How eClosings, eNotes and remote notarisation work in the United States

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Kooky

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A home loan in the United States ends at a closing table, and for most of the last century that table held a stack of paper, a pen and a notary. Each of those three things can now be replaced by an electronic equivalent, but not all at once, not everywhere, and not on the same terms. Whether a given closing can go digital depends on the document, on the state where the property sits, on the state where the notary sits, and on what the lender has been approved to deliver.

This guide follows the rules of two companies that buy mortgages from lenders, Fannie Mae and Freddie Mac. Their requirements are federal in reach, because they apply to any lender that sells to them, but notarisation itself is state law. The guide covers the vocabulary, the legal base, what may and may not be electronic, how an electronic promissory note is stored and tracked, what a lender must do before selling one, the conditions attached to remote online notarisation, and the three different counts of states that the sources give.

Freddie Mac Electronic Loan Documents FAQ, last updated 15 April 2025, for the first two figures; American Land Title Association survey reported on 19 October 2023 for the third.

Four terms that are often confused

The words eClosing, eNote and eMortgage are used loosely in the trade, and the two companies define them with some care. Freddie Mac's FAQ on electronic loan documents describes an eClosing as a closing in which documents are prepared, viewed, signed, stored and transmitted electronically. It adds that the parties and the legal documentation are generally the same as in a paper closing. Nothing about the transaction changes except the medium.

An eClosing comes in two forms. In a full eClosing every document is signed electronically. In a hybrid eClosing some documents are signed electronically and others in wet ink. Freddie Mac says it supports both and describes its approach as a combination of printed and electronic documents, not an all-or-nothing choice.

An eNote, in Freddie Mac's words, is an electronically signed promissory note. The promissory note is the borrower's promise to repay, and it is the one document in the file that behaves like money: whoever holds it can enforce it. That is why it gets its own rules. An eMortgage, as Freddie Mac defines it, is a loan whose promissory note is created, executed, transferred and stored electronically. The security instrument, which is the mortgage or deed of trust that pledges the home, may be paper or electronic. So a loan can be an eMortgage with a paper security instrument, and a closing can be largely electronic without being an eMortgage at all, if the note is still signed in ink.

The last column is the practical dividing line. Freddie Mac says electronic disclosures and closing documents other than eNotes do not go through the eNote approval process, while any eClosing that includes an eNote requires its approval.

The legal base: ESIGN and UETA

Two laws sit under everything else. Freddie Mac's FAQ explains that electronic signatures rest on the federal ESIGN Act, enacted in 2000, and on the Uniform Electronic Transactions Act, known as UETA, a model law dating from 1999 that most states, territories and the District of Columbia have adopted. Both put electronic signatures and records on the same footing as ink and paper. The FAQ adds that ESIGN takes precedence where a state's version is inconsistent with the 1999 model, or where a state has no UETA.

Fannie Mae builds its own rules on the same pair. Its Selling Guide topic A2-4.1-03, Electronic Records, Signatures, and Transactions, dated 6 May 2026, requires electronic records and the systems that hold them to comply with ESIGN and, where applicable, with UETA as adopted in the state concerned. An electronic signature must be valid and enforceable under ESIGN and under the UETA of the state where the signature is applied.

The practical consequence is that the federal law makes electronic signing possible everywhere, while the detail still varies by state. That variation is small for an ordinary signature and large for notarisation, as the later sections show.

What may be electronic, and what may not

Fannie Mae's starting position is broad. According to topic A2-4.1-03, documents used to originate, service or modify a loan may be generated, signed, processed, stored or transmitted electronically, provided they can be reproduced on paper. The exceptions are specific. The promissory note and its addenda are excluded unless the seller has special approval to deliver eNotes. Unrecorded ink-signed originals of documents that modify or supplement the security instrument are excluded. So are assignments for loans registered with MERS when MERS is not named as nominee.

The topic also deals with conversion, in both directions. A paper document may be converted to an electronic record for storage, and the paper then destroyed, unless it is a document required in its original paper form. An electronic record may be converted to paper. In either case the lender or servicer must document the process, the date, the method and what happened to the originals. One conversion is ruled out entirely: Fannie Mae says paper notes may not be converted into eNotes. A note is born electronic or it stays paper.

Freddie Mac draws the same line from the other side. Its FAQ says promissory notes that are not part of an eMortgage must be signed in wet ink, and that electronically signed allonges are not acceptable. The FAQ's reasoning is that the allonge of a paper note must be physically attached to the note, so it cannot be an electronic document. Freddie Mac also keeps a list, in Exhibit 7 of its Seller/Servicer Guide, of which loan documents may be signed electronically.

On signatures themselves, Fannie Mae accepts any form of electronic signature valid under applicable law, with one exception: audio and video recordings cannot serve as signatures. Every signature must be attributable to an identified signer, and the lender or servicer must keep evidence of five things for each one: the signer's authenticated identity, the attribution of the signature to that person, the signer's agreement to sign electronically, the date, and the method used. Fannie Mae says this evidence must be good enough to support a full quality control review of a loan it buys.

