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#1281595 - 11/05/09 04:57 PM E-Sign
FirstCommEA Offline
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We have a question concerning the E-Sign Act. If we scan our initial loan disclosures and e-mail them to our customers, they sign them and send back, do we need to comply with E-Sign?? They are physically signing the papers, didn't know if this might be an issue for us. Please help!!
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#1281639 - 11/05/09 05:18 PM Re: E-Sign [Re: FirstCommEA]
David Dickinson Offline
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If you are going to email a disclosure to a customer, you MUST comply with E-SIGN. Otherwise, they didn't officially receive it in compliance with the regulation or the E-SIGN Act.
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#1282205 - 11/06/09 12:29 AM Re: E-Sign [Re: David Dickinson]
Andy_Z Offline
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I'd want to study that some. Because you are sending them the whole package, they have no obligation until they are received, signed and returned to you. This is like a fax. It isn't optimal, but it isn't a digital signature.
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#1283302 - 11/09/09 03:19 PM Re: E-Sign [Re: Andy_Z]
FirstCommEA Offline
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If we do have to comply with the E-Sign, can the notice that we give the customers just be something that the bank types up & gives at application? Or is there a standard form that we use?
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#1283991 - 11/10/09 03:58 AM Re: E-Sign [Re: FirstCommEA]
Richard Insley Offline
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ESIGN requires you to disclose a number of things about your method of e-delivery of documents. These disclosures can be provided on paper or electronically. After you make these disclosures, you must obtain each customer's consent for electronic delivery of any document that otherwise must be delivered "in writing." The customer's consent must be electronic and it must demonstrate that the customer has mastered the technology that supports the e-delivery.

If this all sounds FAR more complicated than you expected, then you are beginning to understand ESIGN.
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#1300601 - 12/08/09 01:35 PM Re: E-Sign [Re: Richard Insley]
FirstCommEA Offline
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We attended a class on this & since we are emailing the disclosures and the customer is physically signing and then sending back to us, that is considered a "hybrid" and does not pertain to E-Sign.
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#1300770 - 12/08/09 03:51 PM Re: E-Sign [Re: FirstCommEA]
ahou Offline
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I don't see that opinion supported by ESIGN or RESPA. Read question 3 on pg 3 of HUD's Q & A. It the "delivery" of the GFE that is at stake. RESPA allows the delivery of the GFE by email if you follow the consent & other specific requirements for disclosure under ESIGN. I don't see anything in ESIGN that would support the hybrid theory.

I hope I am wrong - because mgmt wants to deliver the GFE by email.
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#1301051 - 12/08/09 07:15 PM Re: E-Sign [Re: ahou]
FirstCommEA Offline
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This is a question & answer that was on our BOL Speedier Lending with E-Disclosures Webinar:

Question: If we email our disclosures to our customers & they print them off, sign them & email or fax them back to us, is that sufficient? We are not talkign loan contracts, we are talking simply disclosures.

Answer: This is the hybrid method I discussed. You are sending disclosures that later consummate the transaction when you receive them back. You have paper with a wet signature. E-SIGN won't apply in this case. You are not substituting bits and bytes for paper, you are using paper. Becuase they print and return them, no demonstrable consent is needed in advance. If they couldn't handle them, you wouldn't have gotten them back.
Last edited by FirstCommEA; 12/08/09 07:16 PM.
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#1301205 - 12/08/09 08:38 PM Re: E-Sign [Re: FirstCommEA]
ahou Offline
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So you will be requiring that they return a copy of the GFE to you? Are you requiring they sign an acknowledgment that they received the GFE? (since you can't have signature lines on the GFE) BTW, thanks for the info.
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#1301396 - 12/08/09 11:05 PM Re: E-Sign [Re: ahou]
Richard Insley Offline
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Who provided this answer? Have any of the regulators agreed that this technique bypasses ESIGN?

I don't see how delivering an email is the same as paper. The regs require delivery in writing, not receipt and not signed copies (generally.)
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#1301438 - 12/09/09 02:36 AM Re: E-Sign [Re: Richard Insley]
rlcarey Offline
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I think that it would be acceptable as a secondary source of delivery to speed up the process, but you would still have to drop a copy in the mail. The e-mailed documents unless delivered through e-sign are meaningless.
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#1302245 - 12/09/09 10:16 PM Re: E-Sign [Re: rlcarey]
morirse de risa Offline
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Does the consumer's consent to accept these records electronically need to be documented?

