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Financial Services Law Insights and Observations


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  • Utah repeals some collection agency registration requirements

    On March 17, the Utah governor signed HB 20 to repeal several of the state’s collection agency statutory provisions. Specifically, the bill repeals provisions that (i) require collection agencies to register with the Division of Corporations and Commercial Code and have on file sufficient bond in the amount of $10,000 (see Sections 12-1-1 and 12-1-2); (ii) stipulate bond terms and require certain records relating to registrations and bonds to be maintained with the Division and open to public inspection (see Sections 12-1-3, and 12-1-5); (iii) relate to violations and penalties and specify that “[a]ny person, member of a partnership, or officer of any association or corporation who fails to comply with any provision of this title is guilty of a class A misdemeanor (see Section 12-1-6); (iv) outline exceptions (see Section 12-1-7); (v) govern assignments of debts involving collection agencies and limit activities as to the assignments (see Section 12-1-8); (vi) specify that information about a consumer’s credit rating or credit worthiness sent to a consumer reporting agency is void if the collection agency does not have a bond on file (see Section 12-1-9); and (vii) require certain registration forms and application fees for collection agencies seeking approval to conduct business in Utah (see Section 12-1-10). Limitations and terms of collection fees and convenience fees imposed by creditors or third-party debt collection agencies will remain unchanged by the amendments (see Section 12-1-11). The changes take effect May 3.

    Licensing State Issues State Legislation Utah Debt Collection

  • Arkansas amends LO sponsorship licensing requirements

    On March 21, Arkansas enacted HB 1439 to clarify the sponsorship process and amend licensing requirements under the state’s Fair Mortgage Lending Act. The amendments modify the definition of a “transitional loan officer license” to mean a license that is issued to an individual who is employed “and sponsored by” a licensed mortgage banker or mortgage broker. The term “sponsor” was also added and defined as a licensed mortgage broker or mortgage banker “that has assumed the responsibility for and agrees to supervise the actions of a loan officer or transitional loan officer.” HB 1439 also amends provisions relating to the termination of a loan officer’s license to provide that should the employment of a loan officer or a transitional loan officer be surrendered or canceled, a “sponsor shall terminate the sponsorship of the loan officer or transitional loan officer with the commissioner within thirty (30) days from the date that the loan officer or transitional loan officer ceased to be employed or ceased activities for the sponsor.” Sponsorship termination extinguishes any rights of a loan officer or a transitional loan officer to engage in mortgage loan activity. The license will be marked as “approved-inactive” until a licensed mortgage broker or mortgage banker files an application with the commissioner to sponsor the loan officer. The “approved-inactive” status may be changed to “approved” if a licensed mortgage broker or mortgage banker files an application for sponsorship, pays a $50 fee, and provides sponsorship notice to the commissioner. The amendments will take effect 90 days following the adjournment of the legislature.

    Licensing State Issues State Legislation Arkansas Mortgages Fair Lending

  • Virginia amends remote work requirements for mortgage companies

    On March 26, the Virginia governor signed HB 2389, which permits mortgage lenders and mortgage brokers to allow employees and exclusive agents to work remotely provided certain conditions are met. Requirements to conduct business out of a remote location include: (i) the establishment of written policies and procedures for remote work supervision; (ii) ensuring access to platforms and customer information adheres to the licensee’s comprehensive written information security plan; (iii) the employment of appropriate risk-based monitoring and oversight processes, as well as the agreement from employees or exclusive agents who will work remotely to comply with these established practices; (iv) banning in-person customer interaction at an employee’s or exclusive agent’s residence unless the residence is an approved office; (v) the proper maintenance of physical records; (vi) compliance with federal and state security requirements when engaging in customer interactions and conversations; (vii) access to the licensee’s secure systems via a virtual private network or comparable system with password protection; (viii) the installation and maintenance of security updates, patches, or other alterations; (ix) “the ability to remotely lock or erase company-related contents of any device or otherwise remotely limit access to a licensee’s secure systems"; and (x) the designation of the principal place of business as the mortgage loan originator’s registered location for the purposes of the Nationwide Mortgage Licensing System and Registry record, “unless such mortgage loan originator elects an office as a registered location.” The amendments also add definitions for “office” and “remote location.” The Act is effective July 1.

    Licensing State Issues State Legislation Virginia Mortgages Mortgage Origination NMLS

  • Oregon clarifies appraisal company registration authority

    On March 13, the Oregon governor signed HB 2287 to clarify that the Appraiser Certification and Licensure Board (the “Board”) is the entity responsible for determining specified criteria for registration or certification of real estate appraisal management companies. In Oregon, “[a] person may not directly or indirectly engage in or attempt to engage in business as an appraisal management company or advertise or represent that the entity is an appraisal management company unless the person is” registered with the Board or is owned and controlled by an insured depository institution. The Act takes effect 91 days following adjournment of the legislature.

