which a signature is required or used, any party to the communication, acknowledgment, agreement, or contract may affix a signature by use of a digital signature, and the digital signature, when lawfully used by the person whose signature it purports to be, shall have the same force and effect as the use of a manual signature if it is unique to the person using it, is capable of verification, is under the sole control of the person using it, and is linked to data in such a manner that if the data are changed, the digital signature is invalidated.”)

• Electronic Commerce Security Act:

• 5 ILCS 175/5-105 (Defines “electronic signature” as “a signature in electronic form attached to or logically associated with an electronic record.”)

• 5 ILCS 175/5-120 (“Where a rule of law requires a signature . . . an electronic signature satisfies that rule of law.” There are several exceptions to this rule, including an exception for “negotiable instruments and other instruments of title . . . unless an electronic version of such record is created, stored, and transferred in a manner that allows for the existence of only one unique, identifiable, and unalterable original with the functional attributes of an equivalent physical instrument, that can be possessed by only one person, and which cannot be copied except in a form that is readily identifiable as a copy.”)

• Freddie Mac Electronic Mortgages Webpage

• Fannie Mae eClosings and eMortgages Webpage

• Mortgage Banker Association eMortgage Closing Guide