A CUSO that specializes in helping firms image and store their documents electronically has warned credit unions that electronic storage may not be best for all their mortgage documents.
Citing a bulletin posted by the Washington State Department of Financial Institutions, eDOC Innovations, a CUSO headquartered in Midway, Utah, warned credit unions using an electronic imaging and storage system for their mortgage loan documentation to keep at least some of the documents in hard copy.
Questions about the role of imaged mortgage documents have arisen as part of litigation in some cases, particularly foreclosure litigation, the CUSO reported.
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"We recognize that although the ESIGN ACT clearly establishes legal validity for electronic forms, exclusions related to 'life sustaining services' do apply. Therefore, we encourage our peers who are engaged in first mortgages to maintain the actual note and other original mortgage documents such as titles in their paper form to mitigate risk in litigation and to accommodate the possibility of secondary market distribution," said Bret Weekes CEO of eDOC Innovations.
The CUSO also observed that issues in litigation, in their experience, have not been related to the image itself but instead to questions that arose in court related to the credit union's procedures and processes that ensure "original authenticity" of the document through sound business practices.
"In the cases with which eDOC is familiar, relating to credit unions using the eDOC system, none have experienced losses in their litigation," the CUSO said.
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