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CUNA Regulatory Comment Call

December 2, 2002

EXECUTIVE SUMMARY

• The Electronic Signature in Global and National Commerce Act (E-SIGN Act) validates and facilitates the use of electronic records and signatures and removes uncertainty about the validity of contracts that are entered into electronically.
• One exception is that the E-SIGN Act does not apply to notices of default, acceleration, repossession, foreclosure, or eviction with regard to an individual’s primary residence.
• As required under the E-Sign Act, the Department of Commerce, through its National Telecommunications and Information Administration (NTIA), is now soliciting comments as to whether this exception continues to be necessary for the protection of consumers.
• Comments are due by January 13, 2003. Please submit your comments to CUNA by January 8, 2003.

Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.com and to Assistant General Counsel Jeff Bloch at jbloch@cuna.com; or mail them to Mary and Jeff in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, DC 20004-2601. You may also contact us at 800-356-9655, ext. 6032.

BACKGROUND

Congress enacted the E-SIGN Act to validate and facilitate the use of electronic records and signatures and to remove uncertainty about the validity of contracts that are entered into electronically. However, the E-SIGN Act provides a number of exceptions. One of these exceptions is that the E-SIGN Act does not apply to notices of default, acceleration, repossession, foreclosure, or eviction with regard to an individual’s primary residence.

The E-SIGN Act requires the Secretary of the Department of Commerce to review all of these exceptions and to issue a report to Congress by June 30, 2003 that evaluates whether these exceptions continue to be necessary in order to protect consumers. In preparation of this report, the Department of Commerce, through the NTIA, is now soliciting comments with regard to the exception on residential default, foreclosure, and eviction notices.

DESCRIPTION OF THE COMMENT REQUEST

The E-SIGN Act exception for residential default, foreclosure, and eviction notices prohibits creditors from sending electronic documents or information to consumers that contain notices of an impending foreclosure or eviction. Current federal and state rules generally require that creditors give consumers such notice in written form that is delivered by certified or registered mail prior to any action to repossess the property.

The E-SIGN Act does not apply to those states that have adopted the Uniform Electronic Transactions Act (UETA). A number of these states have adopted UETA without an exception for housing foreclosure and rental default notices. In these states, such notices may be delivered electronically.

The removal of the foreclosure and rental default notices exception to the E-Sign Act would give creditors an additional method of communicating this information to consumers by way of electronic formats. These include, but are not limited to, facsimiles, electronic mail, and digital or wireless devices.

• Are you subject to the E-Sign Act (or other federal, state, or local law) that requires written notice to your members for residential defaults and foreclosures and, therefore, prohibits the electronic delivery of these notices? Has this hampered your ability to provide mortgages or other loans electronically?
  
  

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• Are you covered under any federal, state, or local law that permits electronic delivery of residential defaults and foreclosure notices? Has this been of benefit to you in your efforts to provide mortgages or other loans electronically?
  
  

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• How will the removal of the E-SIGN Act exception for residential defaults and foreclosure notices impact the consumer protections that your members currently have under various consumer protection laws and regulations?
  
  

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• What protections will be available for your members if the exception is removed and the E-SIGN Act allows for the electronic delivery of residential defaults and foreclosure notices? Please describe the methods that you may use to verify the following: 1) that the notice was sent and/or received; 2) the security of the transmission; and 3) that the recipient has the capability of receiving and reading the notice.
  
  

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• Other comments?
  
  

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