InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
Utah creates regulatory sandbox
On March 25, the Utah governor signed HB 378, which creates a state regulatory sandbox program through the state’s Department of Commerce (Department) that allows participants to temporarily test innovative financial products or services on a restricted basis without requiring a license or authorization to act under Utah law. Under the program, approved applicants will have 24 months from the date an application is approved to test the product or service on Utah residents without being subject to state laws and regulations that normally would regulate such products or services, unless the Department determines otherwise. Additionally, the Department, upon written notice, may end a participant’s participation program at any time and for any reason. The program allows for participants to request an extension of time up to six months after the end of the regulatory sandbox testing period in order to obtain a license or other authorization required by the law to continue to market the product or service. The act takes effect on May 13.
California appoints Manuel Alvarez as DBO Commissioner
On March 28, the California governor announced that Manuel Alvarez has been appointed Commissioner of the California Department of Business Oversight. Since 2014, Alvarez has been general counsel, chief compliance officer, and corporate secretary at an online purchase lender. Prior to those roles, he was an enforcement attorney with the CFPB, and a deputy attorney general at the California Department of Justice. Alvarez’s appointment will require the confirmation of the state Senate.
West Virginia amends provisions related to regulated consumer loans
On March 26, the West Virginia governor signed HB 3143, which amends the requirements for regulated consumer lending in the state to provide that a person making or taking assignment of consumer loans, or “undertaking direct collection of payments,” must first be licensed by the state’s Commissioner of Banking. Among other things, the act also adjusts the threshold amounts “for which certain finance charges can be imposed” on consumer loans, including revolving loan accounts. For instance, (i) on loans less than $3,500 that are not secured by real property, the finance charge “may not exceed 31 percent per year on the unpaid balance of the principal amount”; and (ii) on loans between $3,500 and $15,000, the finance charge “may not exceed 27 percent per year on the unpaid balance of the principal amount.” The act also provides restrictions relating to when finance charges may be imposed again, and states that, in certain cases, the “financing of [] charges is permissible and does not constitute charging interest on interest.” The act further clarifies that the new licensing provisions exclude “any collection agencies as defined and licensed by the West Virginia Collection Agency Act of 1973.” HB 3143 is effective June 7.
Montana adds capital and net worth requirements for mortgage servicers and originators
On March 19, the Montana governor signed HB 107, which amends the Montana Mortgage Act to, among other things, add capital requirements for mortgage servicers and net worth requirements for mortgage originators licensed in the state. The bill provides that a failure to meet or maintain the outlined standards could result in a license application denial or the suspension or revocation of a current license. Additionally, the bill adds a definition for mortgage “servicer providers” and authorizes the banking division of the Montana Department of Administration to adopt rules to (i) define false, deceptive, or misleading advertising; and (ii) establish requirements for licensee advertising using the internet. The bill is effective October 1.
Virginia, North Dakota establish GAP waiver requirements
On March 21, the Virginia governor signed SB 1325, which provides a framework within which guaranteed asset protection (GAP) waivers may be offered in the state. Among other provisions, the act (i) clarifies that any cost to the borrower for the sale of a GAP waiver, in compliance with TILA, should not be considered a finance charge or interest; (ii) states that neither the extension of credit nor the sale or lease of a motor vehicle “may be conditioned upon the purchase of a GAP waiver;” (iii) requires creditors to comply with GAP waiver obligations; (iv) requires a GAP waiver to include disclosures regarding the cancellation of the GAP waiver during a free look period; and (v) establishes requirements and restrictions for GAP waiver cancellations, including refund provisions. The act also provides that GAP waivers are not insurance and are exempt from Virginia's licensing requirements. The act is effective July 1.
Separately, on March 20, the North Dakota governor signed HB 1181, which clarifies that GAP waivers effective on or after August 1 are not insurance and are exempt from the state’s insurance laws. Among other things, the act also (i) clarifies contractual liability coverage; (ii) outlines required disclosures that must be stipulated with the sale of a GAP waiver; and (iii) specifies GAP waiver cancellation conditions and refund provisions.
