If you have a commercial client and obtain consent, are there any other requirements beyond that point such as verifying/documenting delivery? For example if you obtain the client's consent via email (which you retain for documentation) and then you email the PDF to the client - would you need to document delivery or that you sent the email with the PDF to the client?

There are no documentation of receipt requirements.

OK thinking about this a little and playing devil's advocate. Reg B states:

(5) Copies in electronic form. The copies required by § 1002.14(a)(1) may be provided to the applicant in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 et seq.).

The question is: "Can you provide electronic copies outside of E-Sign (business customer or not)?

There is no provision for the delivery of disclosures that are required to be in writing outside of E-sign in either 1002.4 or 1002.14.

Interesting point rlcarey. So, who is going to be the one to ask their regulator this question? Or do we really want to know the answer?

I think my post got skipped over so I'm going to throw it out there again!

We are wanting to be able to email appraisals to our commercial loan customers to comply with the new requirements of Reg B for dwelling secured loans. Is there a short paragraph we can incorporate into our loan application to gain consent for this or does it need to be a stand-alone disclosure?

If anyone has any insight or samples of what I can use it would be greatly appreciated!

I did not skip over your question. I presented an argument that any electronic delivery of an appraisal outside of the E-Sign provisions is not support by the regulation whether it involves a commercial customer or not.

I had the very same thought, but when you look at § 7001(c) it clearly states that it would only apply to a consumer (personal, family, or household purposes). If the consumer consent provision under E-SIGN does not apply, all you would need is an agreement from the commercial customer (verbal or written) to receive that information electronically.

I was specifically focused on the following language:
(5) Copies in electronic form. The copies required by § 1002.14(a)(1) may be provided to the applicant in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act

The consumer consent provision would not apply in the case of a commercial customer. It is a little difficult to analyze how the other applicable provisions would impact this scenario, but the general consensus seems to be that you need to obtain some type of consent through a basic agreement with the commercial customer prior to providing documents they have agreed to accept in electronic form.

I would love to hear any other thoughts. I know Richard Insley is usually involved in a number of discussions involving E-SIGN.

I guess the interpretation of the meaning of the comma in that sentence makes a big difference.

I had in my head that I wanted to comply with E-Sign for our commercial loan customers and just wanted to know if this is something that could easily be agreed to on the commercial loan application. I know the demonstrable consent portion doesn't apply to commercial loans but my initial thought was they had to agree to receive the appraisal electronically before we could send it.

Good to know. From the perspective of documenting delivery for the new ECOA/Reg. B Appraisal requirements, wouldn't you want some type of documentation to prove delivery? For example, a copy of the sent email. I'm just thinking about when the CFPB comes in and says, "prove to me that you provided the applicant with a copy of their appraisal". If we are emailing the client a copy via email in a decentralized environment then what's the best way to prove delivery or at least "attempted delivery"?

We are about to begin delivering our appraisals through e-mail. Do I understand the Reg correctly that as long as we get an E-Sign Disclosure signed by the applicant at application, we can do this? The disclosure came from Laser Pro and has normal disclosure wording at the top and does list the Hardware and Software Requirements along with a consent statement and another section for them to withdraw their electronic communications and resume paper communications. Is there anything else that we need to do?

Where is the electronic demonstrable consent in signing a document? If all they are doing is signing a document, then LaserPro has no concept of the E-Sign demonstrable consent requirements.

I guess that's where I'm lost. What do we have to do to comply with the E-Sign Act? I see the consumer disclosure we have to provide and that's about it. I'm reading from the FDIC Compliance Manual dated August 2012, is that the most recent?

Okay, please disregard that last question. I've found additional information relating to the demonstrable consent. Thank you rlcarey!

I am interested also in the E-SIGN applicability. We have non-consumer purpose loans and in many cases the "dwelling" is owned by a non-natural person. Based on the E-SIGN definition of consumer (Sec 106 as referenced above by rlcarey), if the loan is not made both to an individual and for a consumer purpose (i.e.primarily for personal, family, or household purposes, it does not seem that compliance with E-SIGN, whether the loan is made to and individual or not, would apply (of course IMO). What am I missing?

If we have a customer who has already given us E-sign consent for another type of document (electronic statements), can we email the customer appraisal without additional steps as long as we send it to the same email in which they gave us consent to use (for the statements)?

You can only send them documents and disclosures on which you have previously agreed upon.

(ii) informing the consumer of whether the consent
applies (I) only to the particular transaction which
gave rise to the obligation to provide the record, or
(II) to identified categories of records that may be
provided or made available during the course of the
parties’ relationship;

Holy smoke. Who knew getting a signature could be this involved.

Does this approach passs the disclosure/access proof test:

1. Disclosure sent to borrower explaining rights and options;

and

2. Email sent to borrower with pdf attachment that says "I can open this document" on the pdf that they must open. Borrower opens attachment and emails us back with the super secret code "I can open this document." this provides the "proof of access"

The E-Sign delivery process being discussed has nothing to do with signatures, it has to do with delivery. There are no signatures required on the appraisal disclosure or when you deliver an appraisal to the applicant.

That's correct, rl. Should say e-sign.

Does the 2-step process above pass the test for approval/proof of access?

Yes. Having to enter a code embedded into the type of document that you will be sending would be a form of demonstrable consent.

From the FRB's Consumer Compliance Outlook issued today on page 12.

The Dodd-Frank Act amended the ECOA’s notice requirements
for appraisals effective January 18, 2014.
Under the amendment, a creditor must notify an applicant
for a first-lien mortgage loan that the creditor
may order an appraisal or other written valuation to
determine the value of the property securing the loan
and will promptly provide the applicant with a copy,
even if the loan is not consummated.13 The appraisal
or valuation may be provided electronically subject to
compliance with the E-Sign Act’s consent provisions,
while the notice may be provided without regard to the consent requirements.

Careful with the context of this quotation - I believe this refers to situations in which the application is accessed electronically by the applicant, and required disclosures are provided electronically at the time the application is accessed:

"For applications submitted online,...The Dodd-Frank Act amended the ECOA’s notice requirements
for appraisals effective January 18, 2014.
Under the amendment, a creditor must notify an applicant
for a first-lien mortgage loan that the creditor
may order an appraisal or other written valuation to
determine the value of the property securing the loan
and will promptly provide the applicant with a copy,
even if the loan is not consummated.13 The appraisal
or valuation may be provided electronically subject to
compliance with the E-Sign Act’s consent provisions,14
while the notice may be provided without regard to
the consent requirements.15"

Where the disclosures under §§1002.5(b)(1), 1002.5(b)(2), 1002.5(d)(1), 1002.5(d)(2), 1002.13, and 1002.14(a)(2) accompany an application accessed by the applicant in electronic form, these disclosures may be provided to the applicant in electronic form on or with the application form, without regard to the consumer consent or other provisions of the E-Sign Act.

I was just pointing out what the FRB's publication stated. If read in that context it certainly is misleading.

If we are sending appraisals in paper form (US postal) 100% of the time, are we allowed to send the appraisal electronically if it's not e-sign compliant?

Our compliance area is saying that we would be in violation of the reg - even though sending the appraisal electronically is a secondary means of delivering the evaluation report.

Again, we always send them in paper form as part of our policy.

Similar to early disclosures, we send them in paper form 100% of the time but for some borrowers we also send them electronically.