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Financial Services Law Insights and Observations

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  • Nevada updates consumer privacy framework

    State Issues

    On June 2, the Nevada governor signed SB 260, which revises certain provisions under the state’s existing privacy law. Among other things, the act (i) adds “data broker” to the existing privacy framework; (ii) exempts certain persons and information collected about a consumer in the state from requirements imposed on operators, data brokers, and covered information, including consumer reporting agencies, personally identifying information regulated by the FCRA or the federal Driver’s Privacy Protection Act, information collected for the purposes of fraud information, publicly available information, and financial institutions; (iii) prohibits a data broker from selling covered information collected about a consumer in the state if so directed by the consumer, and revises provisions related to the sale of certain covered information about a consumer; (iv) requires data brokers to respond to a consumer’s verified request within 60 days after receipt (a data broker may extend this period by no more than 30 days if an extension is determined to be reasonably necessary); (v) provides data brokers and operators 30 days to remedy violations of the opt-out requirement (provided they have not previously failed to comply with the opt-out requirements); and (vi) updates the definition of “sale” to include “the exchange of covered information for monetary consideration by an operator or data broker to another person.” While existing law already provides the Nevada attorney general with the authority to seek injunctive relief and impose civil penalties of no more than $5,000 per violation, the act extends this authority to cover data brokers. Additionally, the act explicitly does not provide for a private right of action against operators. The act takes effect October 1.

    State Issues State Legislation Privacy/Cyber Risk & Data Security Data Brokers Consumer Protection

  • New Hampshire clarifies licensing requirements

    On May 27, the New Hampshire governor signed HB 312, which clarifies certain deadlines and provisions in consumer credit applications and licensing requirements for mortgage loan originators. Among other things, HB 312 states that company licensees or persons must “deliver to the commissioner a list of all New Hampshire consumers who have contracted with the licensee or with whom the licensee is otherwise engaged in business regulated under this chapter, and other requested lists summarizing the business of the licensee, within 7 days of receipt of the request” or be subject to a $50 fine per day for each day. The bill further stipulates that a “license shall not be issued and effective unless the applicant or licensee is licensed or registered in the state where its principal office is located.” This provision modifies the previous requirements, in that it is now only applicable to nondepository mortgage bankers, brokers, and servicers, but no longer applies to mortgage loan originators. Additional provisions address, among other things, “examinations of family trust companies, delegation by credit union boards to committees, qualifications of the banking commissioner, and authorizing depository banks to elect benefit corporation status.” The act takes effect 60 days after its passage.

    Licensing State Legislation New Hampshire Mortgages Credit Union

  • Nebraska law establishes a cryptocurrency bank charter

    State Issues

    On May 25, the Nebraska governor approved LB 649, the Nebraska Financial Innovation Act, which creates a bank charter for companies that hold cryptocurrencies. The new act defines “digital asset depository institutions” as banks or financial institutions that hold certain digital assets, and will allow existing state-chartered banks to establish areas focused on cryptocurrency services. New businesses will also be able to gain a state banking charter as digital asset depositories. The act provides, among other things, that “at all times, a digital asset depository shall maintain unencumbered liquid assets denominated in United States dollars valued at not less than one hundred percent of the digital assets in custody” and that “compliance with federal and state laws, including, but not limited to, know-your-customer and anti-money-laundering rules and the federal Bank Secrecy Act, is critical to ensuring the future growth and reputation of the blockchain and technology industries as a whole.”

    State Issues Digital Assets State Legislation Nebraska Cryptocurrency Bank Charter Bank Compliance Bank Secrecy Act

