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Financial Services Law Insights and Observations

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  • Texas updates guidance for property tax lenders to work with consumers

    State Issues

    On February 18, the Texas Office of the Consumer Credit Commissioner updated its advisory bulletin urging property tax lenders to work with consumers during the Covid-19 crisis (previously discussed hereherehere, and here) Among other measures, the regulator urges licensees to increase consumer communication regarding the effects of Covid-19 for licensees, work out modifications for payment difficulties, and review policies for fees, late charges, delinquency practices, and repossessions. The guidance also: (i) reminds licensees of legal requirements for using electronic signatures, and (ii) continues to permit licensees to conduct activity from unlicensed locations, subject to certain conditions. The guidance is in effect through March 31, 2021, unless withdrawn or revised.

    State Issues Covid-19 Texas Consumer Finance Lending Repossession Licensing ESIGN

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  • Texas updates guidance for regulated lenders

    State Issues

    On February 18, the Texas Office of the Consumer Credit Commissioner issued updated guidance (previously covered herehere,  herehere, and here) for regulated lenders relating to the Covid-19 crisis. The guidance: (1) encourages lenders to work with consumers, including by working out modifications to assist with payments, and reviewing policies for fees, late charges, delinquency practices, and repossessions, among other things; (2) reminds lenders of legal requirements for using electronic signatures; and (3) permits lenders to conduct regulated lending activity from unlicensed locations, subject to certain conditions.  The guidance is in effect through March 31, 2021, unless withdrawn or revised.

    State Issues Covid-19 Texas Consumer Credit ESIGN Lending Licensing

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  • Texas Office of Consumer Credit updates guidance urging motor vehicle sales finance licensees to work with borrowers

    State Issues

    On February 18, the Texas Office of the Consumer Credit Commissioner updated its advisory bulletin urging motor vehicle sales finance licensees to work with consumers during the Covid-19 crisis (previously covered herehereherehereherehere, and here). Among other measures, the guidance urges licensees to increase consumer communication regarding the effects of Covid-19 for licensees, work out modifications for payment difficulties, and review policies for fees, late charges, delinquency practices, and repossessions. The guidance also: (i) reminds licensees of legal requirements for using electronic signatures and (ii) continues to permit licensees to conduct activity from unlicensed locations, subject to certain conditions. The guidance is in effect through March 31, 2021, unless withdrawn or revised.

    State Issues Covid-19 Texas Consumer Finance Auto Finance Licensing

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  • Texas Office of Consumer Credit updates advisory to work with consumers

    State Issues

    On February 18, the Texas Office of the Consumer Credit Commissioner updated its advisory bulletin urging credit access businesses to work with consumers during the Covid-19 crisis (previously covered herehereherehere, and here). Among other measures, the regulator urges licensees to increase consumer communication regarding the effects of Covid-19 for licensees, work out modifications for payment difficulties, and review policies for fees, late charges, delinquency practices, and repossessions. The guidance also: (i) reminds licensees of legal requirements for using electronic signatures, and (ii) continues to permit licensees to conduct activity from unlicensed locations, subject to certain conditions. The guidance is in effect through March 31, 2021, unless withdrawn or revised.

    State Issues Covid-19 Texas Consumer Credit Licensing ESIGN

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  • Maryland regulator exempts RELIEF Act stimulus payments from garnishment or set-off

    State Issues

    On February 17, the Maryland commissioner of financial regulation issued guidance specifying that stimulus payments to residents pursuant to the Maryland RELIEF Act of 2021 are exempt from garnishment and set-off laws. 

    State Issues Covid-19 Maryland Debt Collection

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  • Massachusetts AG settles with federal loan servicer to resolve allegations of unfair and deceptive practices

    State Issues

    On February 10, the Massachusetts attorney general announced a “first-of-its-kind” settlement with one of the nation’s largest federal student loan servicers, resolving allegations that the servicer engaged in unfair and deceptive practices by overcharging borrowers and improperly processing claims for public service loan forgiveness. As previously covered by InfoBytes, the AG filed a complaint in 2017 claiming the servicer, among other things, (i) failed to timely and properly process applications for income driven repayment (IDR) plans, thereby denying borrowers the opportunity to make qualifying payments under forgiveness programs; (ii) failed to properly count qualifying payments under the Public Service Loan Forgiveness program; (iii) failed to properly process certification forms in connection with the Teacher Education Assistance for College and Higher Education Grant program, causing grants to be converted into loans; and (iv) collected amounts not legitimately due and owing and failing to refund them.

    Under the terms of the settlement, more than 200,000 Massachusetts borrowers will be able to submit a claim for a detailed audit. Should the audit identify a servicing error or misrepresentation, the servicer must “restore borrowers to their rightful statuses” under the federal loan forgiveness programs; however, if corrections cannot be made, the servicer is required to provide monetary relief to borrowers. The servicer is also is required to repay teachers whose grants were converted into loans erroneously and have not already received relief from the Department of Education, and make corrections for borrowers who experienced IDR application processing delays resulting in missed opportunities for making qualifying payments towards loan forgiveness. Further, the servicer must implement an enhanced quality assurance review practice to identify servicing errors, affected borrowers, as well as root causes for the errors.