    Licensing State Issues State Legislation Oregon Appraisal

  • North Dakota amends mortgage licensing requirements

    On March 13, the North Dakota governor signed SB 2090, which, among other things, revises licensing requirements for residential mortgage lenders. The act provides that “a person other than a residential mortgage lender licensed and authorized under this chapter may not engage in residential mortgage lending in the state without a residential mortgage lender license issued by the commissioner. A person engages in residential mortgage lending if the borrower resides in North Dakota.” The act outlines provisions related to application for licensure; licensing fees; surety bond and minimum net worth requirements; license renewal, expiration, revocation, suspension, and surrender; recordkeeping requirements; prohibited acts and practices; prohibitions on advance fees; and permitted maximum charges for loans and installment payments. Provisions relating to orders, injunctions, investigations, subpoenas, examinations, and penalties are also discussed. The act also provides a comprehensive list of exemptions.

    The act stipulates that lenders in possession of a valid state money broker’s license as of August 1, are not required to obtain a residential mortgage lenders license until December 31. All other provisions of this chapter are applicable to residential mortgage lenders as of August 1.

    Licensing State Issues State Legislation North Dakota Mortgages NMLS

  • CSBS seeks comments on uniform mortgage licensing standards

    On March 16, the Conference of State Bank Supervisors (CSBS), on behalf of the NMLS Policy Committee, issued a request for public comments on proposed uniform state licensing standards for mortgage companies. The Proposal: Mortgage Business-Specific Requirements would create a national standard for mortgage industry licensing to help improve uniformity within the state system and streamline the licensing process for mortgagees seeking licensure in multiple states.

    The proposal is broken down into eight components:

    • Contacts. All licensees will be required to provide contacts within the company for accounting, legal, licensing, data breach/cybersecurity, exam billing, exam delivery, and mortgage call reports, in addition to a primary company contact and a primary consumer complaint contact. If a licensee chooses to list a third-party contact, “the company will be deemed to have expressly authorized a state agency to contact the third party without further approval from the company” and “the company is ultimately responsible for the area of responsibility.”
    • Periodic reporting. All licensees will be required to complete periodic reports covering mortgage call reports, audited financial statements, and reportable incidents.
    • Data requirements. All licensees will be required to “provide numbers for any approvals or designations the company holds[,]” as well as business bank account information for accounts held in the name of the applicant and used for mortgage activities.
    • Document requirements. Required documentation includes financial statements; policies and certifications; current Bank Secrecy Act/anti-money laundering and Gramm-Leach Bliley Privacy Act policies; current disaster recovery or business continuity plans; a current consumer grievance/complaint policy (as well as the required certification); and documents used in the regular course of business such as operating agreements, consumer complaint notices, customer agreements, and third-party contracts.
    • Required functionality. All licensees must abide by a three-party electronic surety bond agreement in order to guarantee “the surety’s performance or monetary compensation to the obligee should there be a failure by the principal to perform specified acts within a stated time period.” The surety bond will be electronically managed by NMLS.
    • Location reporting. All licenses will be required to provide locations where licensed activity will be performed, where records will be stored, or where support staff for licensed activities will be located. Licensees must also provide the primary location for accounting services, regardless of whether they are provided in house or by a third-party accounting firm, cloud storage services (including services used to collect data from customers), and the primary location for legal services, regardless of whether they are provided in house or by a third-party law firm.
    • Company operated work locations’ information. The proposal outlines information required for each company operated work location, including business activities, licensing authorities, addresses, books and records information, and “doing business as” names.
    • Key individual requirements. Licensees will be required to identify key individuals in the areas of management, ownership, functional risk areas, and industry specific roles. The proposal explains that the key individual inquiry focuses on key risk and functional areas (operations, finance, compliance, and information security), rather than titles. Key individuals for mortgages must also submit credit reports and complete an FBI criminal background check. Key individuals who have lived outside the United States at any time in the past 10 years must also provide an investigative background report.

    Comments on the proposal are due May 15.

    Licensing State Issues CSBS NMLS Mortgages

  • North Dakota passes law on money transmitter licensure

    On March 15, the North Dakota governor signed SB 2119, which revises provisions related to money transmitters. The act, among other things, provides that a “person may not engage in the business of money transmission or advertise, solicit, or hold itself out as providing money transmission unless the person is licensed under this chapter.” The provision does not apply to a “person that is an authorized delegate of a person licensed under this chapter acting within the scope of authority conferred by a written contract with the licensee” or to exempt persons provided the person “does not engage in money transmission outside the scope of the exemption.” The act outlines provisions related to consistent state licensure, application for licensure, information requirements for certain individuals, reporting and recordkeeping requirements (including those related to anti-money laundering), and bond requirements. Provisions relating to examinations, investigations, and licensee supervision, as well as unauthorized activities are also discussed. The act also provides a comprehensive list of exemptions.

    The act is effective August 1. For current licensees, the provisions take effect upon license renewal but no later than December 31.