Three states amend appraisal management company requirements and definitions
On March 25, the Colorado governor signed SB 46, which amends the definition of an appraisal management companies (AMC) in sections of the Colorado Revised Statutes to align with the definition in federal law. The act, with the exception of section 3, takes effect immediately.
On March 19, the Arkansas governor signed SB 393, which amends the registration requirements for AMCs. Under the act, appraisers must hold a license in good standing in the state. Additionally, AMCs are required to (i) implement systems to verify independent appraisals; (ii) establish processes and controls to ensure engaged appraisers are qualified and independent of the transaction; and (iii) conduct appraisal management services in accordance with specified federal regulations in existence on January 1, 2019. The act takes effect 90 days after adjournment of the legislature.
Finally, on March 14, the North Dakota governor signed SB 2075, which amends the state’s code related to AMCs. The amendments clarify that “an individual who has had an appraiser license or certification in this state or in any other state refused, denied, canceled, revoked, or surrendered” may not own an AMC. The restriction also applies to entities owned by such individuals. The act takes effect on August 1.
North Dakota expands personal identifying information law
On March 20, the North Dakota governor signed SB 2262, which, among other things, amends the state’s law covering the unauthorized use of personal identifying information (PII). Specifically, the bill expands the definition of PII to include, (i) an individual’s payment card information; (ii) an individual’s biometric data; and (iii) any other information that can be used to access a person's financial records. Under the bill, an individual is guilty of an offense if the individual “obtains or attempts to obtain, transfers, records, or uses or attempts to use” any PII of another individual, living or deceased, to obtain anything of value without consent of the other individual. The bill is effective August 1.
Virginia allows institutions to refuse transactions if elder exploitation is suspected
On March 18, the Virginia Governor signed HB 1987, which authorizes staff of financial institutions to refuse a transaction, delay a transaction, or refuse to disburse transaction funds if the staff member (i) has a good faith belief that the transaction may involve the financial exploitation of an aged or incapacitated adult; or (ii) files a report or has knowledge that a report has been filed with the responsible local authority that states in good faith that the transaction may involve financial exploitation of an aged or incapacitated adult. Unless authorized by a court, the bill allows the continued refusal for up to 30 days after the date the transaction was initially requested. The financial institution and its staff are immune from civil or criminal liability under the bill, absent gross negligence or willful misconduct. The bill is effective July 1.
Virginia requires money transmitters to be licensed through NMLS
On March 19, the Virginia governor signed HB 2690, which requires money transmitters to be licensed through the National Multistate Licensing System and Registry (NMLS). The bill also (i) amends the definition of a “member” subject to the law’s requirements to include a person who owns or controls ten percent (previously it was five) of a limited liability company; (ii) allows for reports and other filings to be submitted to the Commissioner through the NMLS; and (iii) changes the due date for the annual licensing fee from September 1 to December 31. Additionally, on March 21, the governor signed HB 2251, which repeals provisions of the state’s mortgage licensing law related to the issuance of transitional mortgage loan originator licenses and replaces them with provisions granting temporary authority to act as a mortgage loan originator. Both bills are effective July 1.
Kentucky creates separate licenses for check cashing and deferred deposit service businesses
On March 19, the Kentucky governor signed S.B. 145, which establishes separate licenses for check cashing and deferred deposit service businesses. In addition, S.B. 145 creates a new section that allows the Department of Financial Institutions commissioner to (i) require license applications and certain other regulatory filings to also be filed with the State Regulatory Registry (Registry); (ii) report violations, enforcement actions, and other relevant information to the Registry; and (iii) access the Registry as “an agent for requesting information from and distributing information to the [DOJ] or other governmental agencies.” The act takes effect 90 days after adjournment of the legislature.