I've reviewed 1026.25 and it doesn't seem to clarify my question.
Are we required to keep a physical copy of the deed of trust and note?
The following BankersOnline Q&A seems to imply such is the case (bolding and underlining added):
Retention of Imaged Documents
Question: We image all our loan documents. I am looking for guidance on what can be destroyed after it is imaged.
Answer: The whole point of imaging is to save space. For most regulations you should check each regulation to be sure it authorizes electronic copies. Federal compliance regulations allow electronic storage which includes imaging. In fact, those permissions were first written when microfiche was the state of the art. Federal regulations, such as Regulation B, require only that you be able to reproduce the document or an electronic copy.
Thus, state laws would be your primary concern. Anything that you don't need for meeting legal requirements, such as the original note and deed, can be destroyed when copied. However, any state requirements for original legal documents would probably mean that you should keep those documents unless state law specifically permits electronic reproductions.
Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 10, No. 6, 5/05
Thanks in advance!!!