    Licensing State Issues State Legislation North Dakota Money Service / Money Transmitters

  • DFPI clarifies licensing provisions for several state laws

    The California Department of Financial Protection and Innovation (DFPI) recently filed a notice of proposed rulemaking with the Office of Administrative Law, seeking to add several sections to Title 10, Chapter 3 of the California Code of Regulations relating to the California Consumer Financial Protection Law (CCFPL), the California Financing Law (CFL), the California Deferred Deposit Transaction Law (CDDTL), and the California Student Loan Servicing Act (SLSA). (See also DFPI initial state of reasons here.) Among other things, the proposed regulations provide specific registration requirements for covered persons under the CCFPL and outline requirements for exemption from registration under the CCFPL for licensees under the CFL, CDDTL, and SLSA.

    According to DFPI’s notice, the CCFPL grants the Department authority to require covered persons engaged in the business of offering and providing a consumer financial product or service to be registered but does not specify requirements for registration. The proposed regulations clarify these requirements, which include establishing an application process, outlining fees, and specifying persons and conditions for exemption. The proposed regulations also establish annual reporting requirements for filing reports with DFPI. The Department explained that “[e]xisting law exempts from CCFPL registration certain licensees who provide consumer financial products or services ‘within the scope of’ their licenses issued under other Department laws.” The proposed regulations clarify the meaning of “within the scope of” and specify that licensees under the CFL and the CDDTL are exempt from registering under the CCFPL. “[E]xempt licensees who provide products or services that would otherwise be subject to registration under the CCFPL [are required] to submit supplemental information on these activities in their annual reports required under their license,” DFPI explained.

    With respect to the SLSA, DFPI noted that “[a]lthough an SLSA license does not confer upon a licensee the authority to originate financing within the scope of their license, the regulations exempt SLSA licensees from registration requirements for education financing when they meet specified requirements.”

    The proposed regulations also clarify the applicability of the CFL to certain activities, by, among other things, providing that “an advance of funds to be repaid from a consumer’s future earned or unearned pay is a loan subject to the CFL” and that “providers of income-based advances and education financing who are registered under the CCFPL and whose charges do not exceed the charges permitted under the CFL” are exempt from licensure under the CFL. The proposed regulations also clarify provisions relating to collecting loan payments, monthly subscription fees, and loan contracts.

    Comments on the proposed regulations are due May 17.

    Licensing State Issues California State Regulators DFPI CCFPL California Financing Law Student Loan Servicing Act

  • New York AG continues crackdown on unregistered crypto trading platforms

    On March 9, the New York attorney general filed a petition in state court against a virtual currency trading platform (respondent) for allegedly failing to registeras a securities and commodities broker-dealer and falsely representing itself as a cryptocurrency exchange. The respondent’s website and mobile application enable investors to buy and sell cryptocurrency, including certain popular virtual currencies that are allegedly securities and commodities. The AG noted that this is one of the first times a regulator is making a claim in court that one of the largest cryptocurrencies available in the market is a security. According to the announcement, this cryptocurrency “is a speculative asset that relies on the efforts of third-party developers in order to provide profit to the holders.” As such, the respondent was required to register before selling the crypto assets, the AG said, further maintaining that the respondent also sells unregistered securities in the form of a lending and staking product. According to the AG, securities and commodities brokers are required to register with the state, which the respondent allegedly failed to do. Additionally, the respondent claimed to be an exchange but failed to appropriately register with the SEC as a national securities exchange or be designated by the CFTC as required under New York law. Nor did the respondent comply with a subpoena requesting additional information about its crypto-asset trading activities in the state, the AG said, noting that the respondent has already been found to be operating in multiple jurisdictions without proper licensure. The state seeks a court order (i) preventing the respondent from misrepresenting that it is an exchange; (ii) banning the respondent from operating in the state; and (iii) directing the respondent to undertake measures to prevent access to its mobile application, website, and services from within New York. 

    Last month the AG filed a similar petition against another virtual currency trading platform alleging similar violations (covered by InfoBytes here). 

    Licensing State Issues New York State Attorney General Digital Assets Cryptocurrency Enforcement

  • Wyoming to regulate debt buyers as collection agencies

    On February 27, the Wyoming governor signed HB 284, which requires debt buyers to be licensed as “collection agencies” beginning July 1. Under the act, a collection agency now includes any person who operates as a debt buyer, defined as “any person that is regularly engaged in the business of purchasing charged-off consumer debt for collection purposes, whether the person collects the debt, hires a third party for collection of the debt or hires an attorney for collection litigation[.]” As a result, debt buyers will be regulated by the Collection Agency Board. Importantly, the act protects the validity of any civil action or arbitration filed or commenced by a debt buyer, or any judgment entered for a debt buyer, prior to the effective date.

    Licensing State Issues Wyoming State Legislation Debt Buyer Debt Collection


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