Compliance Blog

Written by Steve Van Beek

We've written about the proposed mortgage periodic statement quite a few times already.  One angle we haven't blogged about is how you send the periodic statement.  The CFPB's proposal agrees with the plain language of Dodd-Frank which would allow credit unions to send mortgage periodic statements electronically if the member provides authorization.  Because of the language of Dodd-Frank, the full E-SIGN Act consent process would not be required.  Here is the CFPB's proposal:

"Electronic distribution. TILA section 128(f)(2) provides that periodic statements “may be transmitted in writing or electronically.” Consistent with this provision, proposed § 1026.41(c) would allow statements to be provided electronically, if the consumer agrees. As discussed above, the requirement to transmit a periodic statement to the consumer may be met by sending the consumer an e-mail notification that the statement is available, rather than e-mailing the statement itself in light of information security concerns. This paragraph would require only affirmative consent by the consumer to receive statements, not compliance with E-Sign verification procedures. The Bureau does not believe E-Sign consent is required by the statute. E-Sign is designed to provide an electronic alternative to required writings. The statute, however, requires only periodic “statements” as opposed to “writings” to be transmitted to consumers. Additionally, the statute contemplates electronic statements, as TILA section 129(f)(2) provides that the Bureau shall prescribe a standard form, taking into account that the statements required may be transmitted in writing or electronically. Thus, the Bureau believes that Congress did not intend to require E-Sign verification procedures."  (emphasis added).

Thus, if the CFPB's proposal is adopted as is - credit unions would have flexibility to send mortgage periodic statements electronically without following the full E-SIGN Act consent process.  A member's authorization - properly documented by the CU - would be sufficient.

This flexibility also has the potential to cause confusion in your credit union's procedures and training.  Your staff and colleagues will naturally ask why the E-SIGN Act process is required for share, checking and credit card statements but not for mortgages. 

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We'll be blogging about a few other similar issues in the upcoming weeks as well, so stay tuned.