Sorry for the confusing thread title.

Question concerns the use of an e-sign solution (DocuSign) by an attorney preparing loan docs for the Bank and conducting the closing ceremony to close the real estate transaction.

One of the parties to the loan is currently out of the country, The attorney is asking us if they can use their DocuSign account to obtain electronic signatures from that party with the rest of the party providing wet signatures.

Can the attorney use their e-sign solution (DocuSign) to obtain electronic signatures from one of the borrower's and will this provide the Bank with cover on E-sign compliance provided that Prior Consent and Notice of Availability are evidenced as part of the documentation package forwarded to the Bank by the attorney?

Unless the bank maintains an electronic vault to store notes and deeds of trust in a manner that can prove that they have not been altered, that is not going to fly.

Here is a good article: https://www.wolterskluwer.com/en/ex...-lender-and-finance-leader-needs-to-know

You are dealing with an attorney that is not aware of this?

Thanks for the response Randy.

So what is not going to fly? What part of the E-Sign Act would the Bank be in violation of with the attorney's use of DocuSign to obtain an electronic signature? Electronic vault?

The reason for the question or my hangup is tied to whose system is being used. This attorney uses DocuSign to obtain electronic signatures for their use outside of the Bank. They are simply asking us if the Bank would accept a DocuSign obtained electronic signature for a party that is outside of the country.

I've asked them to send us all the loan docs that they would send out via DocuSign so that we can upload them to our ProSign solution so we could send to the borrower in question directly; however, I'm questioning our need to send these documents ourselves via our ProSign solution in lieu of accepting the attorney's DocuSign obtained docs where e-sign compliant supporting documentation from DocuSign is provided.

We do not deal with e-signatures often. We are in a market where our customer base is available and able to provide wet signatures at our location and/or at a third party location, like an attorney's office. While we generally obtain wet signatures from our borrowers, there are those few scenarios where we do need to utilize an e-sign compliant solution to obtain electronic signatures because the borrower is not in the area and the loan transaction has to close. In these instances, we utilize ProSign (we're a LaserPro customer). We've used this for years without issue and these transactions have has passed e-sign compliance audits and federal/state exams.

We have a separate imaging solution that we utilize to warehouse images of all our contracts/disclosures including the printed or pdf versions of e-signed docs. We simply provide audtors/examiners with access to our imaging solution if they are onsite or we pull the documents from this imaging solution and upload electronic copies of the docs to their portals for offsite audits/exams. Not sure if this is what you mean by "electronic vault".

As always, appreciate your feedback!

There is a big difference between maintaining records of the delivery of a disclosure document via DocuSign and Electronic Vaulting of documents that represent hard assets of the bank. Good luck on ever collecting on a note or foreclosing on a mortgage that was e-signed when using the court systems if the borrower says that the document was altered in some way without all of the audit trails being met.

DocuSign does offer electronic vaulting of documents, but I doubt that it is going to be cost effective for a one-off solution. https://www.docusign.com/sites/defa...msockid=3ab567c5fc586df715ee74d7fdcf6cec

You might want to visit with legal counsel that is familiar with the ins and out of this issue.

Thanks again for the response Randy.

I'm still not following the "electronic vaulting" concern as it relates to E-Sign compliance nor the requirement to do so but I appreciate you pointing it out for consideration.

My question is specific to E-sign compliance. If the Bank were to obtain an electronic signature on it's own through it's own e-sign solution which meets e-sign compliance requirements, I would not be concerned about proving up E-sign compliance nor the enforceability of the loan contract via the electronically obtained signature holding up in court. We already do this and these transactions have passed auditor/examiner scrutiny. What I'm asking is whether the Bank still complies with the E-sign requirements if an electronically obtained signature via an e-sign compliant solution like DocuSign is obtained by a third party (attorney) acting on behalf of the Bank rather than obtained directly by the Bank itself using it's own e-sign compliant solution. We've never had an electronic signature obtained by a third party acting on behalf of the Bank using their own e-sign compliant solution. I don't have concerns about either solutions audit trail support to prove up the validity of the electronic signature and prior consent.

In this scenario, we will still be obtaining the electronic signature ourselves... but only to err on the side of caution. I'm just questing whether allowing the attorney to obtain an electronic signature through their own e-sign compliant solution violates the E-sign act and if so, what part.

There are plenty of very good reasons to have an e-vault. For instance, with FRB you are unable to pledge loans as collateral if that have e-signature and you don't use an electronic vault.

However I disagree with Randy that an e-vault is required for all transactions where an e-signature is obtained. I would agree that a conversation with an attorney knowledgeable in the area is the best course of action.

As to your question, you would want to make sure that you can still access the records associated with the requirements of e-sign (i.e. demonstrable consent). I don't know if Docusign allows that information to be transferred or not.

"However I disagree with Randy that an e-vault is required for all transactions where an e-signature is obtained. "

I never said that. Can you show me where? As if I did, I did so in error.

Also, the validity of the signature is not the issue in this case. The E-Vault process provides for an audit trail that proves the documents that have been signed have not been altered since the time they were E-Signed. Two totally different issues.

As to who's system can be used, I will leave that up to your legal counsel.

It appears you may have a fundamental misconception of ESIGN. It's the simplest of laws -- having no implementing regulations and no penalties. In effect, ESIGN creates a license to substitute electrons for wet signatures and paper documents. It's only purpose is to legalize e-signatures (without defining what is or is not an e-signature) and to recognize e-documents as the legal equivalent of paper documents. The devil's in the operational and risk management issues, and state contract law. ESIGN doesn't address these topics at all. At the end of the day, the only thing that matters is whether you will win or lose in court if you have to sue your customer to enforce the contractual agreements. Defendants will try to repudiate signatures, documents, and anything else that would cause a court to rule against you.