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Financial Services Law Insights and Observations


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  • CSBS urges early NMLS licensing renewal

    On October 28, the Conference of State Bank Supervisors (CSBS) issued a reminder to individuals and businesses operating in the mortgage, money transmission, debt collection and consumer financial services industry that they should begin renewing their licenses in the Nationwide Multistate Licensing System (NMLS) on November 1 to avoid licensing delays. According to CSBS, early renewal is critical due to an increase in the number of licensees eligible for renewal. Renewal periods in most states run from November 1 to December 31, and licensees are encouraged to review state-specific renewal requirements early. State regulators may employ operational efficiencies to streamline the renewal process, CSBS stated, adding that it also plans to implement an online request process on November 1 for licensees to resolve and check in on NMLS access issues, including password reset/unlocking, changes in email addresses, and confirming renewal status. The online request process is available on the NMLS Call Center Information webpage, available here. As a reminder federally-registered mortgage loan originators and institutions are also required to renew their registrations through NMLS by December 31.

    Licensing CSBS NMLS Mortgages Money Service / Money Transmitters Debt Collection Consumer Finance

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  • NMLS seeks comments on changes to Money Services Businesses Call Report

    On October 18, the Conference of State Bank Supervisors (CSBS) issued a request for public comments on behalf of NMLS-participating state regulatory agencies on proposed changes to the NMLS Money Services Businesses Call Report (MSBCR). The MSBCR seeks to create “a nationwide repository of standardized information available to state regulators concerning the financial condition and activities of their Money Services Businesses licensees.” CSBS requests comments on edits to existing virtual currency transaction line items, new virtual currency line items addressing activities not already covered, revisions to the definition of existing permissible investments, and edits to definitions and titles of existing financial condition line items. Comments are due December 17.

    Licensing NMLS Money Service Business CSBS State Issues State Regulators

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  • CSBS responds to regulators’ request on emerging technologies

    Federal Issues

    On September 27, the Conference of State Bank Supervisors (CSBS) sent a letter to Ranking Member of the Senate Banking Committee Senator Pat Toomey (R-PA) detailing state bank regulators’ role in supervising money transmission and virtual currencies, in addition to recommending an activities-based approach to regulation. The letter is in response to a request by Senator Toomey for input on the regulation of financial technologies earlier this year. In Senator Toomey’s August 26 letter, he requested collection of public comments on proposed legislative language, among other things, to regulate emerging technologies. The Senator also requested that each proposal have a brief description that includes “how it will encourage the growth of cryptocurrency and blockchain technology” in the U.S. According to the letter from CSBS, state bank regulators are encouraging “Congress and federal regulators to focus on the activities at issue and making clarifications in existing laws, regulations, and interpretations,” and believe that “[a]n activities-based approach must be performed with collaboration from all stakeholders or risk one regulatory view overextending into areas where it would hurt innovation and consumers.” CSBS also points out that the Money Transmission Modernization Act established a regulatory baseline and represents a critical step in enhancing multistate harmonization in the money transmission industry. CSBS further discussed Networked Supervision, a strengthened collaboration which permits states to operate as a network. According to the letter, earlier this year, CSBS approved public priorities, which highlighted efforts that states will take to advance Networked Supervision  focused on money services businesses. CSBS states that these priorities “emphasize the states’ commitment to harmonization, collaboration, and innovation throughout the state regulatory system.”

    Federal Issues CSBS State Issues Supervision Money Service / Money Transmitters Cryptocurrency Fintech

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  • CSBS releases Uniform Money Transmission Modernization Act

    On September 9, the Conference of State Bank Supervisors (CSBS) released the Uniform Money Transmission Modernization Act as part of states’ broader effort for modernizing the state financial regulatory system. The act, also referred to as the Money Transmitter Model Law, is intended to replace 50 sets of state-specific money transmitter laws and rules with a single set of nationwide standards and requirements designed by state and industry experts. According to CSBS, the law is a result of continuing discussion among state regulators and industry that began under CSBS’ “Vision 2020”, which convened a Fintech Industry Advisory Panel to determine pain points in the state system (previously covered by InfoBytes here). Among other things, the law: (i) “[p]rovides regulators with the tools needed to regulate money transmitters of all sizes, including those that operate globally or small businesses operating locally”; (ii) standardizes definitions, exemptions, the licensing process, the change in control process, and requirements regarding safety and soundness; (iii) enables multistate licensing and multi state supervision; and (iv) “[f]acilitates the development of technology and data analytics necessary to supervise at scale with local accountability.” CSBS also notes that the law will benefit customers of companies that offer digital wallets, prepaid cards, money orders and cash or virtual currency transmissions by establishing a common regulatory floor and standardized and risk-based requirements.  In addition to the law, CSBS released Money Transmitter Model Law FAQs and Fintech Industry Advisory Panel Recommendations.

