Reg B Appraisal Rules – Esign

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    Originally posted in Compliance Masters Group Forum by tstrait:

    It appears the more complicated rules for complying with E-Sign only apply to consumers. What would be required if we decided to provide our Appraisals to Business Customers electronically.


    Take a look at this post:

    I believe most banks that email disclosures/information have a vendor (i.e. online banking provider or possibly your forms vendor) that sets up electronic verification and maintains record of compliance with e-sign.

    Here’s a link to the E-SIGN Act: (7001(c) is where you’ll find the steps you need to take in order to comply.

    tstrait responded:
    “I understand what I need to do to comply with E-Sign for consumers. I recently ran across some articles that said we don’t need to do all this for businesses.

    The E-Sign Act defines consumers as:
    (1) Consumer
    The term “consumer” means an individual who obtains, through a transaction, products or services which are used primarily for personal, family, or household purposes, and also means the legal representative of such an individual.

    A lot of the language in the act refers to “consumer.” I was trying to determine what had to be done when dealing with a business.”

    E-sign only applies to disclosures to consumers. That being said, the Reg B valuation delivery rule doesn’t clarify that point. There are differing opinions out there on whether the e-sign rules should be followed for business applicants covered by this part. The conservative approach is to comply with e-sign for all applicants. The preamble to the rule states: “The Bureau believes that it is appropriate to allow creditors to provide applicants with copies of appraisals and other written valuations in electronic form if the applicant consents to receiving the copies in such form[,]” and then goes on to discuss compliance with e-sign. Since e-sign only only applies to consumers then one could reason that all that needs to be done for a business applicant is to obtain consent. Because of this, at the least, I recommend obtaining consent from the business applicant stating that they authorize electronic delivery.

    tstrait responded:
    “The Consumer Compliance Outlook Fourth Quarter 2013 that I received Friday included an artical on E-Sign. Here is a excerpt that addresses appraisals.

    The Dodd-Frank Act amended the ECOA’s notice requirements for appraisals effective January 18, 2014. Under the amendment, a creditor must notify an applicant
    for a first-lien mortgage loan that the creditor may order an appraisal or other written valuation to determine the value of the property securing the loan
    and will promptly provide the applicant with a copy, even if the loan is not consummated. The appraisal or valuation may be provided electronically subject to compliance with the E-Sign Act’s consent provisions, while the notice may be provided without regard to the consent requirements.”

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