  • Texas amends wrap mortgage loan provisions and various licensing requirements

    On May 24, the Texas governor signed SB 43, which amends various provisions related to residential mortgage loans, including those related to the financing of residential real estate purchases through the use of wrap mortgage loans, as well as various licensing and registration requirements. The act adds a new section related to wrap mortgage loan financing that will subject wrap loans to regulation like other mortgage loan products in order to provide certain protections for buyers and sellers, including written disclosures, tolling of limitations, closing requirements, and fiduciary duties. Among other things, the act defines certain terms, outlines exemptions, and will (i) prohibit a person from originating or making a wrap mortgage loan unless the person is licensed or registered to originate or make residential mortgage loans under certain statutory provisions, unless exempt; (ii) mandate specific disclosures related to wrap mortgages; (iii) authorize the savings and mortgage lending commissioner (commissioner) to conduct an inspection or investigation of a registered wrap lender; and (iv) authorize the commissioner to issue subpoenas and cease-and-desist orders to wrap lenders or wrap mortgage loan originators reasonably believed to have violated these provisions, and, if a violation is determined to have occurred, permits the commissioner to impose an administrative penalty of no more than $1,000 for each day of the violation. The commissioner may also seek injunctive relief. The act takes effect January 1, 2022.

    Licensing State Issues Mortgages State Legislation

  • Vermont amends licensing provisions

    On May 12, the Vermont governor signed SB 88, which amends various provisions related to insurance, banking, and securities, including those related to licensing applications and the annual renewal process. Among other things, the act (i) repeals certain licensing fees related to mortgage broker applications and loan servicer license renewals; (ii) increases the fee that licensees who do not timely file annual reports will be charged from $100 to $1,000 for each month or part of a month that the report is past due; (iii) specifies that mortgage loan originators and a licensee’s employees may work remotely provided they are assigned to a licensed location, are “adequately supervised by the licensee,” and meet any addition required conditions; and (iv) repeals certain provisions related to the surrender of a license in the event it is suspended, revoked, or terminated. The licensing amendments take effect immediately.

    Licensing State Issues State Legislation Vermont

  • Arizona amends various financial institution rules

    State Issues

    On May 10, the Arizona governor signed into law SB 1463, a bill that makes various changes to the Arizona Department of Insurance and Financial Institutions (DIFI). Among other things, SB 1463 (i) eliminates certain application fees for financial institutions, enterprises, money transmitters, and collection agencies; (ii) establishes nonrefundable fees for advance fee loan brokers and for premium finance company branch offices; (iii) revises the annual assessment and renewal fee structure for enterprises, consumer lenders, premium finance companies, advance fee loan brokers, and collection agencies; (iv) clarifies that licensee name change fees for financial institution and enterprise licensees do not apply to loan originators and appraiser licensees; (v) allows the Deputy Director to engage a contractor for mortgage broker license testing; (vi) stipulates that the Uniform Standards of Professional Appraisal Practice are the standards in Arizona, unless the Deputy Director objects; (vii) requires licensee applicants to pass a written examination under the supervision of DIFI; (viii) requires mortgage brokers, mortgage bankers, or commercial mortgage bankers who are licensed as exempt persons to deposit a surety bond with the Deputy Director in order to do business; (ix) defines the phrase “federally regulated appraisal management company”; (x) modifies the definitions of “consumer loan” and “control”; and (xi) stipulates that a consumer loan made pursuant to a consumer lender license is not a secondary motor vehicle finance transaction. SB 1462 goes into effect 90 days after the Arizona legislature adjourns and will be retroactive to July 1, 2020.

    State Issues State Legislation Consumer Finance State Regulators Licensing

  • Washington increases fines for Consumer Protection Improvement Act violations

    State Issues

    On May 10, the Washington governor signed into law SB 5025, a bill that increases fines for unfair methods of competition and unfair or deceptive acts or practices under the state’s Consumer Protection Improvement Act (Act). Among other things, the bill (i) increases the maximum civil penalty for persons who violate the terms of any injunction issued under the Act from $25,000 to $125,000; (ii) increases the maximum civil penalty for violations of RCW 19.86.030 or 19.86.040 to $180,000 for individuals (previously $100,000) and $900,000 for persons other than individuals (previously $500,000); (iii) increases the maximum civil penalty for violations of RCW 19.86.020 to $7,500 from $2,000; and (iv) provides that unlawful acts or practices targeting or impacting individuals or communities based on characteristics including “age, race, national origin, citizenship or immigration status, sex, sexual orientation, presence of any sensory, mental, or physical disability, religion, veteran status, or status as a member of the armed forces” carry an enhanced penalty of $5,000. Additionally, by December 1, 2022, the Washington attorney general is required to “evaluate the efficacy of the maximum civil penalty amounts established in this section in deterring violations of the consumer protection act and the difference, if any, between the current penalty amounts and the penalty amounts adjusted for inflation, and provide the legislature with a report of its findings and any recommendations.” The Act goes into effect July 25.

