The Federal Home Loan Bank of Chicago (FHLBank Chicago) is excited to announce it is now accepting 1-4 family residential mortgage eNotes (Electronic Promissory Notes) as collateral.
Benefits of eNotes
Members can now voluntarily leverage an innovative technology to remain competitive, automate origination processes, strengthen compliance and documentation audit trails, and potentially reduce operational costs in the longer-term.
eNotes offer other business, membership, and compliance benefits:
- Completely digital, virtual, and faster funding experience
- Automated signing process with borrowers not physically present for origination or closing
- Time efficiencies gained that could lead to reduced origination and servicing costs
- No physical loan file delivery required to receive collateral value with FHLBank Chicago
What Is Eligible?
An eNote is an electronic promissory note executed and signed electronically and stored in an eVault. In the initial phase of accepting eNotes as pledged collateral, only certain types of mortgage loans are eligible: 1-4 Family mortgage loans and closed end term 2nd mortgage loans.
This announcement relates only to collateral. Updates regarding the Mortgage Partnership Finance® (MPF®) Program will be communicated at a future date.
How Do I Participate?
When your institution is ready to get started, reach out to your Sales Director. We will guide you through the process and get your team set up. Here are the basic steps to follow:
1. Contact your Sales Director to begin the enrollment process, which includes executing an addendum to your existing FHLBank Chicago Advances, Collateral Pledge, and Securities (ACPS) agreement.
2. Select or confirm existing technology providers will meet FHLBank Chicago's requirements including an eVault.
3. Complete set-up with MERS® including becoming a MERS® member and becoming active on the MERS® eRegistry.
We have also created eNotes Model Collateral Acceptance Requirements and Guidelines. These guidelines are based on federal law pertaining to electronic signature transactions, and set forth standards relating to eSignatures, eNote documentation, eClosings, eRegistry requirements, eNote vault requirements, and servicing system requirements. In addition, our Collateral Guidelines have also been updated and are available through eBanking.
Where Can I Find More Information?
If you would like more background on eNotes as collateral, contact your Sales Director. In addition, we have a webinar, video, eNotes Readiness Checklist, and MERS® resources to help your team get ready:
- System Webinar: Understanding eNotes
- FHLBank Future Acceptance of eNotes Video
- eNotes Readiness Checklist
- MERS® Resources for FHLBank Members