The eNote: SMART document, eVault and registry

A paper note is controlled by possession. An electronic note cannot be, because a file can be copied perfectly. The industry's answer, as Freddie Mac's FAQ lays it out, has three parts.

The first is the format. Freddie Mac requires the document system to produce eNotes as Version 1.02 MISMO Category 1 SMART documents. The FAQ names the format without defining it further, and refers to chapters 1402 and 1302 of the Seller/Servicer Guide.

The second is the eVault, which the FAQ describes by its function: it securely stores executed eNotes and interfaces with the MERS eRegistry. A vault may be a lender's own system or a vendor's.

The third is the registry. The MERS eRegistry, operated by MERSCORP Holdings, is described by Freddie Mac as the system of record for the current controller and the current location of the authoritative copy of an eNote. Controller is the electronic counterpart of holder. When a loan is sold, the note is not handed over; the registry records a transfer of control and of location. A companion system, MERS eDelivery, lets registry members send eMortgage documents and data to each other.

This changes the work of several parties. Freddie Mac's FAQ says warehouse lenders, which fund loans between closing and sale, sign Form 994SF in place of the bailee letters used for paper notes. A servicer of eMortgages must identify them in its portfolio, record status changes in the registry, and confirm that the registry shows Freddie Mac as controller and location at all relevant times. A servicer that is not a registry participant can still service eMortgages, the FAQ says, if it has a subservicing agreement with an approved eMortgage servicer that has its own vault and registry access.

How a lender gets approved to sell eNotes

Freddie Mac says sellers and servicers must have their eClosing and eNote systems approved before they sell or service eMortgages. Its page on eMortgage review and approval sets out what that involves. The route is shorter for a lender that uses vendor systems Freddie Mac has already reviewed and that the vendor hosts.

A lender that uses systems Freddie Mac has not yet reviewed, or that hosts reviewed systems on its own network, has two further requirements. It must demonstrate its eClosing and eNote vault systems, and its Chief Technology or Security Officer, or the vendor's, must certify compliance with Freddie Mac's legal and security requirements. Compliance with the information security requirements is then confirmed each year in the Annual Certification Report.

The same page sets parallel routes for the other parties. Vendors can be reviewed ahead of any lender choosing them, which Freddie Mac says can speed up that lender's approval. Warehouse lenders complete registry testing and Form 994. Custodians of eNotes first obtain approval of their vault, then develop an automated certification service and have that approved as well. The page gives no timeframe for any of these routes, and Freddie Mac reserves the right to ask for more information.

Fannie Mae has its own approval for eNotes, which topic A2-4.1-03 refers to as special approval and details in section B8-8 of its Selling Guide. That section was not read for this guide.

Remote online notarisation, defined

The security instrument is the document of a closing that is notarised and then recorded in the local land records. The two companies describe three alternatives to a notary with an ink stamp, and they are easily mixed up.

Electronic notarisation, in Freddie Mac's description, is a notary applying an electronic signature and an electronic seal to an electronic document. The notary and the signer may be in the same room.

Remote online notarisation, usually shortened to RON, removes the room. Fannie Mae defines it as an electronic notarisation in which the signer and the notary are in different physical locations and communicate by real-time, two-way audio-visual technology, with the signatures and the notarial seal applied electronically.

Remote ink notarisation, or RIN, is a third thing. Freddie Mac permits it under section 1401.3(g) of its Guide and describes it this way: the notary watches the borrower sign in wet ink over an audio and video link, then receives the signed documents by post or another method and applies the seal. The documents stay paper. Fannie Mae mentions the same practice and covers it in a separate topic, A2-4.1-04, which was not read for this guide.

Freddie Mac also notes that RON does not decide the type of note. A remotely notarised loan may carry a wet-ink note or an eNote; the eNote is open only to sellers approved to deliver eMortgages.

Fannie Mae's conditions for a RON loan

Fannie Mae says it accepts loans with electronically notarised documents, including security instruments and loan modification agreements, whether the notarisation was in person or remote, provided it was legally valid under the law of the state where it was performed at that time. Topic A2-4.1-03 then attaches a list of conditions to remote notarisation.

• Identity. The RON system must let the notary identify the borrower. Where that is done by technical means, two things are required: identity validation, meaning images of a government-issued identity document checked for authenticity, and identity verification, a process confirming the borrower matches that identity, such as knowledge-based authentication. Non-technical means allowed by law, such as the notary's personal knowledge, remain possible.
• The notary. The notary must be licensed and physically located in the state where the notarial act is performed and, where the state requires it, specifically licensed for electronic notarisation.
• The recorder. If the document must be recorded, the county recorder in the state and county where the property is located must accept it.
• The audit trail. The lender must store the tamper-sealed audit trail produced by the RON system until it can pass it to the servicer for the loan file.
• Delivery. A loan with a remotely notarised security instrument must be delivered to Fannie Mae with the Remote Notarization Indicator.
• Title insurance. The title insurer may not take any exception concerning any element of the remotely notarised loan.
• Texas. The loan may not be a Texas Section 50(a)(6) loan.

