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  • New York State floats BNPL legislation in FY 2025 budget

    State Issues

    On January 14, New York proposed its FY 2025 budget: Transportation, Economic Development and Environmental Conservation Article VII Bill, which includes an article, cited as the “Buy Now Pay Later Act” (the “Act”). The Act includes new licensing provisions, requiring buy now pay later (BNPL) financing providers (referred to as “lenders” within the Act) to pay a fee and file a written application to receive a license in order to provide BNPL loans. BNPL lenders would also be required to submit an affidavit of financial solvency, disclose their license on their website, app, or other consumer interface, and list the license in the terms and conditions of any BNPL loan offered and entered by the licensee. Licensees would also be subject to supervisory investigations. The Act would further require BNPL lenders to (i) maintain policies for ensuring the accuracy of data that may be reported to credit agencies; (ii) disclose certain loan terms; (iii) engage in limited ability-to-repay analyses; (iv) refrain from charging unfair, abusive, or excessive fees; and (v) abide by certain restrictions and disclosure requirements relating to the use of consumer data, among other things.

    State Issues BNPL New York Consumer Finance Licensing

  • Oregon amends money transmission law with respect to a required security device

    On January 9, the State of Oregon enacted a new bill on money transmission licensing, specifically stating that “each license application shall be accompanied by a security device in the amount of $25,000.” A security device is defined by Oregon law as a surety bond or an irrevocable letter of credit. If an applicant engages in business at more than one location, the security device will increase by $5,000 per location, with a maximum of $150,000. The bill further states that in place of security devices, an applicant could deposit securities such as interest-bearing stocks, bonds, notes, etc., and be held under the same obligations as the security device. The bill concludes that the security device will remain in effect until its cancellation and remain in place no longer than five years following a licensee ceasing its money transmission operations in Oregon. In the event of the bankruptcy of the licensee, the security device will be held in trust for the benefit of purchasers and holders of the licensee’s outstanding payment instruments.

    Licensing Oregon Bond Securities

  • Idaho Department of Finance publishes proposed rule changes on its Mortgage Practices Act

    On January 3, the Idaho Department of Finance published a bulletin on proposed rule changes to Vol. 23-10 of the Idaho Administrative Bulletin, specifically to section 12.01.10 – Rules Pursuant to The Idaho Residential Mortgage Practices Act; a redline of the bill’s section changes is here. According to the bill, the rule changes aim to “reduce regulatory burden by removing outdated requirements,” and the rulemaking changes were made pursuant to Executive Order 2020-01.

    There were several changes to the bill. First, the section on “Deceptive Advertising” was struck from the bill. Second, and under “Written Disclosures,” the portion on “Receipt of an Application” was struck from the bill. Third, and under “Prohibited Practices” and further under “Engage in Deceptive Advertising,” the proposed changes include the addition of two subsections: one on engaging in bait and switch advertising; and another on misleading someone to believe a solicitation is from a person’s current mortgage holder, or government agency, among others. Fourth, the section on “Borrowers Unable to Obtain Loans” was struck entirely.

    Licensing Consumer Finance Mortgages

  • Illinois adopts regulatory changes as part of its Collection Agency Act

    State Issues

    On December 1, the State of Illinois’s Department of Financial and Professional Regulation promulgated final regulations implementing provisions of the Illinois Collection Agency Act. As previously covered by InfoBytes, Illinois transferred oversight of collection agencies from the Division of Professional Regulation to the Division of Financial Institutions under Public Act 102-975 in November.

    Illinois proposed the new rules to “help the Division of Financial Institutions fulfill its newly-granted statutory responsibility and align these rules with regulatory requirements” set forth by the Illinois Collection Agency Act. Adoption of the new rules will not result in any substantive changes for Illinois Collection Agency licensees but will mirror the previous rules governing collection agencies at 68 Ill. Admin. Code 1210; additionally, the new rules have been adjusted to bring collection agencies in alignment with other industries regulated by the Division of Financial Institutions. Specifically, the new rules adjust the previous collection agency rules “regarding definitions, officers, applications for or changes to licensure, communications, pseudonyms, changes in ownership, recordkeeping, fees, payments, and the granting of variances to better reflect the standards of the Division of Financial Institutions.”

    Lastly, the rules add three new sections: (i) Administration and Enforcement of the Act, which grants the director administrative and enforcement power over collection agencies; (ii) Reports, which requires licensees to file written reports (upon at least 45-day notice by the Division); and, (iii) Investigations and Examinations, which generally states that licensees may be “examined from time to time” to ensure compliance. The rules went into effect on November 20, 2023.