    State Issues State Legislation Consumer Protection Enforcement State Attorney General

  • Oklahoma enacts student loan servicer prohibitions

    State Issues

    On April 27, the Oklahoma governor signed SB 261, which creates the Oklahoma Student Borrower’s Bill of Rights Act and outlines new provisions for student loan servicers. Among other things, the act prohibits student loan servicers from (i) directly or indirectly defrauding or misleading student loan borrowers; (ii) engaging in unfair or deceptive practices, such as “misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a student education loan, the terms and conditions of the loan agreement or the borrower’s obligations under the loan”; (iii) obtaining property by fraud or misrepresentation; (iv) incorrectly applying or failing to apply a borrower’s loan payments to an outstanding balance; (v) providing inaccurate information to a credit bureau about a borrower; (vi) failing to report a borrower’s favorable and unfavorable payment history at least once a year except in the case of loan rehabilitation; (vii) refusing to communicate with a borrower’s authorized representative; (viii) making false statements or misrepresenting by omission any material facts in connection with a government investigation; (ix) failing to inform borrowers of their federal income repayment options prior to offering deferment or forbearance; and (x) failing to inform borrowers if their loan does not qualify for a loan forgiveness program. The act takes effect November 1.

    In 2023, the governor signed HB 1443 to make a technical correction to the text. The change is effective November 1.

    State Issues Student Loan Servicer State Legislation Student Lending

  • Oklahoma and North Dakota adjust finance charges, rates on small dollar loans

    State Issues

    On April 21, the governor of Oklahoma signed SB 796, which amends the loan finance charge limit for supervised lenders. Specifically, a loan finance charge “may not exceed the equivalent of the greater of either” 25 percent per year on an unpaid principal balance or: (i) 32 percent annually on unpaid principal of $7,000 or less; (ii) 23 percent annually on unpaid principal that is greater than $7,000 but does not exceed $11,000; and (iii) 20 percent annually on unpaid principal of more than $11,000. The act also allows lenders to charge a closing fee of up to $28.85. The act takes effect November 1.

    The North Dakota governor also signed into law SB 2103 on April 16, which, when it takes effect on August 1, imposes limits on charges that licensed money brokers can assess, including a 36 percent annual interest rate limit on installment loans, and caps nonpayment or late payment fees at five percent for loans greater than $50,000. The act also includes additional restrictions for loans of less than $2,000, including that (i) the maximum term for an installment loan may not exceed 36 months and balloon payments are prohibited; (ii) existing loan balances may be refinanced into a new loan, provided it is less than $2,000 and “the combination of any refinance fees along with any fees collected as part of the original loans” do “not exceed one hundred dollars per calendar year”; and (iii) licensees may not contract for or receive charges exceeding $100 for a loan extension or payment deferment.

    State Issues State Legislation Consumer Finance Small Dollar Lending

  • Maryland amends nondepository institution licensing provisions

    On April 13, the Maryland governor signed SB 251, which amends provisions related to licensing requirements for nondepository institutions. Among other things, the act (i) eliminates certain paper licenses for collection agencies, credit services, lenders, installment lenders, mortgage lenders, mortgage loan originators, sales finance companies, check cashing services, money transmission businesses, and debt management services; (ii) provides for the licensing of certain persons for certain activities through NMLS; (iii) outlines specific information to be included on NMLS-provided licenses; (iv) requires certain licensing information be conspicuously posted (with certain exceptions) at a licensee’s licensed location and on websites and software applications; (v) allows for the surrender of a license through NMLS in accordance with a process established by the state Commissioner of Financial Regulation; and (vi) requires notification to the Commissioner of certain licensee actions. The act takes effect October 1.

    Licensing State Legislation Mortgages Mortgage Servicing NMLS Non-Depository Institution

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