    Licensing Money Service / Money Transmitters CSBS Fintech Vision 2020

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  • Agencies provide guidance on Hurricane Ida and California wildfires

    Federal Issues

    Recently, the FDIC, Federal Reserve Board, NCUA, OCC, and the Conference of State Bank Supervisors issued joint statements covering supervisory practices for financial institutions affected by Hurricane Ida and the California wildfires (see here and here). Among other things, the agencies informed institutions facing operational challenges that the regulators will expedite requests for temporary facilities, noting that in most cases, “a telephone notice to the primary federal and/or state regulator will suffice initially to start the approval process, with necessary written notification being submitted shortly thereafter.” The agencies also called on financial institutions to “work constructively” with affected borrowers, noting that “prudent efforts” to adjust or alter loan terms in affected areas “should not be subject to examiner criticism.” Institutions facing difficulties in complying with any publishing and reporting requirements should contact their primary federal and/or state regulator. Additionally, the agencies noted that institutions may receive Community Reinvestment Act consideration for community development loans, investments, and services that revitalize or stabilize federally designated disaster areas. Institutions are also encouraged to monitor municipal securities and loans impacted by Hurricane Ida and the California wildfires.

    Federal Issues FDIC Federal Reserve OCC CSBS State Issues Disaster Relief CRA Bank Supervision Bank Regulatory

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  • CSBS responds to Waters on state supervisory activities

    Federal Issues

    On August 26, the Conference of State Bank Supervisors (CSBS) sent a letter to House Financial Services Committee Chairwoman Maxine Waters (D-CA) detailing information on CSBS' response to the Covid-19 pandemic related to supervisory efforts, policy initiatives, and mortgage servicing plans. The letter is in response to an August 5th letter from Chairwoman Waters to CSBS, CFPB, OCC, NCUA, FDIC, and Fed asking the agencies, among other things, to immediately update the “Joint Statement on Supervisory and Enforcement Practices Regarding the Mortgage Servicing Rules in Response to the COVID-19 Emergency and the CARES Act dated April 3, 2020,” and to take other steps to “provide vigorous oversight and encourage mortgage servicers to work with borrowers to avoid unnecessary foreclosures.”

    The letter from the CSBS detailed the consumer protection and supervision efforts of state regulators during the Covid-19 pandemic, noting that they have “monitored the activities of mortgage originators and servicers … and have acted responsively and decisively with expanded examination approaches, new policy, and public guidance.” The letter expanded on these actions by setting forth its efforts in “three very broad categories”: networked supervision, direct supervision, and supervision policy.  In the latter two categories, CSBS noted the steps it has taken during the  pandemic to “remain vigilant to signs of unwarranted foreclosure activity or other consumer harm.”  The letter also agreed that the “states’ dual mandate to protect consumers and ensure a healthy economic environment has been the appropriate approach” during Covid-19.

    Federal Issues CSBS House Financial Services Committee State Issues Covid-19 Supervision Mortgages Bank Regulatory CFPB OCC NCUA FDIC Federal Reserve

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  • Oregon enacts student loan servicer provisions

    On July 27, the Oregon governor signed SB 485, which outlines licensing provisions for student loan servicers and implements consumer protections for borrowers. Among other things, the act requires, subject to certain exemptions, persons servicing student loans to obtain a license from the Oregon Department of Consumer and Business Services (DCBS). Should the director reasonably believe that a person subject to the act’s provisions is “engaging in or is about to engage in an act or practice that constitutes servicing a student loan in this state without first obtaining a license” the director may order the person to cease and desist, affirmatively perform the act, or may apply to an Oregon circuit court to enjoin the person from engaging in such act or practice. Additionally, the act outlines requirements related to, among other things, (i) licensing applications, including that the director may require applicants to submit applications to the Nationwide Multistate Licensing System instead of, or in addition to, submitting the application to the director; (ii) licensing renewals, reinstatements, and surrenders; (iii) a licensee’s principal place of business; (iv) liquidity standards; and (v) branch closures, relocations, or the opening of new locations. Under the act, the director is also granted general supervisory authority over each licensee in the state, examination authority, and the ability to participate in multistate examinations scheduled and conducted by the Conference of State Bank Supervisors or the CFPB. The director may also investigate borrower complaints and servicers’ policies and procedures, may impose civil penalties for violations of the act’s provisions, and may promulgate rules and take any other actions necessary to undertake and exercise the duties and powers conferred on the position. The act also outlines provisions related to servicing obligations, prohibits student loan servicers from engaging in fraudulent, deceptive, and dishonest activities, and creates a student loan ombudsperson at DCBS to handle complaints against student loan servicers and educate borrowers about loan repayment options. The act took effect on its passage.

