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On December 29, the Florida Department of Financial Services, Office of Financial Regulation (the “Office”) amended rules related to the application procedures for prospective loan originator, mortgage broker , and mortgage lender licensees to provide an additional 45 days for submission of additional application information and to provide for the disposition of incomplete applications. Specifically, the amended rules allow the Office to grant an extension request of up to an additional 45 days to submit any requested information during the application process, so long as the request is made within the initial 45-day deadline. Should a license applicant fail to provide the additional requested information within the approved timeframe, the application will be removed from further consideration by the Office and closed. The amended rules are effective January 18.
On January 6, a member of the New York Senate introduced S1061, which would update the New York Banking Law (the “Law”) to require a license for persons or entities engaging in the business of making or soliciting a “commercial financing product” in New York. The legislation defines a commercial financing product as “any advance of funds to a commercial or business enterprise made for the purpose of assisting the business with its capital needs,” including (i) loans made to a commercial enterprise of $500,000 or less; (ii) asset-based financing in the amount of $500,000 or less; and (iii) leasing transactions in the amount of $500,000 or less.
“Making or soliciting” includes:
- Providing commercial financing products to small businesses;
- Marketing commercial financing products for providers of commercial financing products;
- Receiving compensation from a provider of a commercial financing product in exchange for a referral; and
- An entity that partners with a federal or state banking organization originator and the entity: (i) acquires a participation interest in the commercial financing product, if the entity either (a) receives compensation from the originator or (b) services the commercial financing product; or (ii) provides indemnity or loss protection to the originator for losses the originator may incur based on the performance of the commercial financing product.
The legislation would exempt banking organizations as defined by the Law (all banks, trust companies, private bankers, savings banks, safe deposit companies, savings and loan associations, credit unions and investment companies), any lender who makes or solicits five or fewer commercial financing products within a 12-month period, and check casher licensees, among others. Notably, the legislation does not currently contemplate any changes to existing Section 340, Article 9 of the Law, which generally requires licensure to originate commercial-purpose loans in New York of $50,000 or less with a rate above 16 percent.
Recently, the Texas Finance Commission adopted amendments to regulations governing residential mortgage banker, loan originator, and loan servicer licensing requirements that included updates to definitions, disclosure requirements, and other licensee duties and responsibilities. Highlights of the amendments include: (i) eliminating the requirement for a licensed mortgage company to post disclosures at its physical office; (ii) requiring disclosure of Nationwide Mortgage Licensing System and Registry (NMLS) identification information on all correspondence from a mortgage company or sponsored originator; (iii) clarifying an existing requirement that advertisements on social media sites are subject to the rules; (iv) amending regulations governing the duties and responsibilities imposed on mortgage bankers and originators to specify discrete acts listed under certain subsections to be deemed violations of certain prohibitions pursuant to Tex. Fin. Code § 156.303(a)(3); and (v) various changes to the requirements for a mortgage company and its sponsored originator to keep books and records, contained in § 80.204. The various rules are effective between January 3 and January 7.
Recently, California’s Department of Financial Protection and Innovation (DFPI) released new opinion letters covering aspects of the Money Transmission Act (MTA) related to Bitcoin automated teller machines (ATMs). Each of the three letters (available here, here, and here), which contain slightly different fact patterns, explain that the Bitcoin ATMs described by the applicant companies are not subject to licensure under the MTA because they are not considered to be engaging in the business of money transmission. In each instance, the transaction would only be between the consumer using the kiosk and the company, the transaction would be completed instantly, and no third parties would be involved in the transmission of the Bitcoin to the customer’s virtual wallets. DFPI reminded each company that while it was not a subject of their inquiry, if they choose to offer virtual currency other than Bitcoin, they may have obligations under California’s broker-dealer laws to the extent that any of those virtual currencies are securities.
On September 15, the New Jersey Department of Banking and Insurance (Department) began accepting applications for the NJ Student Loan Servicer license through the NMLS. The license is governed by the Student Loan Servicing Act, which was enacted in July 2019, and establishes the Office of the Student Loan Ombudsman within the Department and provides licensing requirements for student loan servicers (covered by InfoBytes here). A recently released bulletin by the Department describes the process for licensing and details persons exempt from the licensing requirements, including federal or state chartered banks, savings banks, savings and loan associations, and credit unions, as well as their wholly owned subsidiaries. The Bulletin notes that all non-exempt student loan servicers must submit all requirements for a license by December 31 and may continue to operate in New Jersey while their applications are pending.
