e-Signature Disclosure

Consumer Disclosure Regarding Conducting Business Electronically, Receiving Electronic Notices and Disclosures, and Signing Documents Electronically
Please read the following information, by proceeding forward and signing this document you are agreeing that you have reviewed the following consumer disclosure information and consent to transact business using electronic communications, to receive notices and disclosures electronically, and to utilize electronic signatures in lieu of using paper documents. This electronic signature service is provided on behalf of clients, “sending party,” whom are sending electronic documents, notices, disclosures or requesting electronic signatures to you.

You are not required to receive notices and disclosures or sign documents electronically. If you prefer not to do so, you may request to receive paper copies and withdraw your consent at any time as described below.

Paper Copies
You are not required to receive notices or disclosures or sign documents electronically and may request paper copies of documents or disclosures if you prefer to do so. You also have the ability to download and print any open or signed documents sent to you through the electronic signature service using the PDF and Print icons. Adobe may also email you a PDF copy of all agreements you sign using the electronic signature service. If you wish to receive paper copies in lieu of electronic documents you may close this web browser and request paper copies from the “sending party” by following the procedures outlined below. The “sending party” may apply a charge for requesting paper copies.

Use of the Service requires a standards-compliant web-browser which supports the HTTPS protocol, HTML, and cookies. Viewing PDF documents requiring additional software such as Adobe Reader or similar.

Withdrawal of Consent
You may withdraw your consent to receive electronic documents, notices or disclosures at any time. In order to withdraw consent you must notify the “sending party” that you wish to withdraw consent and to provide your future documents, notices, and disclosures in paper format. After withdrawing consent if at any point in the future you proceed forward and utilize the electronic signature system you are once again consenting to receive notices, disclosures, or documents electronically. You may withdraw consent to receive electronic notices and disclosures and optionally electronic signatures by following the procedures described below.

Scope of Consent
You agree to receive electronic notices, disclosures, and electronic signature documents with all related and identified documents and disclosures provided over the course of your relationship with the “sending party.” You may at any point withdraw your consent by following the procedures described below.

Requesting paper copies, withdrawing consent, and updating contact information
You have the ability to download and print any documents we send to you through the electronic signature system. To request paper copies of documents, withdraw consent to conduct business electronically and receive documents, notices, or disclosures electronically or sign documents electronically please contact the “sending party” by telephone, postal mail, or by sending an email to the “sending party” with the following subjects:

“Requesting Paper Copies” Please provide your name, email, telephone number, postal address and document title.

“Withdraw Consent” Please provide your name, email, date, telephone number, postal address.

“Update Contact Information” Please provide your name, email, telephone number and postal address.

Any fees associated with sending paper copies or withdrawing consent will be determined by the “sending party.”

Shark AI Capital Corporation is pleased to accept electronically signed documents as a first step towards a fully electronic lending process. This guide has been established to provide instruction on acceptable practices for utilizing electronic signatures. Users must comply with this policy in order to proceed with any electronic signature process with Shark AI Capital Corporation. This policy may be amended from time to time (whether or not advance notice of such amendment is provided).

SHARK AI CAPITAL CORPORATION ELECTRONIC SIGNATURE DEFINITIONS

ESIGNATURE (ELECTRONIC SIGNATURE/DIGITAL SIGNATURE)
An electronic signature is any electronic means that indicates that a person adopts the contents of an electronic message. The U.S. Code defines an electronic signature for the purpose of US law as "an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record."

HYBRID ECLOSING (HYBRID)
A Hybrid eClosing is a process where procedural documents are created, signed and stored electronically, while other key documents such as the Note, Lending /Deed of Trust, notarized documents and recorded documents are paper ink signed.

ELENDING /ECLOSING (ELECTRONIC LENDING )
An eLending /eClosing is a lending for which the promissory note (eNote) and possibly other documents are created, signed and stored electronically, rather than as traditional paper documents requiring an ink signature.

E-NOTE (ELECTRONIC NOTE/DIGITAL NOTE)
An eNote is an electronic transferable promissory note; the electronic equivalent of a negotiable paper promissory note. It is created, signed and stored as an electronic document in an electronic vault (eVault), usually in the form of a SMART Doc. An eNote must be signed electronically and cannot be signed with wet ink.

SMART DOCUMENT (SMART DOC)
A SMART Doc is an electronic document created to conform to a specification standardized by MISMO. A SMART document locks together data and presentation in such a way that it can be system-validated to guarantee the integrity of the document. SMART is an acronym for Securable, Manageable, Achievable, Retrievable, Transferable document.

TAMPERSEAL
A tamperseal is a “seal” wrapping an electronic document that has been digitally signed. Used as a security tool, the seal will provide evidence of any changes made to the document after sealing.


