eSignature and ePayment News and Trends

Achieving Digital Transformation and Securing Digital Assets


eSignature and ePayment News and Trends

eSignature and ePayment News and Trends


A fact of business today is that customers – both consumers and other businesses – and employees expect to transact digitally. To remain competitive, companies find themselves increasing their efforts to digitally transform their businesses.


Successfully implementing this transformation requires careful planning to ensure regulatory compliance, a smooth integration with existing business technology and a positive customer experience.


Each issue will feature in-depth insight on a timely and important current topic. In this issue, we provide insights for lenders looking to transact using eNotes to close mortgage loans. In addition, we report on recently enacted federal and state laws, federal and state regulatory activities, fresh judicial precedent and other important news.


For related information regarding blockchain and digital assets, please see our monthly bulletin Blockchain and Digital Assets News and Trends.




eNotes use surges – insights for lenders looking to close mortgage loans electronically


By R. David Whitaker

Over the last two years, the residential mortgage industry saw substantial growth in the use of electronic equivalents to negotiable promissory notes (eNotes) and electronic loan closings. In the first quarter of 2020, events related to the coronavirus disease 2019 (COVID-19) pandemic accelerated this trend, moving the industry closer than ever to widespread adoption of full electronic closings.  Nearly 40,000 residential mortgage loans closed using eNotes in February and March of this year alone. This month’s Insights identifies some key considerations for lenders looking to close loans electronically, either in person or remotely. 
Read more.




Recent updates on remote online notarization:

  • The Arizona Secretary of State enacted regulations on RON.
  • The Kentucky Secretary of State adopted guidance clarifying application of Kentucky remote notarization laws to tangible records.
  • The Idaho Secretary of State issued temporary RON regulations (see IDAPA and Idaho Notary Handbook).

For the latest updates on state enactments and COVID-19 pandemic executive orders and guidance, see our frequently updated alert.








CFPB determines that certain COVID-19 relief payments not subject to compulsory use provision: On April 13, 2020, the Bureau of Consumer Financial Protection (CFPB) issued an interpretive rule that certain COVID-19 pandemic relief payments are not “government benefits” for purposes of Regulation E and the Electronic Fund Transfer Act (EFTA) and are therefore not subject to the compulsory use prohibition in EFTA, if certain conditions are met. Specifically, government benefits do not include payments from federal, state, or local governments if those payments (1) are made to provide assistance to consumers in response to the COVID-19 pandemic or its economic impacts; (2) are not part of an already-established government benefit program; (3) are made on a one-time or otherwise limited basis; and (4) are distributed without a general requirement that consumers apply to the agency to receive funds.


CFPB extends temporary exception under Remittance Rule to January 1, 2021: The CFPB proposed amendments to the Remittance Rule in December 2019 to address the effects of a temporary exception that allowed institutions to disclose estimated exchange rates and certain third-party fees, instead of the exact amounts. That exception will expire July 21, 2020. Because of the COVID-19 pandemic, the CFPB announced on April 10, 2020 that it will not cite supervisory violations nor initiate enforcement actions against insured institutions for continuing to provide estimates to consumers under the temporary exception, instead of actual amounts, for international remittances that occur on or after July 21, 2020 and before January 1, 2021.




OCC rescinds 2004 Advisory Letter regarding electronic consumer disclosures and notices: On March 5, 2020, in OCC Bulletin 2020-11, the OCC rescinded 205 issuances, including the 2004 Advisory Letter regarding electronic consumer disclosures and notices. The OCC rescinded the 2004 letter because it was “outdated” and cited to the “Depository Services” booklet of the Comptroller’s Handbook for more recent information.


Artificial intelligence


FTC blog post discusses use of artificial intelligence and algorithms for making decisions about consumers: On April 8, 2020, the FTC published a blog post that discussed how companies can manage the consumer protection risks of AI and algorithms. Specifically, the FTC stated (1) be transparent; (2) explain your decision to the consumer; (3) ensure that your decisions are fair; (4) ensure that your data and models are robust and empirically sound; and (5) hold yourself accountable for compliance, ethics, fairness, and nondiscrimination.




Electronic signatures


Texas Office of Consumer Credit Commissioner issues Advisory Bulletin addressing COVID-19 pandemic emergency measures, including reminding regulated lenders about use of electronic signatures: On April 16, 2020, the Texas Office of Consumer Credit Commissioner (OCCC) issued Advisory Bulletin B20-2 which stated that if OCCC licensees are considering  using electronic signatures, that they are generally allowed under Texas and federal law. The bulletin reminds licensees of the need to comply with ESIGN’s consumer consent requirements.


NYDFS addresses insurance producers use of electronic communications: The New York Department of Financial Services (NYDFS) issued guidance stating that it is reducing the burden on insurance producers during the current state of emergency by allowing producers to comply with notice obligations by emailing notices to consumers regardless of whether the consumers have consented to receive the notice via email. NYDFS also stated that producers with websites should post the information on their website and encouraged supplemental dissemination of the content of the notice obligations by other means, including social media.


