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Financial Services Law Insights and Observations

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  • Washington AG sues collection agency over time-barred debt settlement offers

    State Issues

    On June 25, the Washington attorney general filed a complaint against a collection agency in King County Superior Court alleging the company’s settlement offers violated the state’s Collection Agency Act (CAA) and Consumer Protection Act (CPA). The complaint alleges that the company sent over 75,000 collection letters to Washington state residents and hundreds of thousands more letters to individuals in other states that told individuals they had a fixed number of days to respond to an offer to settle time-barred debts. However, according to the complaint, because the letters failed to disclose that the debts were legally unenforceable, they “had the capacity to deceive consumers into believing they could be sued on the debts if they did not pay.” These actions, the complaint claims, constitute an unfair and/or deceptive practice under the CPA. The company also allegedly violated the CAA, which, among other things, prohibits Washington-licensed collection agencies from threatening to take actions they cannot legally take. The complaint seeks injunctive relief, civil penalties, restitution, and costs.

    State Issues State Attorney General Debt Collection

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  • New York AG settles with student debt relief defendants

    State Issues

    On June 25, the U.S. District Court for the Southern District of New York entered a stipulated final judgment and order to resolve allegations concerning an allegedly fraudulent and deceptive student loan debt relief scheme. According to the New York attorney general, the defendants allegedly sold debt-relief services to student loan borrowers that violated several New York laws, including the state’s usury, banking, credit repair, and telemarketing laws, as well as the Credit Repair Organizations Act, the Telemarketing Sales Rule, and TILA. The order imposes a $5.5 million judgment against the majority of the defendants, which will be partially suspended after certain defendants pay $250,000. The AG’s case against one of the defendants, however, will continue. The order also prohibits the defendants from engaging in unlawful acts or deceptive practices such as false advertising, and, among other things, imposes compliance and reporting requirements and permanently bans the defendants from offering, providing, or selling any debt relief products and services or collecting payments from consumers related to these products and services.

    State Issues State Attorney General Student Lending Debt Relief Usury TILA Telemarketing Sales Rule

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  • North Dakota governor issues order on cooperatives’ annual meetings

    State Issues

    On July 1, the North Dakota governor issued Executive Order 2020-37, which suspends the provision in North Dakota law requiring cooperatives to hold an annual meeting within six months after the close of the fiscal year. Cooperative associations are permitted to schedule the 2020 annual meeting at a date, time and place, and in a manner that preserves and protects the health and safety of participating members.

    State Issues Covid-19 North Dakota

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  • Delaware governor issues order modifying relief relating to evictions, foreclosures, and insurance

    State Issues

    On June 30, the Delaware governor issued an order that modifies previous relief relating to evictions, foreclosures, and insurance. Specifically, the declaration lifts the stay on residential mortgage foreclosure actions commenced prior to the state of emergency. However, subject to certain exceptions, individuals may not be removed from the residential properties as a result of a mortgage foreclosure process while the order is in effect. Further, actions for summary possession may be filed for residential units in Delaware, but must be stayed pending a determination of whether the parties would benefit from participating in court supervised mediation or alternative dispute resolution. During the eviction process, subject to certain exceptions, individuals may not be removed from the residential properties. Finally, beginning July 1, 2020, every insurer is required to provide a 90-day payment plan for certain individual policyholders and business policyholders impacted by the Covid-19 state of emergency. 

    State Issues Covid-19 Delaware Mortgages Evictions Foreclosure Insurance Mortgage Insurance

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  • Oregon authorizes remote notarizations through July 2021

    State Issues

    On June 30, the Oregon governor signed HB 4212A into law, which authorizes remote online notarization through July 2021. Under the new law, a commissioned notary public may use audio-visual technology to perform notarizations, subject to certain requirements, limitations and conditions. The Oregon secretary of state also issued guidance which assists notaries to find technology vendors that meet the requirements of the new law, register for online notarization training, and submit the required notice form.

    State Issues Covid-19 Oregon Notary Fintech

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  • Oklahoma regulator amends working from home guidance

    State Issues

    On June 30, the Oklahoma Department of Consumer Credit extended, for the third time, its interim guidance to regulated entities on working from home (see here, here, and here for previous coverage). The guidance sets forth data security standards that regulated entities must meet in order for the department to take no action with respect to employees conducting activities that would otherwise require licensure of their homes. The revised guidance also provides that the department will expedite and waive fees for change of address applications in the event that a licensed location is compromised by Covid-19 or is undergoing decontamination. The guidance was extended through September 30, 2020.