ACCEPTABLE DOCUMENTS
The section below shows generally accepted documents with Electronic Signatures through a Shark AI Capital Corporation approved Electronic Signature platform.
• All application documents and loan disclosures
• Appraisal
• Purchase Agreement
• 4506T
• Closing documents except the Note, Lending /Deed Of Trust (CRE), notarized documents, or recorded documents

UNACCEPTABLE DOCUMENTS
• Power Of Attorney
• Note
• Lending /Deed Of Trust
• Notarized documents
• Recorded documents
• SSA-89 Authorization for the Social Security Administration (SSA) To Release Social Security
Number (SSN) Verification

APPROVED ELECTRONIC SIGNATURE PLATFORMS

INITIAL DISCLOSURES
• All vendors listed on the commercial lending approved list
• iSIGN (formerly Communication Intelligence Corporation)
• Docusign
• IDS – International Document Services
• SureDocs by Ala Mode
• Instanet Solutions by Authentisign
• Wolters Kluwers Secure Document Exchange (SDX)
• SignNow

1. Shark AI Capital Corporation reserves the right to request a wet ink version of any electronically signed document.
2. Acceptable platforms for an electronic 4506T is docusign or any approved software

HYBRID ELOSINGS
• Vendor must be on the companies or bank partner’s approved list

TECHNOLOGY REQUIREMENTS
The entire transaction should conform to ESIGN and the Uniform Electronic Transaction Act (UETA) laws as well as adhere to investor specific requirements:
• The digital technology must conform with FIPS 186, Digital Signature Standard and FIPS 180, Secure Hash Standard issued by NIST.
• AllRegs requirements as incorporated in Part 1, Section 402.

DOCUMENT DELIVERY, STORAGE AND REVIEW
Documents with electronic signatures shall be delivered to Shark AI Capital Corporation in the same manner as documents with ink signatures. The Electronic Signatures and Audit Trail Record for those signatures must be verifiable by Shark AI Capital Corporation or correspondent bank for the Life of the Loan or longer at no additional cost to Shark AI Capital Corporation and/or correspondent bank.

REQUIREMENTS FOR ELECTRONIC SIGNATURE PLATFORMS

Shark AI Capital Corporation will accept documents that include electronic signatures from approved vendors who meet the following criteria:
• Must provide a means for the signer to acknowledge his/her intent to sign. (See Establishing Intent and Obtaining Consent From The Signer)
• Use a method of electronic signature that is commonly used and approved for use by the main market investors or secondary market buyers. We do not approve the use of voice-based electronic methods. The standard electronic signatures in the lending industry are click-based signatures and signing-pad (digitized handwritten) signatures. We suggest limiting the approved electronic signatures to these types.
• Use an electronic signature method that includes the signer’s name, an indication that they electronically signed the document (such as text that states “Electronically Signed by”) and a time/date stamp for the signature.
• Provide the electronically signed document such that the electronic signature is viewable on the electronically viewed, printed and downloaded copy. The electronic signatures must be a permanent part of the document. Viewing the electronic signature cannot require the use of any proprietary software. Electronically acknowledged documents, where the signature/acknowledgement is not made a permanent part of the document and is stored separately from the document such as in a database, are not recommended.
• Provide an “original” electronically signed document – a document that can be used as the original, without watermarks such as “copy” -- for all documents for which we would require the ink-signed paper original in the traditional lending loan file.
• If a tamper evident seal is applied to the document (highly recommended, and required for certain documents such as electronically signed Notes), the tamper evident seal must be created and applied using commercially accepted standards. This structure is available in signing standard often used with PDF documents. The means to verify the tamper evident seal must be included as part of the document; this is usually the public key of the digital certificate used to apply the tamper evident seal. Verifying the tamper evident seal must not require any proprietary software.
• Signer should not be able to apply signatures in bulk.
• An audit trail or record of additional data related to the electronic signature process is created as part of the workflow. This information should be included in the document (either as part of the viewable electronic signature, such as a unique key, or as part of the overall document format, such as the Audit Trail section of the SMART Document standard.


APPROVAL PROCESS FOR ELECTRONIC SIGNATURE PLATFORMS

Vendors who wish to provide documents with electronic signature must adhere to the requirements outlined in this documentation. Email the following documentation to __________@sharkai.io for review.
• Vendor should submit proof of each requirement
• Submit a written system overview
• Complete a demonstration (if requested)
• Must be able to comply with GSE requirements (see Investor Specific Requirements)
• At any time during the loan process Shark AI Capital Corporation may require proof of an electronic signature. This may include providing an audit trail or other record of the electronic transaction.


ESTABLISHING INTENT AND OBTAINING CONSENT FROM THE SIGNER
Electronic ESIGN and UETA laws retain the rule that a signature is only valid if the signer intends to sign. In consumer transactions, E-Sign requires a specific and electronic consent process before an electronic notice may replace a legally required written notice. UETA merely requires that the parties agree to conduct transactions by electronic means, but does not specify how that agreement is to be proven.