On September 25, California governor signed SB 908, which includes the “Debt Collection Licensing Act” (the Act). The Act requires a person engaging in the business of debt collecting in the state of California to be licensed and provides for the regulation and oversight of debt collectors by the Department of Financial Protection and Innovation (DFPI) (the legislation refers to the DFPI as its previous name Department of Business Oversight). Debt collection licenses will be required starting January 1, 2022. Debt collectors who submit applications before January 1, 2022 will be allowed to operate while their application is pending.
The Act details the process of licensure, including application fees and background checks, and requires each licensee to (i) file reports under oath with the Commissioner; (ii) maintain a surety bond; (iii) and pay to the Commissioner its pro rata share of all costs and expenses to administer the licensing provisions. The Act requires the Commissioner to “take all actions necessary” in preparation “to fully enforce the licensing and regulatory provisions of this division, including, but not limited to, adoption of all necessary regulations” by January 1, 2022.
Moreover, in addition to the FDCPA’s general prohibition on engaging in unfair or deceptive acts or practices in the collection of consumer debts, SB 908 also prohibits California debt collectors from, among other things, (i) using profane language; (ii) placing telephone calls without disclosing the caller’s identity; (iii) communicating with debtors at a frequency that is “unreasonable,” and would “constitute harassment of the debtor under the circumstances;” and (iv) sending written or digital communications without their California license number displayed in at least 12-point sized font.
On September 1, NMLS announced that it is now accepting installment lender and branch approval license applications and transition filings for Georgia licensees. New applicants and existing licensees may now make submissions for Georgia Department of Banking and Finance licenses directly through NMLS. According to the announcement, “[c]ompanies holding these license types are required to submit a license transition request through NMLS by filing a Company Form (MU1) and an Individual Form (MU2) for each of their control persons by October 15.” The transition follows the enactment of SB 462, which took effect June 30. The statute transferred all “duties, powers, responsibilities, and other authority relative to industrial loans from the Industrial Loan Commissioner to the Department of Banking and Finance,” which utilizes the NMLS to manage its licensees. Specific details on the licensing requirements in Georgia can be accessed here.
On July 1, the South Dakota Division of Banking began accepting mortgage branch registration applications via NMLS. Previously, the division did not require branches of South Dakota mortgage lender licensees, mortgage brokerage licensees, or non-residential mortgage lender licensees to be registered in this fashion.
The NMLS description of the registration provides that it is required for any branch of a South Dakota mortgage lender licensee, mortgage brokerage licensee, or non-residential mortgage lender licensee that “for valuable consideration, originates, sells, or services mortgages, or holds himself, herself, or itself out as a person who, for valuable consideration, originates, sells, or services mortgages.”
Licensees have until December 31, 2021 (more than 17 months) to register their applicable branches. No items are required outside of NMLS regarding the application. However, branch managers must be licensed as South Dakota mortgage loan originators, which could take several months to coordinate.
On July 6, the Missouri governor signed SB 599, which, among other things, modifies the state’s mortgage broker licensing requirements. Specifically, the legislation (i) provides that a prelicensing education course that is completed by an applicant will not satisfy the state’s education requirement if the course precedes an application “by a certain period” as established by the Nationwide Multi-State Licensing System and Registry (NMLSR); (ii) requires persons with various financial relationships with a business applicant for a residential mortgage loan broker license to furnish fingerprints to the NMLSR for submission to the FBI and any other authorized government entity for a background check; and (iii) allows the Director of the Division of Finance to waive the requirement that residential mortgage loan brokers maintain at least one full-service office in the state of Missouri for persons “exclusively engaged in the business of loan processing or underwriting,” or providing mortgage loan servicing. The legislation is effective August 28.
On June 13, the Louisiana governor signed HB 701, which provides for the licensing and regulation of virtual currency businesses in the state. Subject to certain exceptions, the bill establishes licensing and registration requirements, and, among other things, (i) authorizes reciprocity of licensure with other states; (ii) specifies that licensee applications must be submitted through the Nationwide Multi-State Licensing System; (iii) adds provisions related to licensee examinations; (iv) outlines licensee surety bond requirements “based on the nature and extent of risks in the applicant’s virtual currency business model”; (v) provides the state’s office of financial institutions with enforcement authority; and (vi) prohibits licensees from engaging in unfair, deceptive, or fraudulent practices. The act is effective August 1.
- Steven R. vonBerg to discuss "Non-QM market overview & the impact of QM 2.0" at the IMN Non-QM Virtual Conference
- Buckley Webcast: Looking ahead — Tighter scrutiny of deposit and payment practices
- Jeffrey P. Naimon to discuss "What have you bought non-QM post-Covid?" at the IMN Non-QM Virtual Conference
- Garylene D. Javier to moderate "Innovation in an evolving privacy landscape" at the American Bar Association Business Law Section Consumer Financial Services Committee Winter Meeting