(2) Periodic statements. (i) Statement required. The creditor shall mail or deliver a periodic statement as required by §1026.7 for each billing cycle at the end of which an account has a debit or credit balance of more than $1 or on which a finance charge has been imposed...

We just completed a system conversion. Our residential loan customers used to have coupon books. They are now getting statements mailed monthly. Many have asked us to email their statements. They do not want to sign-up to review their accounts through on-line banking. Can these statements be emailed? I imagine it would call for encryption, but not sure.

We are a Small Servicer if that plays a role in the outcome.

1026.7 is for open-end credit. Statements for closed-end real estate loans is found under 1026.41.

1026.41(c) Comment 3. Electronic distribution. The periodic statement may be provided electronically if the consumer agrees. The consumer must give affirmative consent to receive statements electronically. If statements are provided electronically, the creditor, assignee, or servicer may send a notification that a consumer's statement is available, with a link to where the statement can be accessed, in place of the statement itself.

Randy - Unless I'm reading my preferences into this, ESIGN is not an issue here. This rule lies somewhere between the UETA and ESIGN standards. It lacks ESIGN's requirement for a test drive (demonstration) but "affirmative consent" exceeds UETAs' requirements for a simple agreement between the parties. Use of a fully compliant ESIGN consent process would more-than-meet the 41(c) requirement, but failure to provide ESIGN's preconsent disclosures or do a test drive would not invalidate the mortgage lender's delivery of periodic statements.

Richard - you are correct - from the commentary:

The Bureau believes that only consumer consent, not the full E-Sign verification procedures are required before a servicer may provide a statement electronically in place of paper. If a servicer would like to follow the E-Sign Act procedures to obtain consumer consent, that would be allowed, but servicers may also obtain consent through a simpler process. The Bureau is adopting the comment as proposed.

The Bureau suggested, and commenters agreed, that anyone who is currently receiving certain information electronically from their servicer shall be deemed to have consented to receiving e-statements in place of paper statements. Such consumers have demonstrated their ability and willingness to receive information electronically. This is clarified in comment 41(c)-4. The Bureau does not believe that consumers who pay their mortgage through auto-debit, but who have not consented and are not currently receiving information electronically, shall be deemed to have consented to e-statements. Such consumers must receive paper statements until the servicer obtains some form of consent from the consumer that they are willing to receive information electronically.

Thank you so much for your assistance and detailed information. Your expertise is greatly appreciated.

1026.41(c) Comment 3. ...., with a link to where the statement can be accessed, in place of the statement itself.

I am questioning the "link". The customers who do not want on-line banking would not have a link to the bank site to see their statement. The customer request is to simply email the statement as a PDF. Would this suffice along with a signed document they wished to receive statements in this manner?

The bank could provide a link in place of the statement, with or without e-banking. That is defined by what you want, the consumer agrees to and your systems capabilities. You can email the statement itself but I would recommend considering only encrypted/password protected statements as privacy is still a big issue. That means coordinating a password with the consumers which is a hassle right up there with getting them to click a link. If this a few Luddites it may be doable, but it certainly comes with real costs because the bank needs to know the consumer can open those statements or defend its actions when a consumer claims ignorance because they could never see what was happening with their accounts or accompanied notices.

Depending on the size of this group of borrowers, the bank has certainly taken on an expense to bill in this manner. Those who do not want e-billing because of encryption requirements are going to increase your costs and with snail mail moving ever slower, potentially increase your customer service requirements if you go to snail mail.

Thank you again.

I'd simply offer two options -- snail-mailed statements or statements via your online portal behind security login credentials. If the borrower doesn't agree to use online access, they get a paper statement, period.