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Financial Services Law Insights and Observations

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  • CSBS agrees to implement recommendations from fintech advisory panel

    Fintech

    On February 14, the Conference of State Bank Supervisors (CSBS) agreed to implement specific recommendations from the CSBS Fintech Industry Advisory Panel. The Advisory Panel, which was formed in 2017 and consists of 33 fintech companies, works to “identify and remove unnecessary pain points in the multistate experience of fintechs and other nonbanks operating regionally or nationwide while improving financial supervision.” Of the 19 recommended actions by the Advisory Panel, CSBS supported 14, including: (i) creating a 50-state model law to license money services businesses; (ii) creating a standardized call report for consumer finance businesses; (iii) expanding the use of the Nationwide Multistate Licensing System across all license types; and (iv) building an online database of state licensing and fintech guidance. Recommendations related to small business lending were among the items saved for future action or implementation.

    Fintech State Issues CSBS Licensing NMLS

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  • NYDFS adds check cashing and virtual currency businesses to nationwide licensing system

    State Issues

    On October 1, NYDFS announced the commencement of the final phase of its initiative to manage the license application and regulation of all non-depository financial institutions operating in the state through the Nationwide Multistate Licensing System and Registry (NMLS). As such, NYDFS now allows financial services companies holding check casher and virtual currency business activity licenses to transition those licenses to NMLS. Additionally, companies applying for new licenses may now submit applications through NMLS. As previously covered in InfoBytes, licensed budget planners, sales finance agencies, money transmitter licensees, and mortgage providers have already made the transition to NMLS. 

    State Issues NYDFS NMLS Licensing Virtual Currency

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  • California governor approves revisions to Student Loan Servicing Act

    State Issues

    On September 14, the California governor approved AB 38 amending the state’s Student Loan Servicing Act (Act). The Act provides for the licensure, regulation, and oversight of student loan servicers by the California Department of Business Oversight (CDBO). Among other things, the amendments: (i) clarify the circumstances under which the Commissioner of the CDBO may deny a student loan servicer’s application; (ii) remove debt collectors of defaulted student loans from the definition of a “student loan servicer”; (iii) authorize the Commissioner to require license applicants and licensees to submit required filings with, and pay assessments to, the Commissioner through the Nationwide Multistate Licensing System and Registry; (iv) require the Commissioner to report violations of the Act “as well as other enforcement actions and information to the licensing system and registry to the extent that the information is a public record”; and (v) extend to 10 business days the time for a licensee to acknowledge receipt of a qualified written request from a borrower. The amendments also grant the Commissioner the authority to prescribe circumstances under which electronic records, including applications, financial statements, and reports, may be accepted.

    State Issues State Legislation Student Lending Student Loan Servicer Licensing NMLS

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  • Illinois updates Residential Mortgage License Act

    State Issues

    On August 14 and 10, the Illinois governor signed HB 4404 and SB 2615, which amend the Illinois Residential Mortgage License Act of 1987. Effective immediately, SB 2615, now Public Act 100-0795, requires, among other things, that mortgage loan advertisements in Illinois, whether print or electronic, reference the Nationwide Multistate Licensing System (NMLS) and Registry’s Consumer Access website, except where exempted by the Secretary of Financial and Professional Regulation.

    HB 4404, now Public Act 100-0851, provides that an entity that is engaged solely in independent loan processing through the sponsoring of individuals is considered exempt from the licensing requirements of the Residential Mortgage License Act but is required to annually apply through the NMLS for an exempt company registration for the purpose of sponsoring one or more licensed mortgage loan originators. The changes are effective immediately.

     

    State Issues Mortgages Mortgage Licensing Mortgage Advertising NMLS Licensing

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  • Connecticut governor signs amendments to state banking statutes

    State Issues

    On June 14, the governor of Connecticut signed HB 5490, which makes various amendments to the state’s banking statutes, including standardizing various requirements across several mortgage and nonmortgage licensing types. Among other things, the law (i) extends the commissioner’s authority over certain mortgage-related licensees (mortgage lenders, brokers, and originators; correspondent lenders, and processors or underwriters) to include small loan lenders, sales finance companies, sales finance companies, mortgage servicers, money transmitters, check cashers, debt adjustors, debt negotiators, consumer collection agencies, student loan servicers, and lead generators; (ii) outlines provisions concerning the commissioner’s authority to conduct investigations and examinations; (iii) establishes that for loans under $5,000, the maximum annual percentage rate (APR) shall not exceed the lesser of 36 percent or the maximum APR for interest “permitted with respect to the consumer credit extended under the Military Lending Act”; and (iv) requires sales finance companies to acquire, maintain, and report to the commissioner certain demographic information on ethnicity, race, and sex for any retail installment contract or application for such contract covering the sale of a motor vehicle. The law is effective October 1, with the exception of specified provisions.

