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Washington state recognizes distributed ledger technology
On April 26, the Washington state governor signed SB 5638, which recognizes the validity of distributed ledger technology. Intending to expand the scope of the existing federal ESIGN Act, the bill adds a new chapter to the Revised Code of Washington, defining distributed ledger technology as “any distributed ledger protocol and supporting infrastructure, including blockchain, that uses a distributed, decentralized, shared, and replicated ledger.” The bill prohibits an electronic record from being denied “legal effect, validity, or enforceability solely because it is generated or stored using distributed ledger technology.” The bill is effective July 28.
Georgia exempts certain retailers from mortgage licensing requirements
On April 18, the Georgia governor signed HB 212, which amends the Official Code of Georgia Annotated relating to the licensing of mortgage lenders and mortgage brokers. Under the Act, the following persons, who meet certain requirements, are exempt from state licensing requirements: “retailers and retail brokers of manufactured homes, mobile homes, or residential industrialized buildings.” The Act also revises the definition of a “mortgage broker” to remove the aforementioned categories from the term, and further provides that a “mortgage broker” does not include employees of exempt persons who satisfy specific requirements. The Act takes effect July 1.
NYDFS creates Consumer Protection and Financial Enforcement Division
On April 29, NYDFS announced its newly created Consumer Protection and Financial Enforcement Division, led by Katherine Lemire as Executive Deputy Superintendent. The new office combines the Enforcement and Financial Frauds division with the Consumer Protection division and is responsible for ensuring compliance, fighting consumer fraud, and assisting NYDFS with the enforcement of the state’s Banking, Insurance and Financial Services laws. The office will have a particular investigative focus on the response to cybersecurity events and the creation of supervisory, regulatory and enforcement policy in the area of financial crimes. Prior to her new role, Lemire served as Assistant United States Attorney in the Southern District of New York where she investigated complex federal crimes, and as a prosecutor in the Manhattan District Attorney’s Office.
South Carolina enacts servicemembers civil relief act
On April 26, the South Carolina governor signed H 3180 to enact the South Carolina Servicemembers Civil Relief Act, which will “expand and supplement the rights, benefits, and protections of the federal Servicemembers Civil Relief Act (SCRA)” and provide that a violation of the SCRA is a violation of the state’s act. In particular, the Act expands federal SCRA’s definition of “military service” to include South Carolina guardsman who are on state active duty, subject to certain requirements. It also provides that a “dependent of a servicemember engaged in military service has the same rights and protections provided to a servicemember” under both the Act and the SCRA and expands contract termination rights for servicemembers receiving “military orders to relocate for a period of service of at least ninety days to a location that does not support the contract,” encompassing phone, internet, TV, and gym subscriptions. The Act took effect upon signature and is applicable to contracts executed on or after April 26.
Oklahoma permits inter-agency information-sharing agreements
On April 22, the Oklahoma governor signed HB 1387 to permit the state’s Administrator of Consumer Credit to enter into certain cooperative, coordinating, information-sharing agreements with other agencies in place of conducting a separate examination or investigation. According to the Act, the information-sharing agreements apply to any agency that has “supervisory or regulatory responsibility over any entity that has been or may be licensed by the Department of Consumer Credit or any organization affiliated with or representing one or more” such agency, as well as the Oklahoma State Banking Department. The Act is effective November 1.
Maryland approves bills on debt settlement services, mortgage lenders, and credit service businesses
On April 18, the Maryland governor approved several bills concerning debt settlement service providers, mortgage lenders, and credit service businesses.
Under HB 59, registrants providing debt settlement services are required to apply for a license or renewal and obtain a valid unique identifier issued by the Nationwide Multistate Licensing System and Registry (NMLS) on or after July 1. HB 59 also requires the Office of the Commissioner of Financial Regulation (OCFR) to establish a time period of at least two months within which registrants must transfer licensing information to NMLS. Additionally, registration fees are decreased to $400 from $1,000 for the issuance or renewal of a registration.
HB 61 amends the Annotated Code of Maryland related to mortgage lenders, loan servicers, and loan originators to, among other things, (i) alter and clarify certain tangible net worth requirements and criteria for mortgage lenders, servicers, and originators; (ii) repeal a provision that requires licensees to reapply for a license should a location change request not be filed in a timely manner with the OCFR; (iii) extend examination cycle periods; and (iv) amend certain expiration provisions related to mortgage loan originator licensees. The amendments take effect October 1.
Finally, SB 68 amends the definition of a “credit service business” to mean, among other things, any person who represents the ability to provide advice or assistance to consumers concerning improving a consumer’s credit record, establishing a new credit file, or obtaining credit extensions. SB 68 also exempts certain credit services businesses from certain information statement requirements when engaged to obtain an extension of credit for a consumer. Credit services businesses that qualify for an exemption must provide the consumer with certain information concerning the right to file a complaint as well as a copy of the contract before the consumer executes the contract. SB 68 takes effect October 1.
Maryland charges title company with making unlicensed, usurious consumer loans
On April 11, the Maryland Attorney General announced an administrative proceeding taken against a title company, its owner, and related businesses for allegedly making unlicensed and usurious title loans secured by consumers’ motor vehicles. According to the AG’s charges, the defendants, among other things, allegedly engaged in unfair or deceptive trade practices by offering consumers high-interest, short-term title loans with typical annual interest rates of 360 percent. The AG contends that the loans offered by the defendants qualify as consumer loans under Maryland law and therefore are subject to state interest rate caps. Furthermore, the AG alleges that the defendants were never licensed by the Maryland Commissioner of Financial Regulation to make consumer loans in the state. The AG seeks an order compelling the defendants “to permanently cease and desist from making unlicensed and usurious consumer loans in Maryland, to pay restitution to all affected consumers, and to pay civil penalties.”
Arkansas defines blockchain technology
On April 16, the Arkansas governor signed HB 1944, which defines blockchain technology under the state’s Uniform Electronic Transactions Act (UETA). Under the act, “blockchain technology” is defined as “a shared, immutable ledger that facilitates the process of recording one or more transactions and tracking one or more tangible or intangible assets in a business network.” The act also provides definitions for “blockchain distributed ledger technology” and “smart contract” under the UETA. The act takes effect 90 days after adjournment of the legislature.
Oklahoma enacts small lenders act
On April 18, the Oklahoma governor signed SB 720 to create the Oklahoma Small Lenders Act (the Act) and establish a framework to license and regulate small loan lenders in the state through the Department of Consumer Credit (ODCC). Beginning on January 1, 2020, any licensee under the Deferred Deposit Lending Act (DDLA) may begin an application under the Act and all licenses under the DDLA will be terminated and deemed expired on August 1, 2020. As of August 1, 2020, no lender may make a small loan covered by the Act unless they are properly licensed; and “small loan” is defined as an unsecured loan with a period between 60 days and 12 months that is fully amortized and payable in substantially equal periodic payments and contains no prepayment penalty. A licensee may only charge a maximum of 17 percent as a periodic interest rate, and the maximum aggregated principal loan amount of all small loans outstanding per customer is $1,500. Additionally, the Act outlines requirements for licensure, default procedures, reporting requirements, and penalties for violations.
Arizona exempts GAP waivers from insurance laws
On April 22, the Arizona governor signed HB 2674, a bill defining the term “guaranteed asset protection waivers” (GAP waivers) and clarifying that GAP waivers are not insurance and are thus exempt from the state’s insurance laws. The Act is effective 90 days after the state’s legislative session adjourns sine die.