We have estatement customers sign an agreement; however, we do not have anything similar for loan customers that want to receive disclosures via email.

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#1302323 - 12/10/09 01:15 AM Re: E-Sign [Re: morirse de risa]
Richard Insley Offline
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Many loan disclosures must be provided "in writing." Prior to ESIGN, the only legal way to deliver "written" documents was on paper. Now, since 2000, you have a choice: paper or electrons. For electronic delivery to be legally acceptable, however, you must follow ESIGN's demonstrable consent process before you start. Importantly, the consent must be electronic, not on paper. If you are using paper agreements to authorize e-delivery of statements, you have not satisfied ESIGN's requirements and the statements you are sending are not "in writing" as required by Regs E and DD.
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#1302385 - 12/10/09 01:51 PM Re: E-Sign [Re: Richard Insley]
FirstCommEA Offline
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Andy Zavoina with BOL provided the answer to my question regarding the "hybrid theory".
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#1302548 - 12/10/09 03:17 PM Re: E-Sign [Re: FirstCommEA]
Richard Insley Offline
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Then we'll have to get Andy to give us a more detailed analysis of the facts & conclusions.

I'm not convinced by what's posted above. The loan regs require delivery. No paper is delivered. Electrons are delivered. ESIGN (relevant portions extracted, adjusted to the current facts & shown below) conveys its "good as paper" seal of approval only when the lender follows the two-step demonstrable consent process.

"...the use of an electronic record to provide or make available [disclosures required by Fed Regs E, Z, DD, etc.] satisfies the requirement that such information be in writing if [ESIGN preconsent disclosures are given] and the consumer consents electronically, or confirms his or her consent electronically, in a manner that reasonably demonstrates that the consumer can access information in the electronic form that will be used to provide the [disclosures required by Fed Regs E, Z, DD, etc.]"
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#1306209 - 12/15/09 04:51 PM Re: E-Sign [Re: Richard Insley]
morirse de risa Offline
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When a customer wants their statement electronically, we send them a PDF document in an email. The document is their "agreement" to receive their statements electronically and also is our test document that they will be able to receive their PDF statements when we email them out.

Our loan documents are different. If someone does want them electronically, we are now sending them an email with a PDF document that contains their password for the password-protected PDF disclosures that follow in a separate email.

Do you feel we have demonstrable consent for both our statement and loan document delivery? I appreciate any help on this.

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#1306376 - 12/15/09 05:59 PM Re: E-Sign [Re: morirse de risa]
Richard Insley Offline
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Originally Posted By: HuskerBanker
Do you feel we have demonstrable consent for both our statement and loan document delivery?

From what you've posted here, no. You didn't mention how you handle ESIGN's laundry list of pre-consent disclosures and I don't see that you are obtaining the customer's consent electronically in a manner that demonstrates success with your system.
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#1306415 - 12/15/09 06:30 PM Re: E-Sign [Re: Richard Insley]
morirse de risa Offline
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When we send the initial email to the customer, it is in the same format (PDF) as the statment or disclosures - so isn't that proving that our e-delivery process will work when the time comes?

We would be able to track their success with this test email by tracking whether or not we receive the estatement agreement back or if they receive the disclosures.

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#1306549 - 12/15/09 07:48 PM Re: E-Sign [Re: morirse de risa]
Richard Insley Offline
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Is the initial email a sample document or a live statement? Does this document contain all the ESIGN disclosures? If not, how, where & when are they provided?

Do you have an affirmative statement in electronic form wherein the customer requests e-delivery?
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#1306623 - 12/15/09 08:21 PM Re: E-Sign [Re: Richard Insley]
morirse de risa Offline
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The initial email is a document containing an estatement agreement, as well as the ESIGN disclosures.

If the customer signs up for estatement while logged in to internet banking, we do have an affirmative statement in electronic form. However, customers may also sign up for estatements while in person at the bank. In this situation we still do send them the initial email with agreement and disclosures in PDF form...but there is no affirmative statement in electronic form. Is this wrong?

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#1306953 - 12/16/09 12:53 AM Re: E-Sign [Re: morirse de risa]
Richard Insley Offline
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Toano, VA
Originally Posted By: HuskerBanker
The initial email is a document containing an estatement agreement, as well as the ESIGN disclosures.

