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#2191585 - 09/04/18 06:00 PM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent Getting_Grayer
Gibby Offline
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If a consumer is closing a loan within the branch, and has consented by receiving the ESIGN disclosure on their phone or other personal device and electronically signed to consent on that device, can the actual loan documents then be viewed on a bank tablet or computer screen, signed electronically at the lender's desk, and the signed docs sent to the customer's personal device? Or must the customer review and sign the loan documents on their personal device? The ESIGN consent form and loan docs would be sent in the same PDF format.

It would seem much more customer-friendly to view those documents on a larger bank device than to expect them to read everything on their phone. How do others do in-branch loan closings electronically?

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eBanking / Technology
#2191601 - 09/04/18 08:42 PM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent Getting_Grayer
Richard Insley Online
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Richard Insley
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Toano, VA
Forget about the signatures for a moment and let's focus on document delivery. Also, forget about the contract documents and security instruments--they are subject to general state laws governing contracts, not federal law. Unless I've overlooked something, that should leave the documents containing disclosures required by Reg. Z and other federal laws/regs.

By the time you reach a loan closing, most (if not all) of the remaining federal disclosures must be delivered in writing. If you and the borrower have agreed to go tree-free, then you must have already completed the ESIGN consent "handshake." Following consent, any e-document that you transmit to the borrower in the manner outlined in your pre-consent disclosures is the legal equivalent of paper. Since your pre-consent and consent did not include references to bank-owned equipment, then the documents you deliver to bank-owned equipment can only be considered courtesy copies of the official disclosure documents. Further, since the copies sent to the customer's personal device are not transmitted until after the note is signed, then you violate Reg. Z, RESPA, etc. which require delivery before consummation.
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#2191635 - 09/05/18 02:38 PM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent Getting_Grayer
Gibby Offline
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Thank you for breaking that down!

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#2191642 - 09/05/18 03:14 PM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent Getting_Grayer
Richard Insley Online
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Richard Insley
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Toano, VA
Thanks for raising this question, Gibby. It's a good one and it will remain an issue for the foreseeable future.

There may be a way to achieve more or less what you want to do--that's why ESIGN was written in flexible terms that can adapt to future technologies.

The risk you must not forget is what will happen when the borrower defaults. You will go to court to obtain a judgement, and the borrower's attorney will argue that the note suffers from a chain of custody type of problem. S/he will argue that it is not a valid contract because the contract terms stated in the document delivered to the borrower's handheld device were not the same as the terms the borrower read on the bank-owned equipment--an electronic sleight-of-hand.
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#2219363 - 08/08/19 05:34 PM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent Richard Insley
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Let’s say we want to post a non-interactive application on our website, in fill-in pdf format (no submit button) for the borrower to complete and return either in person, by mail, or by email. This is a real estate application and we would like to deliver Reg B’s right to receive a copy of the appraisal notification electronically. Could we add a click-through button at the end of application that would first navigate the applicant to the E-Sign consent/disclosure that in turn contains a button to then navigate to the appraisal disclosures? In other words, is demonstrable consent achieved? I'm not so sure the demonstrable consent prong is accomplished.

Alternatively, could we begin the online application process with the E-Sign consent/disclosure on a webpage then a click-through to another webpage with the appraisal notice, then click-through to the pdf application? In this latter way, we are assured the consent was accomplished when we later receive the completed application from the applicant, since an application completion and submission cannot be accomplished without the click-throughs.

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#2219591 - 08/13/19 02:43 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent Getting_Grayer
Richard Insley Online
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Richard Insley
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Toano, VA
This question touches on several issues--all worthy of discussion.

First, there may be a security issue if applicants fill in a form and email it. Unless the pdf form handler encrypts the completed application, highly sensitive personal information could be intercepted during transmission to the bank. If there's any question about security, you should probably instruct applicants NOT to submit the form via email.

Next, be careful not to underestimate the actual scope of this project. I'm no authority on Reg B's appraisal rules, but the appraisal notification appears to be a boilerplate notice--with no transaction-specific content. The simplest of all possible methods can be used to e-deliver it, and who cares if the whole world sees it. Maybe your lenders have more in mind--including the "notice of action taken" (in case the decision is adverse), the copy of the actual appraisal, Reg. Z/RESPA disclosures, flood, and anything else you will need to deliver "in writing" during the processing of the application. Once you get to sensitive transaction-specific disclosures, security becomes mandatory. If you don't currently have a secure and efficient way to e-deliver these additional disclosures, don't agree to anything more than e-delivery of the boilerplate notice.

ESIGN consent for boilerplate e-delivery is very easy. Before you ask the applicant's consent, you must give the pre-consent disclosures. They don't have to be "in writing", so they can appear anywhere you can prove the customer saw them. Using a chain of pages, as you suggest, is a reliable way to do this. With appropriate explanation on the page containing the ESIGN preconsent disclosures, you can tell the applicant that the required appraisal notification will be displayed on the next page. If s/he can read this page, then you have adequate hardware and software to receive the appraisal notice and blank fill-in form. S/he can print or save this page as desired, but you should state that you won't provide a paper copy upon request. At the end of the preconsent disclosures, you will want to invite the applicant to click a button or link acknowledging these disclosures, consenting to receive the appraisal notice electronically, and acknowledging that there will be a link to the application form on the following page.
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#2219601 - 08/13/19 02:09 PM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent Richard Insley
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Richard, I very much appreciate your input.

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