Sign on the Dotted Line

by C/A Staff

Is there a regulatory requirement to have the _________ disclosure signed by the consumer under the regulation? If your first thought is yes, the answer may surprise you. Fill in the above blank with any one of the many disclosures or notices required by the federal regulations, and we’ve most likely received a question regarding the signature requirement for it. Surprisingly, the answer to whether a signature is required by regulation is usually no. While signatures, per se, are not typically required by regulation, it is worthwhile reviewing some of the instances in which as practical matter signatures are obtained.  

Reg. B generally prohibits banks from requiring signatures from a co-applicant on a credit application of an applicant that qualifies on their own. Joint applicants are an exception to the rule; the regulation requires evidence of the person’s intent to be a joint applicant at the time of application. While the regulation doesn’t preclude other methods of establishing intent, the commentary specifies that a signature on the credit application affirming intent to jointly apply for credit may be used to establish joint intent. Because intent would be tricky to demonstrate otherwise, we have heard that as a matter of policy, most of our members obtain signatures from the applicants affirming their intent to apply for joint credit.

Under the Flood regulations, when applicable, a bank is required to provide a Notice of Special Flood Hazards and Availability of Federal Disaster Relief Assistance to the borrower. The regulation requires the bank to document receipt by the borrower. The FDIC Compliance Examination Manual, provides examples of such documentation which includes:

  1. a borrowers signed acknowledgement on a copy of the notice;
  2. a borrower-initialed list of documents and disclosures that the lender provided the borrower; and
  3. a scanned electronic image of a receipt or other document signed by the borrower.

While the regulation doesn’t specify that a signature is explicitly required for the record of receipt, we have heard that most of our members, as a matter of policy, follow the guidance’s examples and obtain signatures.

Lastly, the Consumer Protection in the Sales of Insurance regulation requires certain disclosures to be provided with the initial purchase of an insurance product or when soliciting an insurance product in connection with a credit application. As a general rule, the regulation requires the bank to obtain a written acknowledgement from the consumer that they received the disclosures when they are provided. To satisfy this requirement we have heard that most of our members, as a matter of policy, obtain signatures on the preprinted disclosures, documenting that the consumer received the disclosures.

Even in cases where signatures are not required by regulation, such as for the Loan Estimate and Closing Disclosure under TRID, the appraisal disclosure under Reg. B, and the overdraft opt-in requirement under Reg. E, many banks still have borrowers sign these disclosures and notices as a matter of policy. It is a commonly-accepted, straightforward way to document that the notices and disclosures were provided, and signatures may be required by investor guidelines in addition to the bank’s internal policy.