North Carolina-based Truliant Federal Credit Union has become the first lender to transfer an eNote, or electronic promissory note, to FHLBank Atlanta. The move marks one of the first successful eNote transfers within the 11-member Federal Home Loan Bank system.
“This is the culmination of years of work by the state of North Carolina, FHLBank Atlanta and a dedicated team at Truliant,” said Todd Hall, Truliant’s president and CEO. “This final digital step makes the whole homebuying experience quicker, more accurate and secure.”
The transfer was conducted as part of FHLBank Atlanta’s eNote pilot program, meant to test the bank’s infrastructure and ensure that more lenders can report eNotes as collateral. Truliant, which serves more than 270,000 members at over 30 locations across the Carolinas and Virginia, was invited to participate in the pilot.
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“Interest in the ability to pledge eNotes as collateral continues to grow among our members and this initial transfer demonstrates that we now have the ability to meet this growing demand,” said Rob Kovach, FHLBank Atlanta’s Chief Credit Officer.
Truliant completed the eNote transfer on March 26 using the MERS eDelivery system and DocMagic’s eVault — almost exactly a year after they completed their first end-to-end eClosing on March 27, 2020, via DocMagic’s 100% paperless Total eClose solution.
To conduct the transfer Truliant had to meet a series of standards set by the FHLBank system relating to eSignatures, eNote documentation, eRegistry requirements, eVaults and more. For example, the standards covered what processes Truliant has in place if the eNote should need to be modified or papered out, or if a loan goes into foreclosure, said Beth Eller, Truliant’s vice president of mortgage services.
“We had eNotes in our portfolio so we had the ability to collateralize a note with them,” Eller said. “FHLBank Atlanta is a great institution. We were just really honored to be asked to participate.”
eNote usage is skyrocketing. In 2020, there were 462,671 eNotes registered on the MERS eRegistry, which shattered the 2019 record of 127,178 eNotes.
The individual members of the FHLBanks, the majority of which selected DocMagic’s eVault technology, are in disparate stages of accepting eNotes as collateral. FHLB Des Moines is the only other member to have completed an eNote transfer, while Chicago and Dallas announced in mid-2020 that they would begin accepting eNotes. Other members are still in various planning stages.
In 2020, Truliant became the first credit union and second financial institution based in North Carolina to offer full eClosings.
“DocMagic was critical to our success and in being able to do eClosings,” Eller said. “Without DocMagic’s help, we would have really struggled to get eNote adoption as quickly and efficiently as we did. It’s been a real plus to have a partner that is engaged in your success and that really has a vested interest in making sure that things go well.”