We recommend retaining loan agreements for a period of ten years after the loan is paid off, due to Illinois’s ten-year statute of limitations for written contracts. This retention period should apply to any documents that may be relevant in a dispute over the loan agreement, such as a mortgage release. For other documents in your loan files, we believe you may 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.

Additionally, we note 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, while Fannie Mae requires servicers to retain mortgage files for four years under most circumstances.

For resources related to our guidance, please see:

• 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; but if any payment or new promise to pay has been made, in writing, on any bond, note, bill, lease, contract, or other written evidence of indebtedness, within or after the period of 10 years, then an action may be commenced thereon at any time within 10 years after the time of such payment or promise to pay.”)

• IBA Guide to Bank Record Retention 2013-14 (“Mortgage Loans” Recommendation: “RD [from date of making] + 5y”)

• Freddie Mac Single-Family Seller/Servicer Guide, Section 3302.3 —Mortgage file control and identification (“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 A2-4.1-02 — Ownership and Retention of Loan Files and Records (“After a loan is liquidated, the servicer must keep the individual loan records for at least four years, unless the local jurisdiction requires longer retention or Fannie Mae specifies that the records must be retained for a longer period.”)

• Fannie Mae Single Family Servicing Guide, Section A2-4.1-02 — Ownership and Retention of Loan Files and Records (“If a loan or property is repurchased or a make whole payment remitted, the responsible party must keep the individual loan records for at least four years from loan liquidation unless applicable law requires longer retention or Fannie Mae specifies that the records must be retained for a longer period.”)