    State Issues State Legislation Mortgages Licensing NMLS

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  • NYDFS enters next phase in use of nationwide licensing system

    State Issues

    On April 25, the New York Department of Financial Services (NYDFS) announced the next phase in its initiative to manage the licensing and regulation of all nondepository financial institutions operating in the state. Beginning May 1, budget planners and premium finance companies will be able to transition their licenses to the Nationwide Multistate Licensing System and Registry (NMLS). Companies applying for new licenses will be also able to submit applications through the NMLS. As previously covered in InfoBytes, licensed lenders, sales finance companies, and money transmitters made the transition to NMLS last year. “The Department is proud to continue our work with [the Conference of State Bank Supervisors] and our fellow state regulators in the ongoing modernization of financial services regulation, enhancing the strong regulatory framework created by states, and supporting industry innovation,” stated NYDFS Superintendent Maria T. Vullo.

    State Issues NYDFS NMLS Non-Depository Institution Licensing

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  • Wyoming allows state board to use NMLS to assist in regulation of debt collection industry

    State Issues

    On March 12, the Wyoming governor signed SF 26, which amends the preexisting licensing law to authorize the state’s collection agency board to use information from, and furnish information to, the nationwide multistate licensing system (NMLS) to assist in the regulation of the debt collection industry. In addition, among other things, SF 26 allows the board to establish application requirements; require background investigations of licensees and applicants; and receive criminal history record information. The law also amends provisions relating to the disposition of fees and expiration and renewal of licenses. The law is effective immediately. 

    State Issues NMLS Licensing Debt Collection

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  • OCC requests comments on registration of mortgage loan originators

    Lending

    On February 6, the OCC published a notice and request for comment in the Federal Register concerning its information collection entitled, “Registration of Mortgage Loan Originators.” Under the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act), any person employed by a regulated entity, who is engaged in the business of residential mortgage loan origination, must register with the Nationwide Mortgage Licensing System and Registry (NMLS), obtain a unique identifier, and adopt policies and procedures to ensure compliance with the SAFE Act’s requirements. The NMLS is structured to, among other things, (i) improve information sharing between regulators; (ii) increase mortgage loan originator accountability; and (iii) provide consumers easy access to background information on mortgage loan originators, including publicly adjudicated disciplinary and enforcement actions. The OCC retains enforcement authority under the SAFE Act for financial institutions (including federal branches of foreign banks) with total assets of $10 billion or less. Comments on the notice must be received by April 9.

    Lending OCC Loan Origination NMLS Mortgages SAFE Act

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  • Pennsylvania requires non-bank mortgage servicers to submit licensing applications through NMLS

    State Issues

    On January 23, the Pennsylvania Department of Banking and Securities announced it will begin accepting licensing applications from non-bank servicers through the Nationwide Multistate Licensing System (NMLS) as early as April 1 as part of the state’s move to increase oversight into non-bank mortgage servicing. The licensing requirement falls within SB 751 (Act No. 81), which amended Title 7 of the Pennsylvania Consolidated Statutes to regulate certain mortgage servicing activities, and was signed into law on December 22 by Governor Tom Wolf. (See previous InfoBytes coverage here.) The deadline for submitting licensing applications is June 30.

    State Issues Lending Mortgage Servicing Licensing NMLS

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  • CSBS announces FTC access to non-confidential NMLS licensing information

    Lending

    On January 18, the Conference of State Bank Supervisors (CSBS) announced it will start sharing non-confidential licensing information obtained through the Nationwide Multistate Licensing System (NMLS) with the FTC. Once implemented, the FTC will have access to regulated companies’ ownership information, and public FTC enforcement actions will be added to the NMLS database and made available to state regulators and to the public. According to the FTC, access to this type of information will improve consumer protection investigation efficiency and coordination with state law enforcement partners. Currently, select NMLS data is shared with the Office of Financial Research, CFPB, Financial Crimes Enforcement Network, and FHA.

    Lending CSBS FTC NMLS Enforcement

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