Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021.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, we are not aware of specific record retention requirements for original homeowner insurance policies, annual escrow analyses, and mortgage releases. Electronic storage is sufficient to satisfy any applicable retention requirements for the types of loan documents mentioned in your question. The general rule under both federal and Illinois law is that an electronic copy of a document may not be denied legal effect, validity or enforceability solely because it is in electronic form (with limited exceptions for documents that confer title, such as mortgage notes). 

As to the time periods for retaining these documents (whether electronically or on paper), generally your bank may set record retention periods in its business judgment, subject to a few considerations discussed below.

It is possible that secondary market purchasers may set record retention periods for mortgage loan documents related to loans they have purchased. For example, Freddie Mac requires servicers to retain mortgage files for seven years after the mortgage is satisfied. Fannie Mae’s document retention requirements are different, with a retention period of four years under most circumstances.

Otherwise, for the mortgage loan documents mentioned in your question — homeowner insurance policies, annual escrow analyses, and mortgage releases — we believe your bank could follow the general recommendation in the IBA’s Record Retention Manual, which is to retain records for five years after a mortgage loan is paid off.

We do note that loan agreements should be retained for a period of ten years after a loan is paid off, due to Illinois’ ten-year statute of limitations for written contracts. This retention period also should apply to any documents that may be relevant in a dispute over the loan agreement, such as a mortgage release.

For resources related to our guidance, please see:

• Electronic Signatures in Global and National Commerce (ESIGN) Act, 15 USC 7001(a)(1) (“A signature, contract, or other record . . . may not be denied legal effect, validity, or enforceability solely because it is in electronic form.”)

• Illinois Financial Institutions Electronic Documents and Digital Signature Act, 205 ILCS 705/10(a) (“If in the regular course of business, a financial institution possesses, records, or generates any document, representation, image, substitute check, reproduction, or combination thereof . . . that accurately reproduces, comprises, or records the agreement, transaction, act, occurrence, or event . . . [it] shall have the same force and effect under the laws of this State as one comprised, recorded, or created on paper or other tangible form by writing, typing, printing, or similar means.”)

• Illinois Electronic Commerce Security Act, 5 ILCS 175/5-110 (“Information, records, and signatures shall not be denied legal effect, validity, or enforceability solely on the grounds that they are in electronic form.”)

• Electronic Commerce Security Act, 5 ILCS 175/5-115(b)(3) (“[A]ny record that serves as a  unique and transferable instrument of rights and obligations including, without limitation, negotiable instruments and other instruments of title wherein possession of the instrument is deemed to confer title” must be maintained in paper form 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 Single Family Seller/Servicer Guide, Section 3302.3 (“The Servicer must maintain the Mortgage file while Freddie Mac retains an interest in the applicable Mortgage and for at least seven years from the date Freddie Mac’s interest in the Mortgage is satisfied.”)

• Fannie Mae Single Family Servicing Guide, Section A2-5.2-03, Retention and Storage of Individual Mortgage Loan Files and Records (“After a mortgage loan is liquidated, the seller/servicer must keep the individual mortgage loan records, including property inspection reports, copies of delinquency repayment plans, copies of disclosures of ARM loan interest rate and payment changes, documents related to insurance loss settlements, and foreclosure records, as required by the Servicing Guide for at least four years (measured from the date of payoff or the date that any applicable claim proceeds are received), unless the local jurisdiction requires longer retention or Fannie Mae specifies that the records must be retained for a longer period. . . .”)
   
• Illinois Code of Civil Procedure,735 ILCS 5/13-206 (“Except as provided in Section 2-725 of the ‘Uniform Commercial Code’, actions on bonds, promissory notes, bills of exchange, written leases, written contracts, or other evidences of indebtedness in writing and actions brought under the Illinois Wage Payment and Collection Act shall be commenced within 10 years next after the cause of action accrued . . . .”)