I have a scenario that I would like opinions on related to whether the LE and initial disclosures were provided timely.

A loan application was received on Tuesday 8/8/2017. The LE and initial disclosures were sent electronically to applicants on Friday 8/11/2017 (day 3). The applicants never acknowledged consent or accessed the disclosures, so disclosures were mailed on Wednesday, 8/16/2017 (day 6).

Because the mail rule would apply, it seems that the LE and initial disclosures were not provided within three business days of completed application.

Am I overthinking this and am totally off base?

Any assistance is greatly appreciated.

I don't think you are overthinking this, except that the "mail rule" doesn't matter for delivery purposes. You said that the "applicants never acknowledged consent or accessed the disclosures." First, they don't have have to access the disclosures (as you could assume 3 days for deliver). What they must do, however, is consent to ESIGN before you can deliver the disclosures electronically. I am assuming that you meant they did not consent to ESIGN as many systems are pretty slick and do ESIGN and delivery in one big swoop when they open the email from the lender.

If they did not consent to ESIGN, it is like you never sent the disclosures at all. Therefore, you are correct that your disclosures were not sent until day 6, violating the timing requirements. If your bank is going to be using an ESIGN system where the customer consents as part of the disclosure opening process, then your lenders (or someone) needs to watch to make sure the customer actually consents before the 3 day deadline. Otherwise, you must send them paper disclosures within the initial 3 days.

Said another way: to comply with the initial disclosure requirements, within 3 days of the application you need to either 1) have the customer consent (i.e. comply with ESIGN) and send the disclosures electronically (again they don't have to open or even acknowledge the disclosures w/in 3 days, you just have to send them) or 2) you must send paper disclosures.

Adam - we are looking at using an electronic delivery application for delivery & signature of TRID disclosures. I understand the comment you made above and glad that this question was asked. My question is if you get e-sign consent from the customer for the LE, do you have to get e-sign consent again for the delivery of the CD or does the original consent cover the entire transaction? You don't have to get consent each time you send a required disclosure electronically, correct? Thank you.

ESIGN consent is going to be either specific or general, based on how the consent is worded as you have the option to make it 1) specific to a "particular transaction" or 2) to cover a variety of disclosures. Therefore, you will want to look at your specific ESIGN disclosure/contract/consent form to see if it covers both. That said, it is highly likely that both the LE and CD are covered as I can't imagine a disclosure written in a way that didn't include all disclosures for the TRID loan. What may not be covered in your TRID ESIGN disclosure is deposit disclosures (or even future additional loans). If other disclosures are not included, then you would have to get ESIGN again for different transactions/products.

1. It's up to you and your customer.
2. Same as #1.

Since you are "looking at using an electronic delivery application", you need to (re)read ESIGN. Fortunately, everything you need to know is in one paragraph--Section 7001(c)(1).

That's it for legal authority to substitute electrons for paper. The rest depends on Reg. Z and any other federal laws/regs that require the disclosures you want to e-deliver.

Great points, Richard. For reference, ESIGN can be found here: https://www.gpo.gov/fdsys/pkg/USCODE-201...apI-sec7001.htm

Thank you both. This was very helpful.