    State Issues State Attorney General Enforcement Student Lending Student Loan Servicer

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  • Washington issues updated guidance to residential mortgage loan servicers

    State Issues

    On February 12, the Director of the Washington Department of Financial Institutions issued their fourth amended guidance to residential mortgage loan servicers.  The guidance reminds residential mortgage loan servicers to take all necessary precautions to help prevent the spread of Covid-19, including allowing them to continue working from home (previously discussed here.)  It also urges servicers to take “reasonable and prudent actions” to support consumers by:

    • Forbearing mortgage payments;
    • Refraining from reporting late payments to credit rating agencies;
    • Offering mortgagors additional time to complete trial loan modifications, and ensuring that late payments do not affect their ability to obtain permanent loan modifications;
    • Waiving late payment fees and online payment fees;
    • Postponing foreclosures;
    • Ensuring that the closure of the mortgage servicer’s office does not disrupt services to borrowers; and
    • Proactively reaching out to mortgagors via app announcements, text, email or otherwise to explain the assistance being offered to mortgagors.

    The guidance also notes that efforts to assist mortgagors will not be subjected to examiner criticism.

    State Issues Covid-19 Washington Mortgages

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  • New York expands commercial lending disclosure coverage

    State Issues

    On February 16, the New York governor signed S898, which amends the state’s recently enacted commercial financing disclosure law to expand its coverage and delay the effective date. As previously covered by InfoBytes, in December 2020, the governor signed S5470, which establishes consumer-style disclosure requirements for certain commercial transactions under $500,000. The law exempts (i) financial institutions (defined as a chartered or licensed bank, trust company, industrial loan company, savings and loan association, or federal credit union, authorized to do business in New York); (ii) lenders regulated under the federal Farm Credit Act; (iii) commercial financing transactions secured by real property; (iv) technology service providers;  and (v) lenders who make no more than five applicable transactions in New York in a 12-month period. The law is currently set to take effect on June 21, which is 180 days after the December 23, 2020 enactment. As noted by the sponsor memo, prior to signing the law, the governor “expressed concerns about the reach of the bill and the time needed to implement the required rulemaking.” After enactment, the legislature introduced S898, which contains the “negotiated change to the underlying chapter [to] address[] those concerns.”

    S898 increases the coverage of the consumer-style disclosure requirements to commercial transactions under $2.5 million and creates a new exemption for certain vehicle dealers. The law also extends the effective date to January 1, 2022.

    State Issues State Legislation Commercial Finance Commercial Lending Merchant Cash Advance

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  • States reach $4.2 million settlement to resolve credit card interest overcharges

    State Issues

    On February 8, state attorneys general from Pennsylvania, Iowa, Massachusetts, New Jersey, and North Carolina entered into an assurance of voluntary compliance with a national bank to resolve allegations that it overcharged credit card interest for certain consumers. According to the investigating states, between February 2011 and August 2017, the bank allegedly failed to properly reevaluate and reduce the annual percentage rate (APR) for certain consumer credit card account holders who were entitled to a reduction, as required by the CARD Act and state consumer protection laws. The announcement follows a 2018 CFPB settlement, in which the bank agreed to provide $335 million in restitution to affected consumers (covered by InfoBytes here). At the time, the Bureau noted that it did not assess civil monetary penalties due to efforts undertaken by the bank to self-identify and self-report violations to the Bureau. The states also acknowledged that the bank self-identified issues with its APR reevaluation process through an internal compliance program. The bank denied liability or that it violated the states’ consumer protection laws and has agreed to pay $4.2 million to approximately 25,000 current and former affected consumers, which will be limited to consumers who received a payment of $500 or more in restitution from the bank for the original violation.

    State Issues State Attorney General Enforcement Credit Cards Interest CARD Act

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  • NYDFS says climate-based activities may qualify for state CRA credit

    State Issues

    On February 9, NYDFS issued new guidance stating that financing activities that support the climate resiliency of low- and moderate-income (LMI) and underserved communities may receive credit under the New York Community Reinvestment Act (the “New York CRA”). The industry letter notes that LMI and underserved communities are “disproportionally affect[ed]” by climate change because they “tend to be more susceptible to flooding and heat waves” and have “fewer resources to recover from natural disasters.” NYDFS reminds institutions that one way banking institutions subject to the New York CRA are evaluated is the extent to which their activity revitalizes or stabilizes both LMI geographies and underserved geographies, and that financing climate resiliency actions “may help mitigate climate change risks and at the same time revitalize or stabilize those geographic areas.” Accordingly, NYDFS outlines a non-exhaustive list of specific examples that may qualify for credit under the New York CRA, including (i) “renewable energy, energy-efficiency and water conservation equipment or projects for affordable housing…”; (ii) “microgrid or battery storage projects in LMI areas with high flood and/or wind risk…”; and (iii) “installation of air conditioning in multifamily buildings offering affordable housing….” Moreover, NYDFS states that banking institutions may also receive credit for climate resiliency promoting investments or loans to Community Development Financial institutions, among others.

    State Issues NYDFS CRA State Regulators

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