Freddie Mac handles the recording of the session differently from the audit trail. Under section 1401.3(f) of its Guide, as its FAQ summarises it, sellers need not keep a copy of the video recording; the RON provider must give the seller and current and future servicers access to it for the required retention period.

Two of Fannie Mae's conditions depend on someone outside the lender's control. A county recorder that will not accept a remotely notarised document, or a title insurer that wants to except it, stops the loan from qualifying even where the state's law allows the notarisation.

How many states allow it: three counts

There is no single number for the states that allow remote online notarisation, because the sources count different things on different dates. They are set out below as each source gives them.

The American Land Title Association's figure is a count of legislation. On 14 September 2023 it reported that California had joined 44 other states that had passed laws allowing remote online notarisation; the California bill, Senate Bill 696, was at that date awaiting the governor's signature.

Freddie Mac's figure is a count of where it will buy. Its FAQ explains that states without an express statute were assessed on how likely their overall legal structure is to recognise a remote notarisation, and that Exhibit 48 is the authoritative list.

Fannie Mae's list is also an eligibility list, and it has its own footnotes. It names every state except Georgia and Mississippi. For a property in a state that is not listed, the topic still allows remote notarisation if that state expressly permits it by law, or accepts remote notarisations performed out of state under the law of the state where the act takes place. California is listed with a condition: an out-of-state notary may perform a remote notarisation on a California property, but a California notary may do so only after the trigger provision in California's law has been activated.

The three numbers are therefore not steps on one scale, and a difference between them does not by itself show that a state changed its law between two dates.

The borrower's choice, and what stays on paper

Everything above describes what a lender may do. None of it is something a borrower can be made to accept.

Where a lender does deal with a borrower electronically, Fannie Mae requires it to meet the consumer consent requirements of Section 101(c) of ESIGN and to keep evidence that it did. For a servicer that sends disclosures electronically, the loan file must show the disclosures given before consent, the borrower's consent, and how the servicer demonstrated that the borrower could receive them.

Some notices are kept off electronic channels altogether. According to the same topic, a servicer may not electronically issue a notice of default, acceleration, repossession, foreclosure, eviction or the right to cure. These are the notices on which a borrower's home may depend, and they continue to arrive on paper however the loan was closed.

After the closing: recording, corrections and servicing

A digitally signed security instrument still has to reach the public record. Freddie Mac describes eRecording as electronically recording a copy of the security instrument and other recordable documents, whether they began as paper or electronic, with the local land records office. Its FAQ says more than 95 per cent of the United States population lives in a county that permits it. That is a share of people, not of counties, so a property in a small county may still fall outside it.

An eNote that contains an error cannot be fixed with a pen and initials. Freddie Mac's FAQ separates major corrections, which affect the enforceability of the note, from minor ones. The major list has 24 items, among them the note date, the note amount, the note rate, the first payment date, the maturity date and the MERS identification number. Minor corrections are scrivener's errors: a misspelt street, city, state or lender's name, or a misspelt printed name of a borrower. Those are handled under section 1402.3 of the Guide, and the seller remains responsible for the note's validity and first lien status.

For title and closing agents, the adoption figures available are dated. A survey by the American Land Title Association, reported on 19 October 2023 and drawn from 399 title professionals and businesses in 46 states and the District of Columbia, found that fully digital or hybrid closings made up 10 per cent of transactions in 2022, against 7 per cent in 2021, a rise of 3 percentage points. No later figure was read for this guide, and no eNote registration volumes were consulted.

What is still unsettled: a federal bill and a draft standard

Two pieces of the framework were unfinished in the sources read.

The first is federal. The American Land Title Association supports the SECURE Notarization Act, which it says would permit immediate nationwide use of remote online notarisation and give certainty on recognition between states. The association reports that the House of Representatives passed the bill by voice vote on 27 February 2023, and that it joined more than 100 businesses and trade associations in a letter of support to senators in May 2023. Its page reports no Senate passage and no enactment. The bill's current status was not verified for this guide.

The second is technical. Fannie Mae requires a RON system to comply with the MISMO Remote Online Notarization Standards Version 2.0, except their section on identification and authentication. Until the final version is published, the Selling Guide points to the draft released for public comment in July 2025, as amended. Once the final standards are out, systems must comply with them in full, and their identification rules will replace the ones in Fannie Mae's own topic.

Until then the working rule stays as the two companies state it: a closing can be as electronic as the state's law, the county recorder, the title insurer, the lender's approvals and the borrower's own preference each allow.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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