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#2235165 - 04/17/20 08:24 PM Dealer Loan and E-Sign
TeamComply Offline
100 Club
Joined: Aug 2016
Posts: 242
If a dealer is wanting to handle a transaction through DocuSign, etc. with their customer, and then we will purchase the dealer's paper...do we need to ensure they are e-sign compliant? What are the rules for something like this? Obviously this has come up as a result of COVID-19.

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eBanking / Technology
#2235174 - 04/17/20 09:02 PM Re: Dealer Loan and E-Sign [Re: TeamComply]
BrianC Online
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BrianC
Joined: Nov 2004
Posts: 5,350
Illinois
This is a business decision your bank needs to make. If you purchase a note only to find out later the note is invalid because the signature is not valid who takes the loss, you or the dealer?

Most indirect contracts have some type of clause that assigns liability for errors the dealer makes. Have your legal counsel review yours to determine where your risk is. The answer to that question will guide how much due diligence you feel your need to perform on the loans you wish to purchase.
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#2235194 - 04/18/20 01:20 AM Re: Dealer Loan and E-Sign [Re: TeamComply]
Richard Insley Offline
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Richard Insley
Joined: Oct 2000
Posts: 9,762
Toano, VA
Brian offers good advice, but if the dealer folds, it's just you and the borrower in court arguing over the validity of a contract that you can't prove was signed by the borrower. Adding to an already bad situation, if the court buys your argument that the signature is valid but then you can't prove the dealer had demonstrable consent to provide the TIL (and any other necessary federal disclosures) you're fully exposed to the Section 130a TILA liability. Plan for the worst and hope you're never in that position.
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