Freddie Mac Issues RIN Guidance With Multi-factor Authentication Requirement

June 8, 2021

Freddie Mac followed Fannie Mae by issuing guidance related to requirements for loans purchased by the government sponsored entity for loans closed using remote ink-signed notarizations (RIN).  

Most of Freddie Mac’s guidance mirrors what Fannie Mae issued except for a requirement for multi-factor authentication.

Freddie Mac’s RIN process for any audio-visual communication technology requires the following minimum standards:

  • At least two-factor identity authentication, including using a government-issued photo ID that has a signature, credential analysis and identity-proofing
  • System security sufficient to: (A) prevent interference with the authenticity, integrity and security of the notarial ceremony or corruption or loss of the recording of the same, and (B) protect the communication technology
  • A secure electronic journal of the notarial act, including evidence of identity of the principal and a backup of the electronic record
  • Recording of the notarial ceremony with storage for greater of (a) the minimum period required by applicable laws of the State in which the notary is licensed, or (b) 10 years
  • The notarial certificate (acknowledgment) on the notarized document includes an indication that communication technology was utilized in the notarization process

Freddie Mac updated its Selling Guide to specify that this process is permitted where expressly permitted by law. However, in order to protect borrowers from potential fraud, Freddie Mac said it requires the process and the technology used to meet certain minimum standards. These requirements also apply to mortgages closed through the RIN process in other states where the process is currently permitted on a temporary basis through emergency executive orders.

Fannie Mae’s requirements for RIN lack the multi-factor authentication criteria that follow the MBA-ALTA and RULONA model acts, as well as the MISMO standards. Fannie Mae’s audio-visual standards say that either two forms of signed government-issued identification be provided or two-factor authentication be used with a combination of at least two of the following factors: remote presentation of a signed government-issued photo, credential analysis or knowledge-based identity proofing.

ALTA believes there should be a high threshold for identity assurance. For example, the audio-video must be free from tampering. Additionally, the notary must be able to assure the identity of the signer through multi-factor authentication. Moreover, new methods such as biometric solutions, provide robust options for identity verification. The key to reducing fraud is a multi-factor method of authenticating the identity of the signer. This process should include two of the following: (1) items the signer possesses, like a driver’s license; (2) information the signer knows based on personal knowledge such as, “What was the make and model of your first car?”; (3) characteristics unique to the signer, like a fingerprint.

In addition to the multi-factor standards, the following are RIN requirements for loans that are eligible to be purchased by Freddie Mac:

  • The RIN process has been expressly authorized under applicable law
  • The notary public is licensed and domiciled in the State in which the Mortgaged Premises is located, and the RIN law was enacted
  • The RIN process is performed in accordance with and is legally valid under the laws and regulations of the state in which the notarization is performed, at the time it was performed.
  • The mortgage is not a Texas Equity Section 50(a)(6) Mortgage
  • The final title insurance policy does not make any exceptions regarding the fact that the any document was notarized using a RIN process
  • All documents notarized using a RIN process are recordable in the public land records of the state in which the mortgaged premises is located
  • The seller makes all representations and warranties in the Guide related to validity, enforceability and lien priority, including that each mortgage utilizing a RIN process is a valid, effective and enforceable First Lien on the Mortgaged Premises

In addition to the guidance, Freddie Mac also updated its list of RON-eligible states after West Virginia passed legislation permitting RON effective June 17.

Contact ALTA at 202-296-3671 or [email protected].