CUNA Regulatory Comment Call


December 2, 2002

The E-SIGN Act Housing Foreclosure, Repossession, and Default Notices Exception

EXECUTIVE SUMMARY

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.

QUESTIONS TO CONSIDER REGARDING
THE E-SIGN ACT HOUSING FORECLOSURE, REPOSSESSION, AND DEFAULT NOTICES EXCEPTION

Eric Richard • General Counsel • (202) 508-6742 • erichard@cuna.com
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 • mdunn@cuna.com
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 • jbloch@cuna.com
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 • corr@cuna.com