Legal Issues in Mortgage Technology November 30 – December 2, 2005 Fannie Mae & eMortgages Pam Holland Associate General Counsel Fannie Mae

Legal Issues in Mortgage Technology November 30 – December 2, Overview History Legal Framework eMortgage Guide Our Experiences What’s Next?

Legal Issues in Mortgage Technology November 30 – December 2, HISTORY 2000 –Began Legal Framework Analysis –Purchased First 2 eMortgages in Secondary Market –SMART Doc Concepts and Specifications 2002 –Registry Concept Introduced –Issued Announcement June 2002 –“Open for Business”; purchasing eMortgages 2005 –Guide Update –MERS® eRegistry

Legal Issues in Mortgage Technology November 30 – December 2, Legal Framework ESIGN and UETA Notwithstanding any law to the contrary, a signature, contract, may not be denied legal effect because it is in electronic form Transferable Record provisions make eNotes equivalent to paper negotiable instruments MERS eNote Registry Provides simplified means of compliance with Transferable Record provisions of ESIGN and UETA

Legal Issues in Mortgage Technology November 30 – December 2, Legal Framework –Uniform eNote Clause – Key Provisions Borrower’s agreement to the electronic transaction “(A) I expressly state that I have signed this electronically created Note (the "Electronic Note") using an Electronic Signature…”

Legal Issues in Mortgage Technology November 30 – December 2, Legal Framework – Uniform eNote Clause con’t eNote Registry “(B)….the identity of the Note Holder and any person to whom this Electronic Note is later transferred will be recorded in a registry maintained by [MERS]… The current identity of the Note Holder and the location of the authoritative copy…, will be available from the Note Holder or Loan Servicer, as applicable. The only copy of this Electronic Note that is the authoritative copy is the copy that is within the control of the person identified as the Note Holder in the…Registry (or that person’s designee).

Legal Issues in Mortgage Technology November 30 – December 2, Legal Framework –Uniform eNote Clause - con’t: Provision for failure to register Provision in event of need to convert to paper

Legal Issues in Mortgage Technology November 30 – December 2, eMortgage Guide – Fannie Mae’s Requirements Getting Started –eMortgage Guide (Updated June 2005) available on eFannieMae.com (search on “eMortgage”) –Consultative process –Contract amendment to Master Agreement that incorporates eMortgage Guide

Legal Issues in Mortgage Technology November 30 – December 2, eMortgage Guide – Fannie Mae’s Requirements Documentation Requirements –Uniform eNote –eSignatures –Borrower Attribution –Disclosures MERS® eRegistry –Registration within 1 Day of eClosing

Legal Issues in Mortgage Technology November 30 – December 2, eMortgage Guide – Fannie Mae’s Requirements Procedures for MBS Deliveries and Document Custodian Support Servicing –Payoffs –Loss Mitigation

Legal Issues in Mortgage Technology November 30 – December 2, Our Experiences Significant Value Exists Borrower Acceptance Title Company and Closing Agent Participation and Acceptance

Legal Issues in Mortgage Technology November 30 – December 2, What’s Next? Broader Lender Adoption Electronic Recording of Closing Docs Further Collaboration With the Industry on Standards Further Collaboration With MERS and Lenders to Streamline Processes

Legal Issues in Mortgage Technology November 30 – December 2, Questions? Pam Holland Associate General Counsel Fannie Mae