    State Issues Licensing Illinois Debt Collection

  • DFPI opens comment period for the Digital Financial Assets Law

    On November 20, DFPI announced it is seeking public comment before it begins its formal rulemaking process on its Digital Financial Assets Law (DFAL), which was enacted on October 13. As previously covered by InfoBytes, DFAL created a licensing requirement for businesses engaging in digital financial asset business activity and is effective on July 1, 2025.

    For comments that recommend rules, DFPI encourages comments that “propose specific rule language and provide an estimate, with justification, of the potential economic impact on business and individuals that would be affected by the language.” Additionally, DFPI requests metrics, applicable information about economic impacts, or quantitative analysis to support comments. Among other topics, DFPI especially asks for comments related to (i) application fees and potential fee adjustments based on application complexity; (ii) surety bond or trust account factors; (iii) if capital minimums should vary by the type of activity requiring licensure; and (iv) its stablecoin approval process. 

    Comments must be received by January 12, 2024. On January 8, 2024, DFPI will host a Virtual Informal Listening Session with stakeholders to discuss feedback on this informal invitation for comments.

    Licensing State Issues Agency Rule-Making & Guidance DFPI California State Legislation Digital Assets Cryptocurrency

  • SBA issues new SBLC licenses for the first time in 40 years

    Federal Issues

    On November 1, the SBA announced that three new Small Business Lending Company (SBLC) licenses have been issued to lenders focused on underserved markets, which is notably the first expansion of the SBLC program in more than 40 years. An SBLC license permits lending institutions to leverage government guarantees during the process of approving small business loans, decreasing risk for the lender, and lowering costs for the borrower. Consequently, SBA noted, SBLCs can extend a greater number of loans to small businesses than would be feasible without government support. The announcement stated that SBA's current SBLCs surpass banks and credit unions in their ability to provide loans to minority-owned businesses.

    In June, the SBA opened a window for new applications for lenders. In announcing the new licensees, SBA Administrator Isabel Guzman stated that “[w]ith the addition of three new Small Business License Companies, the SBA will be able to serve even more small business owners who need capital to start, operate, and grow their businesses.” The SBA highlighted that “[e]ach of the three new SBLC license holders will focus on historically underserved markets, including small businesses in Native, rural, and low-income communities.”

    Federal Issues SBA Nonbank Consumer Finance Peer-to-Peer Loans Small Business Lending Biden Licensing

  • Utah Court of Appeals affirms ruling for debt buyer engaged in unlicensed collection efforts

    Courts

    The Utah Court of Appeals affirmed a lower court’s ruling against a debt buyer that acquired a portfolio of bad debts from borrowers all over the country, including residents of Utah. The debt buyer collected on the portfolio of debts by retaining third-party debt collectors or, in some instances, attorneys to recover such debts by filing lawsuits. The debt buyer was not licensed under the Utah Collection Agency Act (UCAA). As such, the plaintiffs argued that the debt buyer’s collection efforts were “deceptive” and “unconscionable” under the Utah Consumer Sales Practices Act.

    The lower court ruled for the debt buyer on the grounds that failure to obtain a license, without more, did not rise to the level of “deceptive” or “unconscionable” conduct. Further, the UCAA does not have a private right of action.

    Utah recently repealed the collection agency’s license, effective May 3, 2023 (covered by InfoBytes here).

    Courts Licensing Appellate Utah Debt Buying Consumer Finance Consumer Protection

  • CSBS offers guidance for licensees to prepare for NMLS renewal

    Federal Issues

    On October 24, CSBS released tips for licensees to prepare for NMLS renewal. As previously covered by InfoBytes, NMLS announced it will be rolling out a new version of its mortgage call report which will include new requirements for many licensees. Kelly O'Sullivan, the chair of the NMLS Policy Committee and deputy commissioner of the Montana Division of Banking and Financial Institutions, advises licensees to proactively update their information in NMLS and make use of available training and resources to address their queries before the renewal period begins. This is particularly crucial for those individuals who typically only engage with NMLS during the license renewal phase.

    CSBS recommended five essential tips for licensees:

    • Licensees should log into NMLS and thoroughly review and update their profile record to ensure accuracy;
    • Licensees should reset their NMLS password in advance to have a current password ready for accessing NMLS when needed;
    • Licensees should provide and maintain a current email address to receive essential updates from NMLS during the renewal process;
    • Licensees should review state-specific renewal requirements, as state agencies typically begin publishing details, including deadlines and fees, in September;
    • Licensees are encouraged to take advantage of the free, on-demand renewal training resources provided by CSBS to become familiar with the renewal process.