Massachusetts Supreme Judicial Court Order authorizes use of electronic signatures by attorneys and self-represented parties: On April 6, 2020, the Massachusetts Supreme Judicial Court issued an order authorizing use of electronic signatures by attorneys and self-represented parties. The order states that to the extent not already authorized, electronic signatures may be used “in all courts and case types, whenever an attorney or self-represented party is required to sign a document to be served on another party or filed with the court, the attorney or self-represented party may electronically sign, unless the court specifically orders otherwise.”








West Virginia enacts regulatory sandbox: On March 24, 2020, the West Virginia governor approved HB 4621, which creates the West Virginia FinTech Regulatory Sandbox Program. The new law establishes establishing requirements for participants to temporarily test innovative financial products or services on a limited basis without otherwise being licensed or authorized to act under the laws of the state. Further, it establishes various consumer protections related to such participation and establishes the scope of being able to operate without otherwise being licensed or authorized to act with respect to approved financial products or services.


Utah adopts insurance regulatory sandbox: On March 24, 2020, the Utah governor signed HB 402, which created an insurance regulatory sandbox program that allows participants to temporarily test innovate insurance products on a limit basis without otherwise being licensed to operate under Utah’s insurance laws.




Hawaii launches Digital Currency Innovation Lab. On March 17, Hawaii initiated its pilot Digital Currency Innovation Lab. The Lab allows digital currency issuers to do business in Hawaii without obtaining a state money transmitter license. In partnership with the Hawaii Division of Financial Institutions (DFI), this program is expected to:

  • Create economic opportunities for Hawaii through early adoption of digital currency
  • Offer consumer protection by providing guidance to issuers of digital currency
  • Provide data to shape legislation supporting digital currency





Telephone Consumer Protection Act


Second Circuit adopts broad definition of an autodialer: In Duran v. La Boom Disco, Inc., 2020 WL 1682773 (2nd. Cir. Apr. 7, 2020), the Second Circuit held that held that any phone that (1) has the capacity to store telephone numbers and to dial them, or (2) produce telephone numbers using a random or sequential number generator and to dial them, constitutes an autodialer. This decision is consistent with the Ninth Circuit’s decision in Marks v. Crunch San Diego (covered here), but conflicts with holdings from the Third, Seventh, and Eleventh Circuits, which adopted a narrow definition of an autodialer by requiring that the phone must be able to produce random or sequential numbers and then dial them.


Electronic signatures and general online contract formation


Court upholds signed arbitration agreement despite being entered into using a cellphone: In Fenton v. Criterion Worldwide, 2020 WL 1489795 (S.D.N.Y. March 27, 2020), the court upheld an arbitration agreement against the plaintiff employee despite the plaintiff’s claim that she could not read the arbitration agreement because of the small size of her phone screen. The court – quoting earlier SDNY case law – stated that “failure to read or understand a contract does not relieve a signer of its obligations thereunder.”


Court upholds arbitration agreement despite plaintiff stating that she never signed it: In Randle v. Conduent, 2020 WL 1905241 (W.D. N.Y. Apr. 17, 2020), the court stated that the defendant had met its burden to prove that the plaintiff signed the dispute resolution plan (DRP) and thus was bound by its arbitration clause. To sign the DRP, plaintiff had to create an account and a personal password. The plaintiff alleges that she needed to make an appointment with the defendant to complete the signing process – there were allegedly IT issues at the application site – and the defendant’s employee clicked through the documents such that the plaintiff couldn’t review. The court stated that the weight of the evidence supports the inference that the plaintiff agreed to the arbitration agreement: it contained her typewritten name at the bottom and that the plaintiff had to input her private password to enter the site.




Margo Tank participated in a webinar with MERS and the Federal Home Loan Bank of Boston, eNotes and the Role of the MERS® eRegistry: Guidance from Attorneys for Attorneys, on March 25.


Margo Tank and Liz Caires presented an MBA webinar, Remote Online Notarization State-of-Play, on February 27, 2020.


Margo Tank presented at the Structured Finance Conference in Las Vegas on February 25, 2020, speaking on a panel entitled “eNotes, eClosings, and eVaults.”


Margo Tank presented at DLA Piper’s FinTech 2020 and beyond: eContracts and Asset Backed Securities event in New York on February 12, 2020.




The MBA Compliance Essentials Remote Online Notarization State Surveys, developed by DLA Piper, provides a comprehensive look at RON requirements in each state that has enacted RON legislation.  These fully editable surveys are organized by category of requirements, including registration, technology, seal and signature, certificates of RON acts, journal, authentication, session, recording, and additional requirements. Companies can purchase the full package which includes surveys for all states that have enacted RON legislation along with a matrix summarizing state requirements, or companies can purchase information about individual states as needed. Read more.


Learn more about our eSignatures and ePayments practice by contacting:

Margo H.K. Tank


David Whitaker


Additional contributors


Raymond Zamora



In this issue