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Texas updates guidance for tax lenders, continuing to urge them to work with consumers and allowing employees to work remotely
On April 15, the Texas Office of the Consumer Credit Commissioner updated its advisory bulletin (previously discussed here, here, here, here, and here) urging property tax lenders to continue to work with consumers during the Covid-19 crisis. Among other measures, the regulator urges licensees to increase consumer communication regarding the effects of Covid-19 on the licensees’ business, work out modifications for payment difficulties, and review policies for fees, late fees, and delinquency practices, to help support successful repayment. 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 The guidance is in effect through May 31, 2021, unless withdrawn or revised.
On March 15, the Michigan Department of Insurance and Financial Services, the Michigan Bankers Association, Community Bankers of Michigan, the Michigan Credit Union League and the National Business League urged minority-owned and other underserved businesses in Michigan to apply for forgivable loans through the Paycheck Protection Program (PPP) prior to the March 31, 2021 deadline. The announcement highlighted that community development financial institutions offer specialized support to underserved communities and can assist customers with limited or no credit history to obtain a PPP Loan.
On March 12, California Governor Gavin Newsom issued a joint statement along with the California Senate president pro tempore and Assembly speaker related to the tax treatment of Paycheck Protection Program (PPP) loans. California intends to delay those portions of Assembly Bill 1577 that was signed into law on September 9, 2020 relating to forgiven PPP loans, pending detailed guidance from the U.S. Treasury Department regarding certain provisions in the American Rescue Plan Act.
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 here, here, here, 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.
On February 18, the Texas Office of the Consumer Credit Commissioner issued updated guidance (previously covered here, here, here, here, 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.
On February 10, the Florida Office of Financial Regulation released a set of “Compliance Tips” reminding lenders and their servicers that they may be required to report certain delinquent loans as “current” pursuant to the CARES Act. The guidance reminds lenders and loan servicers that under the federal CARES Act, those consumers who were not delinquent as of April 1, 2020 and who subsequently received an accommodation and are complying with the accommodation agreement should be reported as “current.” The tips also urged lenders to be proactive with borrowers to resolve credit reporting errors. Lastly, the tips advised lenders to seek out how reporting errors may have been made, and implement additional internal controls to ensure similar errors do not reoccur.
On January 11, the Court of Appeals of the State of California affirmed the denial of an auto lender’s motion to compel arbitration, concluding that the arbitration clause was invalid and unenforceable. According to the opinion, in May 2019, consumers filed a class action complaint alleging the lenders charged unconscionable interest rates in violation of California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA). The company moved to compel arbitration, which the consumers opposed, arguing that the agreement was “procedurally and substantively unconscionable,” and that the California Supreme Court decision in McGill v. Citibank, N.A. (covered by a Buckley Special Alert here, holding that a waiver of the plaintiff’s substantive right to seek public injunctive relief is not enforceable) applied. The trial court denied the motion to compel arbitration, concluding that the McGill rule applied and that the injunctive relief provision could not be severed from the rest of the arbitration agreement because severability did not apply to the class waiver provision.
On appeal, the state appellate court agreed with the trial court, concluding that the McGill rule applied. Specifically, the appellate court concluded that the injunctive relief the consumers were seeking “encompasses all consumers and members of the public,” and “an injunction under the CLRA against [the lender]’s unlawful practices will not directly benefit the Customers because they have already been harmed and are already aware of the misconduct.” Moreover, the appellate court determined that there is no precedent holding that “the remedy of public injunctions under CLRA and UCL should be limited to false advertising claims.” The court further concluded that the class waiver was not severable, stating that the lender’s argument that the arbitration agreement could not be determined void until after an appellate court reviews the viability of the class waiver was “illogical.” Accordingly, the appellate court affirmed the denial of the motion to arbitrate.
On December 22, 2020, the Rhode Island Department of Business Regulation extended interim guidance permitting mortgage loan originators, lenders, loan brokers, and exempt company registrants to work from home, even if the home is not a “licensed branch” or located outside of Rhode Island (previously covered here, here, and here.) To take advantage of this exemption, the individual must maintain certain specified data security provisions. This extension is set to expire March 31, 2021.
On September 28, the Rhode Island Department of Business Regulation, Banking Division, extended previous guidance (previously covered here and here) issued to mortgage loan originators, lenders, loan brokers, and exempt company registrants. The guidance permits working from home, even if the home is located outside of Rhode Island or is not a licensed branch, so long as specified data security provisions are met. The department extended this guidance until December 31, 2020.
On September 21, the U.S. District Court for the Southern District of New York dismissed six class actions alleging that the Paycheck Protection Program (PPP) and its implementing regulations entitle accountants who assist borrowers in securing PPP loans to a portion of the fees banks receive from the Small Business Administration (SBA).The six class actions were brought by a collection of accountants and accounting firms alleging that the banks did not pay agent fees reportedly due under the PPP, even though they had not entered into agreements with the banks to receive the fees. The district court, following a similar decision by a Florida federal district court (covered by InfoBytes here), dismissed the class actions, concluding that absent an agreement to do so, banks are not required to pay agent fees under the CARES Act—which created the PPP—and its implementing regulations. Specifically, the court noted that although the law and implementing regulations impose limits on agents fees, those limits “do not entitle agents to fees but simply regulate how such fees would be paid when they are to be paid.” The court also rejected a variety of state law and common law claims, which were “largely premised on the same theory,” and dismissed all six class actions in their entirety.
- Buckley Webcast: Best practices for incident-response planning in a dangerous and regulated world
- Jonice Gray Tucker to discuss “Government investigations, and compliance 2021 trends” at the Corporate Counsel Women of Color Career Strategies Conference
- APPROVED Webcast: California debt collection license requirement: Overview and analysis
- Max Bonici to discuss “BSA/AML trends: What to expect with the implementation of the AML Act of 2020” at the American Bar Association Banking Law Fall Meeting
- Jeffrey P. Naimon to discuss “Regulators are gearing up: Are you ready?” at HousingWire Annual
- Amanda R. Lawrence and Elizabeth E. McGinn discuss “U.S. state privacy legislation – Are you compliant?” at the Privacy+Security Forum
- H Joshua Kotin to discuss “Modifications and exiting forbearance” at the National Association of Federal Credit Unions Regulatory Compliance Seminar
- Jonice Gray Tucker to discuss “Fintech trends” at the BIHC Network Elevating Black Excellence Regional Summit
- Jeffrey P. Naimon to discuss "Truth in lending” at the American Bar Association National Institute on Consumer Financial Services Basics
- John R. Coleman and Amanda R. Lawrence to discuss “Consumer financial services government enforcement actions – The CFPB and beyond” at the Government Investigations & Civil Litigation Institute Annual Meeting
- Jonice Gray Tucker to discuss "Consumer financial services" at the Practising Law Institute Banking Law Institute
- Jonice Gray Tucker to discuss “Regulators always ring twice: Responding to a government request” at ALM Legalweek