Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021.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.

We believe that it is possible to accept electronic signatures on mortgage security instruments and notes, though such signatures must meet certain requirements, as explained below.

The Illinois Financial Institutions Electronic Documents and Digital Signature Act states that a “digital signature” has “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.” 205 ILCS 705/10(b). Further, the Uniform Real Property Electronic Recording Act states that, for purposes of recording a document, an electronic signature satisfies any signature requirement. 765 ILCS 33/3. That law defines “electronic signature” as “an electronic sound, symbol, or process attached to or logically associated with a document and executed or adopted by a person with the intent to sign the document.” 765 ILCS 33/2(4).

Note that the Illinois Electronic Commerce Security Act also recognizes electronic signatures as valid, but this law imposes more stringent requirements on electronic signatures. It does not recognize electronic signatures on “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.” 5 ILCS 175/5-120. Therefore, you may want to instead rely on the Financial Institutions Electronic Documents and Digital Signature Act explained above for your electronic signatures.

The federal Electronic Signatures in Global and National Commerce (ESIGN) Act states that “a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” 15 USC 7001(a)(1). However, note that the federal law applies only to interstate transactions, and not to transactions that take place only within Illinois.

Also, note that Fannie Mae and Freddie Mac impose their own requirements on the use of electronic signatures (see the Freddie Mac eMortgage Guide and the Fannie Mae eMortgage Guide). You also may find the Mortgage Banker Association’s eMortgage Closing Guide helpful as a source of guidance on best practices, though none of its recommendations are binding.