    Licensing State Issues State Legislation Student Loan Servicer NMLS CSBS CFPB

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  • CSBS releases regulatory prudential standards for nonbank mortgage servicers

    State Issues

    On July 26, the Conference of State Bank Supervisors (CSBS) released model state regulatory prudential standards for nonbank mortgage servicers. The prudential standards provide states with “a consistent framework that ensures covered nonbank servicers maintain the financial capacity to serve consumers and investors with heightened transparency, accountability and risk management standards.” According to CSBS, in the past 10 years, the nonbank mortgage servicer market has grown from 6 percent to 60 percent of the government agency mortgage market, representing at least 45 percent of the servicing market overall, with “[n]onbank mortgage servicers currently administer[ing] roughly three-quarters of the servicing for loans in Ginnie Mae mortgage backed-securities” (encompassing loans to veterans, first-time homebuyers, and low-to-moderate income borrowers). In response to concerns raised by state regulators about the lack of state standards to address servicers’ capital and liquidity levels, as well as inadequate corporate governance and board oversight identified by state and federal examiners, state regulators approved the prudential standards, which focus on two main areas: financial condition and corporate governance. The prudential standards—which “align with existing federal minimum eligibility requirements, wherever practical, to minimize regulatory burden for servicers”—cover both agency and non-agency servicing, and apply to servicers that service at least 2,000 loans and operate in at least two states. Exempt are small servicers that do not meet the minimum requirements, reverse mortgage loan servicers, not-for-profit mortgage servicers, and housing agencies. State agency commissioners are also given the authority to “increase requirements for high-risk servicers or even suspend the requirements in times of economic, societal or environmental volatility.” The prudential standards are part of CSBS’s eight Networked Supervision 2021 priorities, which are intended to advance its “strategy to streamline nonbank licensing and supervision and generate new data for risk analysis through expanded use of technology platforms.”

    State Issues CSBS State Regulators Nonbank Mortgages Mortgage Servicing

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  • Groups ask Education Dept. to stop preempting states on student lending

    Federal Issues

    On July 7, the Conference of State Bank Supervisors (CSBS) and the North American Collection Agency Regulatory Association (NACARA) sent a letter to Department of Education Secretary Miguel Cardona urging the Department to rescind recent policies “claiming preemption or otherwise impairing state regulation of federal student loan servicers and debt collectors.” The letter acknowledges steps taken by the Department to facilitate coordination and collaboration with state financial regulators but notes that additional action is required to accomplish a shared mission of protecting student borrowers. Among other things, the letter discusses several Department actions taken over the years, including the Department’s 2018 position that state regulation of servicers of loans made under the William D. Ford Federal Direct Loan Program and the Federal Family Education Loan Program is preempted by federal law. The letter urges the Department “to rescind the 2018 preemption notice and formally recognize that state oversight and regulation is fully applicable to federal student loan servicers and debt collectors, entirely appropriate, and not in conflict with the purpose of the [Higher Education Act].” The letter also discusses revised guidance issued in May concerning the handling of outside requests for Department records and data. As previously covered by InfoBytes, the revised guidance supersedes the Department’s 2017 guidance and creates a “streamlined and expedited process” for reviewing information requests made by any state or federal authority for information pertaining to companies engaged in student loan lending or collections. However, CSBS and NACARA emphasize that the Department should “recognize that state financial regulators are independently authorized to access records in possession of the federal student loan servicers and debt collectors subject to state regulation.” Additionally, the letter requests, among other things, that the Department take additional action deemed necessary to “fully return” to a policy of collaboration for protecting student loan borrowers, pointing out that timing is important as most federal student loan repayments resume in October.

    Federal Issues State Issues CSBS State Regulators Department of Education Student Lending Debt Collection Preemption

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  • District Court stays CSBS’s fintech charter challenge while OCC reviews framework


    On June 16, the U.S. District Court for the District of Columbia entered an order staying litigation in a lawsuit filed by the Conference of State Bank Supervisors (CSBS) challenging the OCC’s authority to issue Special Purpose National Bank Charters (SPNB). (Covered by InfoBytes here.) Earlier this year, the OCC responded to CSBS’s opposition to the agency’s alleged impending approval of an SPNB for a financial services provider (proposed bank), in which CSBS argued that the OCC was exceeding its chartering authority (covered by InfoBytes here). The OCC countered that the same fatal flaws that pervaded CSBS’s prior challenges, i.e., that its challenge is unripe and CSBS lacks standing, still remain (covered by InfoBytes here). Moreover, the agency argued, among other things, that the cited application (purportedly curing CSBS’s prior ripeness issues) is not for an SPNB (the proposed bank that has applied for the charter would conduct a full range of services, including deposit taking), but that even it if was an application for an SPNB charter, there are multiple additional steps that need to occur prior to the OCC issuing the charter, which made the challenge unripe.

    According to CSBS’s unopposed motion to stay litigation, a “90-day stay would conserve the [p]arties’ and the [c]ourt’s resources by avoiding potentially unnecessary briefing and oral argument.” Further, in referring to acting Comptroller Michael Hsu’s testimony to the U.S. House of Representatives—in which he stated that “the OCC is currently reviewing various regulatory standards and pending actions, including the OCC’s framework for chartering national banks”—CSBS noted that the OCC has represented that it anticipates this review period will take approximately 90 days and that it does not intend to take any action towards granting a charter to the proposed bank during this period. Following the conclusion of the 90-day stay, the parties agreed to confer and submit to the court a joint status report on or before September 27 “addressing the status of the OCC’s plans with respect to processing applications for uninsured national bank charters, including the [proposed bank’s] charter application, and the [p]arties’ proposed schedule for proceeding with or resolving the present case.”

    Courts Federal Issues State Issues CSBS OCC Fintech Charter Fintech National Bank Act Preemption Agency Rule-Making & Guidance Bank Regulatory

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