We are working with a vendor to get eSign in place to be able to send loan disclosures to customers. We are adding a question "Do you wish to receive your loan disclosures electronically?" to our loan application. If they agree, our Underwriting team will send an email to the customer that will provide a link to the vendor's portal, where the customer will sign up, login, review system requirements, and then agree to receive disclosures electronically or opt-out- this is their formal acceptance to eSign. Our initial question in our application process is just to capture those who are interested in electronic disclosures so that we can then send them an email to sign up for electronic disclosures. Will this work under eSign since we're not giving them anything during application when they initially agree there to get their disclosures electronically?

The best way to look at this is to trace your way through a typical transaction and identify the first point where you run into a disclosure requirement that can only be satisfied with a "written" document. Then, back up to the most convenient point where you can provide the preconsent disclosures to those applicants who might be interested in e-delivery instead of paper. These are the hardware/software/how-it-works/paper-copies disclosures required by ESIGN. They don't have to be written or in any particular format--you just have to cover all the items mentioned in Section 7001(c)(1) of ESIGN. You could email these disclosures to the applicant.

After you've given all the preconsent disclosures, you obtain the customer's consent. It must be:
1. affirmative,
2. electronic, and
3. demonstrative that the consumer has the hardware, software, and savvy to use your system.

Nowhere in ESIGN do you find a record retention requirement--but that doen't mean there isn't one. Trace a few more steps through the relationship and consider what will happen when the borrower defaults and you're in court trying to salvage whatever is possible.
- You're presenting an electronic note and supporting documents.
- ESIGN tells the judge that (1) a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and (2) a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation.
- The borrower's attorney is arguing that s/he didn't understand what happened, didn't receive TIL and other disclosures, and should be awarded the civil penalties provided by TILA, etc.
- You'd better have a convincing argument plus supporting evidence that you complied fully with ESIGN and, therefore, DID deliver all the necessary disclosures "in writing."

Thanks Richard. The hardware/software/how-it-works/paper-copies disclosures are in the vendor's platform, which is accessible by the link we send the customer if they said they wanted electronic disclosures during the taking of the loan application. We do not have the hardware/software/how-it-works/paper-copies disclosures as part of our initial app- we just ask them if they want to get their disclosures electronically, and if they say yes, we send them the email that takes them to the vendor platform where all eSign requirements are satisfied. I'm trying to understand if that's ok? Or do we have to provide the system requirements in our loan app process?

There would be no such requirements. All it is, is a "hey are you interested" question.

The hard work starts later.

Thanks Randy. That's what I thought as well- it's just to make sure we know who is interested and who is not; that's all that question is intended to do. If you don't ask, you don't know. Appreciate the feedback!

That includes both your initial contact with the applicant plus the services provided by your vendor under a service agreement. It doesn't matter which one of you provides the pre-consent disclosures or obtains the consent--as long as both are done before you reach the first disclosure document that must be delivered "in writing."