If the customer signs up for estatement while logged in to internet banking, we do have an affirmative statement in electronic form.

How do you know that the customer:
- has Acrobat installed?
- received the email with the attached .pdf document attached?
- could open the .pdf attachment?
- could read the content of the .pdf attachment?

Originally Posted By: HuskerBanker
However, customers may also sign up for estatements while in person at the bank. In this situation we still do send them the initial email with agreement and disclosures in PDF form...but there is no affirmative statement in electronic form. Is this wrong?

ESIGN allows you to obtain the customer's consent in a non-electronic manner (such as a wet signature) PROVIDED you also confirm the consent electronically in a manner that demonstrates success with your e-delivery.

Whether you're obtaining consent or confirming it, the customer's electronic actions must prove to you that s/he is capable of receiving, opening, and reading the content of a test document of the type you will use to transmit the e-statements. Until your customers pass this test drive, you do not get the ESIGN seal of approval.
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#1306962 - 12/16/09 02:37 AM Re: E-Sign [Re: Richard Insley]
Sheldon Hendrix Offline
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I'm sorry, but I don't see how there isn't proof that they could not open the documents with the necessary software and read it. It was emailed PDF --> They opened the PDF --> Read and signed the disclosure --> Returned it to the bank proving their ability to receive documents in this format.

Richard (or anyone knowledgeable in ESIGN), please explain in a little more detail how this does not comply. We are considering delivering disclosures in this manner for the time being, but are not completely sure if it will be ESIGN compliant.

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#1306970 - 12/16/09 03:34 AM Re: E-Sign [Re: Sheldon Hendrix]
Richard Insley Offline
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Toano, VA
Section 101(c)(1)(C)(ii) of ESIGN says the consumer must
"consent electronically, or confirm his or her
consent electronically, in a manner that reasonably
demonstrates that the consumer can access information
in the electronic form that will be used to provide
the information that is the subject of the consent."

If the consumer mails or hand-delivers a self-printed copy of the document, this may demonstrate success with your e-delivery system, but it is not electronic and a demonstration in this manner does not precede delivery of the first e-document.
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#1307340 - 12/16/09 04:52 PM Re: E-Sign [Re: Richard Insley]
morirse de risa Offline
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So if I am understanding this correctly, we need to confirm the customer's consent to receive these stmts or disclosures in some electronic format. And it seems some banks fulfill the "consent" and "ability to access" requirements in the same function.

In regards to loan disclosures, if we have the customer reply to our email that they can read and have received the email, will we cover our bases? I'm not sure how else to document customer's consent electronically.

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#1307592 - 12/16/09 07:28 PM Re: E-Sign [Re: morirse de risa]
Richard Insley Offline
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Yes, you need to do three things:
- explain how your e-delivery service works (by giving all the hardware/software, etc. disclosures listed in Sections 101(c)(1)(B) and (C) of ESIGN)
- obtain the customer's affirmative consent to e-delivery
- "test" the customer to be sure s/he can actually use your system--this "test" must be done in conjunction with obtaining consent

It appears that you are "pushing" e-statements and that's also how you plan to deliver loan disclosures. In such a system, a reasonable "test" could be as simple as:
- draft a test .pdf document (include all ESIGN disclosures, anything else the customer might need to know about the pricing or operation of this service, and some kind of PIN or code)
- email this test document to any customer who expresses an interest in e-delivery--include in this message the "mailto" link discussed below
- instruct customer to open attached test document, retrieve the PIN/code, click the "mailto" link, add the PIN/code to the message and the send the message

The "mailto" link would take the following form:
mailto:e-delivery-enrollment@mybank.com?subject=I want electronic statements&body=Please enroll my account for e-delivery of statements. By providing you the code contained in your e-delivery agreement and disclosures, I am demonstrating my ability to open and read documents of the type you will send instead of paper statements. The code is ____________.

When you receive the message, confirm the PIN is correct. When this is done, the customer has proven s/he received your message, opened the test document successfully, and could read the content. Retain a copy of the email from the customer as evidence of the consent (and evidence of compliance with ESIGN.)

If you can embed the mailto link inside the .pdf document, then you can skip the PIN/code. By simply following the direction within the test document, the customer has demonstrated success with your system.

There can be many ways to accomplish what must be done, but the idea is to prove in advance that your customers will be able to open and use e-documents when you begin sending them.
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