Enforceability of Electronically Signed Documents

Daniel PascaleBy: Daniel T. Pascale, Esq.

Office Locations: Delray Beach and Coral Gables, FL

On April 20, 2016, the District Court of Appeal for the Fourth District of Florida held that a copy of an electronic promissory note (e-note) was sufficient to prove the identity of the e-note’s owner and to provide authorization to the loan servicer to pursue a foreclosure action (Rivera v. Wells Fargo Bank, N.A., 2016 WL 1579076 (Fla. 4th DCA Apr. 20, 2016)).

Background

On April 1, 2008, Carlos Rivera and Yanira Santiago executed an e-note in favor of Homebuyers Financial, LLC. The e-note was secured by a mortgage, which identified Homebuyers as the lender and MERSCORP, Inc. as the mortgagee (as nominee for the lender).

Wells Fargo Bank claimed that at some point between April 1, 2008, and the present, the mortgage note was either lost or destroyed and Wells Fargo was unable to possess it when it filed its complaint. In place of the original note, Wells Fargo attached copies of the mortgage and the e-note to its complaint. The attached copy of the e-note contained notations that indicated both borrowers had electronically signed the e-note on April 1, 2008.

In November 2010, Wells Fargo filed an amended complaint to foreclose the mortgage based on the borrowers’ default. Wells Fargo claimed that Fannie Mae was the owner of the note, and Wells Fargo was authorized to bring the foreclosure action because it was the holder of the note and servicer of the loan.

In June 2013, Wells Fargo filed an “E-note Certificate of Authentication,” in which Wells Fargo’s assistant vice president attested that Wells Fargo acts as a servicer for Fannie Mae, and as such, maintains a copy of the e-promissory note on Fannie Mae’s behalf. Wells Fargo also attached a paper copy of the e-note that included the borrowers’ signatures, a “Summary Information” sheet describing Wells Fargo as the “Controller” and “Delegatee,” and a document from MERS showing Wells Fargo had electronic possession of the e-note.

In October 2013, the borrowers answered the amended complaint and alleged Wells Fargo lacked standing because it failed to prove that Fannie Mae owned the e-note and had authorized Wells Fargo to pursue the foreclosure. The borrowers also alleged that the borrowers’ signatures lacked authenticity.

The trial court entered final judgment of foreclosure in Wells Fargo’s favor and the borrowers appealed.

Outcome

The district court affirmed the trial court’s decision to allow Wells Fargo to foreclose on the mortgage. The court reached its decision by relying on Sections 673.3081(1) and 668.50 of the Florida Statutes. (Uniform Electronic Transactions Act).The court first referred to Section 673.3081(1) of the Florida Statutes and stated that, absent any introduction of evidence by the borrowers to support the assertion that the e-note’s signatures were forged or unauthorized, Wells Fargo was not required to prove that the e-signatures were valid.

The court then held that Wells Fargo presented substantial evidence showing that Fannie Mae owned the e-note and authorized Wells Fargo to pursue the foreclosure. Applying the Uniform Electronic Transaction Act, the court found that Wells Fargo’s evidence established that:

The e-note is a “transferable record” because:

  •        it is an electronic record that would be a note under Chapter 673 if it were in writing; and
  •        the borrowers expressly agreed to the e-notes term that it is “an effective, enforceable, and valid Transferable Record
  •        Wells Fargo, as Fannie Mae’s servicer, employed a system that reliably established that the e-note was transferred to Fannie Mae, giving Fannie Mae control of the e-note

The e-note was stored in a manner such that a single authoritative copy exists, which is:  unique; identifiable; and unalterable.

The court concluded that Wells Fargo was the e-note’s holder and had the same rights as Fannie Mae had as a holder of an equivalent record.

Practical Implications

Parties should recognize the enforceability of electronic documents and be aware that the electronic nature of a document does not immediately call into question its validity. This District Court of Appeal decision suggests that a paper copy of an electronic authorized document has just as much effect as an original hard copy of the same document. Moreover, e-signatures within the e-documents, if date and time stamped, are valid.