    State Issues Covid-19 Oklahoma Consumer Credit Privacy/Cyber Risk & Data Security Licensing

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  • New York Department of Financial Services adopts emergency measure to provide relief to insureds

    State Issues

    On June 28, the New York Department of Financial Services adopted an emergency measure that amends the insurance regulations to provide relief to policyholders, contract holders, and insureds who can demonstrate financial hardship relating to the Covid-19 pandemic. Among other things, the emergency measure: (i) provides that premiums remitted by a creditor will be assumed to provide coverage under a credit life or credit unemployment insurance policy for insured debtors whose payments are not more than three months overdue; (ii) provides certain protections for insureds who do not make timely premium payments to certain insurance entities; and (iii) prohibits a premium finance agency from cancelling an insurance policy due to an insured’s failure to make a timely installment payment for a period of at least 90 days, if the insured can demonstrate financial hardship due to Covid-19, and subject to the safety and soundness of the premium finance agency. 

    State Issues Covid-19 New York NYDFS Insurance Consumer Credit

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  • FDIC follows OCC, adopts final rule addressing Madden

    Agency Rule-Making & Guidance

    On June 25, the FDIC issued a final rule clarifying that whether interest on a loan is permissible under the Federal Deposit Insurance Act is determined at the time the loan is made and is not affected by the sale, assignment, or other transfer of the loan. The FDIC’s final rule effectively reverses the Second Circuit’s 2015 Madden v. Midland Funding decision as applicable to state banks and follows the OCC’s issuance of a similar rule earlier this month for national charters. Specifically, the FDIC’s final rule states that, “[w]hether interest on a loan is permissible under section 27 of the Federal Deposit Insurance Act is determined as of the date the loan was made. . . [and] shall not be affected by a change in State law, a change in the relevant commercial paper rate after the loan was made, or the sale, assignment, or other transfer of the loan, in whole or in part.” Additionally, the FDIC rule mirrors the OCC in specifying that the rule does “not address the question of whether a State bank. . .is a real party in interest with respect to a loan or has an economic interest in the loan under state law, e.g. which entity is the ‘true lender.’” Details on the effect of these rules can be found in Buckley’s Special Alert on the OCC’s issuance.

    Agency Rule-Making & Guidance FDIC OCC Madden Interest Rate State Issues

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  • NYDFS discusses state CRA exams and Covid-19 considerations

    State Issues

    On June 30, NYDFS issued two industry letters aimed at reminding New York regulated banking institutions of their responsibilities under New York State’s Community Reinvestment Act (NYCRA) with respect to minority-and women-owned businesses, as well as opportunities to receive NYCRA credit for Covid-19 pandemic activities.

    The first industry letter discusses the state’s recent amendments to the NYCRA, which were effective January 11, 2020, and require NYDFS to consider “several aspects of banking institutions’ activities with respect to minority- and women-owned businesses.” These include, among other things, (i) “‘the banking institution’s participation, including investments, … in technical assistance programs for small businesses and minority- and women-owned businesses’”; and (ii) “‘banking institution’s origination of … minority-_and women-owned business loans within its community or the purchase of such loans originated in its community.’” NYDFS notes that later this year, it will begin to request information regarding programs related to minority- and women-owned businesses in order to begin evaluating banks under the new amendments. NYDFS also provided a spreadsheet with sample requests for guidance.

    The second industry letter describes the circumstances in which regulated institutions may receive NYCRA credit for activities taken in response to the Covid-19 pandemic, which the announcement notes is consistent with the guidance federal regulators have issued on the same topic (covered by InfoBytes here and here).

    State Issues State Regulator New York NYDFS CRA State Legislation Covid-19

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  • California governor issues executive order extending previous relief orders

    State Issues

    On June 30, the California governor signed Executive Order N-17-20 (previously discussed here), which extends authorization for local governments to halt evictions for renters impacted by the Covid-19 pandemic through September 30. Among other things, the executive order also extends the deadlines in connection with certain licenses, including real estate licenses, which we previously covered here.

    State Issues Covid-19 California Mortgages Evictions Mortgage Licensing Licensing

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