E-Sign’s consent rule, found in section 101(c), applies where another statute, regulation or rule of law requires information to be provided or made available to a consumer in writing. It requires all of the following:
• There must be an affirmative consent, which has not been withdrawn.
• The consent must be preceded by a clear and conspicuous statement informing the consumer of all of the following:
o Any right or option to receive the information on paper (if the option exists)
o How to withdraw the consent and whether any other consequences, such as fees or
termination of the arrangement, will be imposed on the withdrawal,
o How to update the contact information
o How to obtain a paper copy on request and the fee, if any, for that copy.
o Before the consent is given, the consumer must be provided with a statement of the
hardware and software requirements for access to and for retaining the electronic records.
o The consumer's consent must be obtained or confirmed electronically (not just on paper).
o The manner of obtaining the electronic consent or confirmation must reasonably
demonstrate that the consumer can access information “in the electronic form that will be
used to provide the future information."

The consumer's consent must be reacquired if there is a change in the hardware or software requirements needed to access or to retain the electronic record and the change creates a material risk that the consumer will not be able to access or store records delivered electronically.


LEGAL FRAMEWORK FOR USE OF ELECTRONIC RECORDS AND SIGNATURES SUMMARY

In 1999 and 2000 the legal framework was created for using electronic records to replace paper records, and electronic signatures instead of ink signatures. In 1999, a model state law called the Uniform Electronic Transactions Act (“UETA”) was drafted and approved by the National Conference of Commissioners on Uniform State Laws (“NCCUSL”). 3 The UETA was then adopted by most states. In addition, in July 2000,
President Clinton signed the Electronic Signatures in Global and National Commerce Act (“ESIGN”) which then became the federal law on the use of electronic records and electronic signatures. 4

Both UETA and ESIGN have the same general purpose; to establish that an electronic signature is as legally effective as an ink signature; and that a contract that is made through the use of electronic records may not be denied enforceability solely because it is in electronic form.

ESIGN says this as follows:

SEC. 101. GENERAL RULE OF VALIDITY.
(a) IN GENERAL.— Notwithstanding any statute, regulation, or other rule of law (other than this title and title II), with respect to any transaction in or affecting interstate or foreign commerce—
(1) a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and
(2) a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation.

UETA and ESIGN focus solely on the legality of business partners agreeing to use electronic records and electronic signatures. They purposely leave the decisions of process to effect electronic delivery and electronic signature, as well as choice of technology to create the electronic signature itself, up to the business partners.

3. Refer to the UETA draft act for a list of the states that have adopted UETA, including links to their legislative record on adopting UETA, go here. As of this writing, three states have their own non-UETA based laws for electronic signature: New York, Illinois, and Washington. The text of these state laws is available by clicking the state’s name.
4. The text of the ESIGN Act is available here.


It is up to the business partners to agree on the process used, the type of electronic signature created, and the storage requirements for the electronically signed documents.

In the lending industry, regulators and other entities have issued guidance for lenders to consider in regard to using electronic records and signatures in their electronic initial disclosures process.

FEDERAL RESERVE GUIDANCE
From a regulatory perspective, the Federal Reserve Board has issued amendments to Regulations B, E, M, Z, and DD; which are effective October 1, 2008 for lenders who wish to use electronic delivery and signature for disclosure processes. 5 The final rule is generally summarized as follows:
• Creditors may provide application-related and other disclosures as electronic records to consumers, “subject to compliance with the consumer consent and other applicable provisions of the E-Sign Act”
o Although the Board allows certain disclosures to be electronically provided without specific E-Sign Consent, in certain circumstances such as in the case of a consumer creating an online application where the context of applying online demonstrates that the consumer has the necessary technical ability to receive documents electronically, the Board is specific that eSign consent is required for adverse action notices, copies of appraisals, and other documents that would normally be provided to consumers at some point in time after the initial application is made.
• Creditors must still provide the disclosures at certain specified times as required in other regulations (e.g. within 72 hours of receiving an application for credit, per Regulation Z)
• The disclosures should be in an electronic form that the consumer can keep, that is, “a standard electronic format that can be downloaded and saved or printed on a typical home personal computer.”
• “Creditors are also expected to maintain disclosures on Web sites for a reasonable period of time (which may vary depending upon the particular disclosures) so that consumers have an opportunity to access, view and retain the disclosures.” It is important to note here that the Board originally proposed a specific term of 90 days, but deleted the 90 day provision in the final rule.

5. Review the Federal Reserve final rule for details (Federal Reserve Board - Board announces amendments to five regulations to clarify requirements for providing consumer disclosures in electronic form).