eNotes
      Back to home
      1. Epic River Knowledge Base
      2. Custom Application & Closing Portal
      3. eNotes

      eNotes Overview & Background

      Overview of eNotes, FHLBanks, and MERS® eRegistry

      An "eNote" is an electronic promissory note that is digitally created, signed, transferred, and managed, providing a faster, more efficient, and secure process for mortgage transactions. 

      Traditionally, mortgages pledged as collateral with the FHLBanks were required to be signed and transferred on paper. This created inefficiencies in the process and allowed for processing errors, lost documents, and time delays. Most FHLBanks now accept eNotes as eligible collateral for 1-4 family residential mortgage loans.   

      Process Overview

      1. Borrower applies for loan 
      2. Closing document package is generated 
        1. Instead of generating the traditional paper Note, an eNote will be generated
      3. eNote will be created, signed, and stored within the eVault 
      4. eNote will be registered with MERS® eRegistry
      5. eNote will be pledged as collateral with FHLB
      6. FHLB advances funds and maintains the holder position of the eNote

      This entire process is facilitated in the Platform @EpicRiver leveraging integrations with eOriginal and MERS® eRegistry. 

      Background

      • eNote Definition and Benefits: An eNote is a legally valid promissory note in electronic form, compliant with eCommerce laws (UETA and ESIGN). Key benefits include:
        • Reduced handling and transportation costs.
        • Streamlined post-closing and certification processes.
        • Lower risk of lost or damaged notes.
        • Potentially increased value to investors due to improved access and lower costs.
        • Faster funding.
        • Improved audit trails and faster signing processes for borrowers.
      • MERS® eRegistry: The System of Record:
        • The MERS® eRegistry is a crucial registry that identifies the current Controller (holder) and Location (custodian) of the authoritative copy of an eNote.
        • It's the mortgage industry's "system of record" for eNotes.
        • It doesn't store the eNotes themselves; it registers transactions related to control and custody.
        • The MERS® eRegistry is the only national registry used by the mortgage industry for eNotes.
        • It is required for GSE purchases of eNotes.
        • A key role of the registry is to fulfill the “control” requirements as laid out in the Uniform Electronic Transactions Act and E-Sign Act, which are required to prove control of the eNote as it can’t be held physically.
        • Registration of an eNote on the MERS® eRegistry is a critical step for eNote validation.
      • eVaults: Secure Storage:
        • eVaults are required for eNote implementation, providing a place to store the eNote securely.
        • They are not the same as the eRegistry. The eRegistry does not store documents, but rather, processes transactions about the controller and location.
        • The eVault interfaces with the MERS® eRegistry, submitting and receiving transaction data.
        • An eVault must identify the stored copy as the single authoritative copy.