    Federal Issues Licensing NMLS Mortgages Consumer Finance CSBS Supervision

  • CSBS announces release of NMLS MCR Version 6 in Q1 2024

    On October 13, 2023, the Conference of State Bank Supervisors (CSBS) announced the Nationwide Multistate Licensing System & Registry (NMLS) will be rolling out a new version of its Mortgage Call Report (MCR). In an effort to standardize mortgage company data at the state level, and minimize the amount of reporting outside the system, NMLS will be launching an updated version of the MCR, Version 6 (FV6) on March 16, 2024.

    Licensees will see three main improvements in Version 6:

    • FV6 eliminates standard and expanded forms and consolidates them into one form. All servicers will complete the servicer schedule and all lenders will complete the lender schedule. Lenders and servicers will file financials quarterly, and brokers will file financials annually.
    • Commercial and consumer lending licensees will complete a separate state-specific form, removing the obligation to report mortgage information.
    • The revision of line-item definitions will improve the overall quality of the data and help implement more completeness and accuracy checks.

    FV6 will go into effect for all data collected on transactions dated on and after January 1, 2024. Additionally, NMLS will provide companies with the XML specifications no later than October 23. CSBS estimates that approximately 24,000 brokers, lenders, and servicers will experience reduced requirements, and approximately 3,100 lenders will have additional filing requirements.

    The Mortgage Bankers Association sent a letter to CSBS in July, raising concerns with the new version, including (i) the lack of technical specifications needed for full consideration of the proposal and its implementation; and (ii) the significant expansion and burden of reporting requirements on smaller filers resulting from the replacement of standard and expanded forms in favor of the new and more detailed FV6. CSBS noted mortgage industry concerns surrounding the timing of the rollout of FV6 ahead of Q1 2024, and shared that details for leniency to the filing deadline will be provided in future communications. NMLS will provide regular updates on the Mortgage Call Report page, targeted learning opportunities and Q&A sessions.

    Visit here for additional guidance on FV6 from APPROVED.

    Licensing NMLS CSBS Mortgages Consumer Finance

  • California enacts licensing requirements for digital asset businesses, regulation of crypto kiosks

    On October 13, the California Governor signed AB 39, which will create a licensing requirement for businesses engaging in digital financial asset business activity. Crypto businesses will need to apply for a license with California’s Department of Financial Protection and Innovation (DFPI). The bill, among other things, (i) empowers DFPI to conduct examinations of a licensee; (ii) defines “digital financial asset” as “a digital representation of value that is used as a medium of exchange, unit of account, or store of value, and that is not legal tender, whether or not denominated in legal tender, except as specified”; (iii) empowers DFPI to conduct enforcement actions against a licensee or a non-licensed individual who engages in crypto business with, or on behalf of, a California resident for up to five years after their activity; (iv) allows DFPI to assess civil money penalties of up to $20,000 for each day a licensee is in material violation of the law, and up to $100,000 for each day an unlicensed person is in violation; and (v) requires licensees to provide certain disclosures to California clientele, such as when and how users may receive fees and charges, and how they are calculated. The new law exempts most government entities, certain financial institutions, most people who solely provide connectivity software, computing power, data storage or security services, and people engaging with digital assets for personal, family, household or academic use or whose digital financial asset business activity is reasonably expected to be valued at no more than $50,000 per year. In September of last year, the California Governor vetoed a similar bill because creating a licensing framework was “premature” considering conflicting efforts.

    Also effective on July 1, 2025 is SB 401, which was also enacted on October 13. SB 401 establishes regulations for crypto kiosks under the DFPI’s authority. It will, among other things, prohibit kiosk operators from accepting or dispensing more than $1,000 in a single day to or form a customer via a kiosk. Operators would be required to furnish written disclosures detailing the transaction's terms and conditions as well as transaction details. Kiosk operators will also be obligated to provide customers with a receipt for any transaction at their kiosk, including both the amount of a digital financial asset or USD involved in a transaction and, in USD, any fees, expenses, and charges collected by the kiosk operator. Finally, operators will be required to provide DFPI with a list of all its crypto kiosks in California, and such list will be made public.

    Licensing State Issues California DFPI State Legislation Cryptocurrency Digital Assets Disclosures

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