An easy test for E-Sign Compliance
With more institutions handling things electronically - disclosures, online applications, opening an account, monthly billing statement, etc. - make sure you're covered under the E-Sign act.
E-Sign is a Federal law that makes it easier to do business electronically easier, provided certain conditions are met. It legitimizes different activities that otherwise could not be performed electronically.
How does that fit in with financial institutions?
Well, financial institutions often have a legal obligation to deliver documents. Now, they could send those documents by physical mail, but it is often quicker, safer, and more convenient to do so electronically. Financial institutions also need signatures from consumers in many instances. Here again is something that can often be better accomplished electronically.
But these electronic activities are only recognized if certain conditions are met.
E-Sign requirements aren't terribly difficult to meet. The consumer needs to receive a disclosure with the technical requirements listed. The consumer also needs to provide consent based on this disclosure. The consumer must have a right to withdraw their consent and to receive paper records. That's pretty much it.
But there's one part of this that we seem to keep struggling with ... so let's discuss it so you can make sure you are compliant. And as I said, it's pretty easy!
Consumer Consent: Apples to Apples
The E-Sign rule requires that, after receiving the E-Sign disclosure, that the consumer "affirmatively consents" ... "in a manner that reasonably demonstrates that the consumer can access information in the electronic form that will be used to provide the information that is the subject of the consent." We call this the "Apples to Apples" test.
In other words: If you send the consumer an E-Sign disclosure through your Mortgagebot POS, but then plan on sending the Closing Disclosure and other closing docs through your Encompass LOS (or through DocMagic or secure e-mail or anything else), then that fails the test above. It needs to be apples to apples ... if you get E-Sign consent through Mortgagebot, you'll need to deliver disclosures in the same way (or get new E-Sign consent for the different software).
An even simpler example: You send a mortgage borrower a secure e-mail with an E-Sign disclosure in .Word format. The borrower signs and returns it. You should not then send a Loan Estimate and other disclosures through secure e-mail in .PDF format -- the borrower's consent needs to prove they can read/receive things using this method. Their consent only proves they can receive Word documents through e-mail.
So this is a simple test to perform - are you receiving E-Sign consent in the same manner that you're ultimately delivering documents to consumers?
In Other News
Minnesota regulators fine title company for violations of RESPA Section 8's prohibition on providing kickbacks for referrals of settlement business.
Republicans are fighting to replace CFPB Director Cordray as head of the CFPB, with the Wall Street Journal describing Rep. Randy Neugebauer (R., Texas) as a "candidate to succeed Mr. Cordray." With Rep. Neugebauer's (P.S. going to have to give this guy a nickname ...) having repeatedly criticized the CFPB for having only one director, instead of a multi-member commission, it would be ironic to see him appointed to replace Cordray as sole director. In general, actually, Rep. Neugebauer is probably the CFPB's biggest critic, with comments such as "Dodd-Frank has been a disaster--it's time to get the CFPB out of making choices for America's consumers" and "[The] CFPB's regulation by enforcement is a deliberate evasion of a transparent public dialogue," and wrote this article (free) explaining how he wants to change the CFPB.
FYI - I'll try to avoid any political landmines here, but it seems like both the Elizabeth Warrens and Rep. Neugebauers of the world agree on the importance of community lending institutions. Warren supported a recent community bank relief proposal and Rep. Neugebauer's constantly refers to Dodd-Frank's impact on community bankers. That said, I would want to make sure laws passed going forward support that effort. But this seems easier said than done when you see things like the statistics on Dodd-Frank related meetings held with federal regulators in the critical period of 2010 - 2013, available here: Some highlights include Goldman Sachs, JP Morgan, Citigroup, Bank of America, and Wells Fargo being in the top 10; American Bankers Association coming in 19th (although its 65 meetings aren't that impressive compared with Goldman's 22 or JP Morgan's 207); the Independent Community Bankers of America coming in 80th; and the Mortgage Bankers Association a lowly 125th.
An excerpt from "Managing Oneself" from Peter F. Drucker:
Am I a reader or a listener?
The first thing to know is whether you're a reader or a listener. Far too few people even know that there are readers and listeners and that people are rarely both. Even fewer know which of the two they themselves are. ...
When Dwight Eisenhower was Supreme Commander of the Allied Forces in Europe, he was the darling of the press. His press conferences were famous for their style -- General Eisenhower showed total command of whatever question he was asked, and he was able todescribe a situation and explain a policy in two or three beautifully polished and elegant sentences. Ten years later, the same journalists who had been his admirers held President Eisenhower in open contempt. He never addressed the questions, they complained, but rambled on endlessly about something else. And they constantly ridiculed him for butchering the King's English in incoherent and ungrammatical answers.
Eisenhower apparently did not know that he was a reader, not a listener. When he was Supreme Commander in Europe, his aides made sure that every question from the press was presented in writing at least half an hour before a conference was to begin. And then Eisenhower was in total command. When he became President, he succeeded two listeners, Franklin D. Roosevelt and Harry Truman. Both men knew themselves to be listeners and enjoyed free-for-all press conferences. Eisenhower may have felt that he had to do what his two predecessors had done. As a result, he never even heard the questions the journalists asked. ....
A few years later, Lyndon Johnson destroyed his presidency, in large measure, by not knowing that he was a listener. His predecessor, John Kennedy, was a reader who had assembled a brilliant group of writers as his assistants, making sure that they wrote to him before discussing their memos in person. Johnson kept those people on his staff--and they kept on writing. He never, apparently, understood one word of what they wrote.
"The condition upon which God hath given liberty to man is eternal vigilance."
- John Philpot Curran (Irish judge, 1750-1817)
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