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Question:

What should a mortgage company do if it issues initial disclosures electronically, but the applicant fails to e-consent and open the package by the 3^rd business day following receipt of the application?

Answer:

Mortgage companies must have consent from an applicant to issue initial disclosures electronically.  The Electronic Signatures in Global and National Commerce Act (“E-SIGN Act”) requires a consumer to confirm his/her consent electronically and 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 [1].  

If a mortgage company issues initial disclosures to an applicant by email but the mortgage company failed to obtain the applicant’s consent to receive disclosures via email prior to delivering the disclosures, then the mortgage company does not comply with the Loan Estimate or Good Faith Estimate delivery requirements, unless the mortgage company also provides the initial disclosures in a different manner that complies with the three (3) business day requirement.  As such, it is imperative that mortgage companies carefully monitor this area.  Mortgage companies should consider providing e-consent requests prior to initial disclosure packages whenever possible.  Additionally, mortgage companies must ensure that by the end of the third day following receipt of an application that they issue initial disclosure packages by mail or in-person in the event an applicant fails to e-consent and view the disclosures. 

[1]  Chapter 96- Electronic Signatures in Global and National Commerce Subchapter I- Electronic Records and Signatures in Commerce, 7001(c)(1)