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West Virginia creates regulatory sandbox program
On March 24, the West Virginia governor signed HB 4621, which creates a state fintech regulatory sandbox program through the state’s Division of Financial Institutions (Division) that allows participants to temporarily test innovative financial products or services on a restricted basis without requiring a license under West Virginia law. Under the program, approved applicants will have 24 months from the date an application is approved to test their product or service within the state without being subject to state laws and regulations that normally would regulate such products or services, unless the Division determines otherwise. HB 4621 outlines requirements for participants, which include specific state consumer protection laws, time limitations, and reporting requirements. Additionally, the Division, upon written notice, may end a participant’s participation in the program at any time and for any reason. The program allows participants to request an extension of time up to 12 months after the end of the regulatory sandbox testing period in order to obtain a license or other authorization required by the law to continue to offer the product or service. The act takes effect on June 5.
Indiana amends certain financial institution and consumer credit provisions
On March 18, the Indiana governor signed House Enrolled Act No. 1353, which amends various provisions concerning financial institutions and consumer credit, including those related to first lien mortgage lenders, credit unions, and surety bond requirements for licensed mortgage loans originators, pawnbrokers, and money transmitters, among others. Among other things, the act also amends a provision in the state statute governing credit unions, which provides that loans made by a credit union to the credit union’s individual officers (and to the immediate family members of an officer, director, or supervisory committee member) must be made in accordance with Regulation O of the Federal Reserve Board. The act also stipulates that required appraisals connected to mortgage loans made to credit union members must be “consistent with the appraisal standards and transaction value limitations” outlined in the National Credit Union Administration’s appraisal regulations. The amendments take effect July 1.
West Virginia amends mortgage loan originator definition; adjusts allowable final installment payment on mortgage loans
On March 25, the West Virginia governor signed SB 651, which amends the definition of a mortgage loan originator “with respect to retailers of manufactured or modular homes and their employees” under the West Virginia Safe Mortgage Licensing Act. Among other things, SB 651 states that retailers of manufactured or modular homes (or the retailers’ employees) do not qualify as a mortgage loan originators provided they meet certain criteria, including that they (i) provide written disclosures to consumers of “any corporate affiliation with any mortgage lender” (including “at least one unaffiliated mortgage lender,” if they do have a corporate affiliation); (ii) do not directly negotiate loan terms with consumers or mortgage lenders; and (iii) do not represent that they can perform the activities of a mortgage loan originator. The amendments take effect June 2.
Also on March 25, the governor signed HB 4411, which adjusts the allowable final installment payment on a mortgage loan to be “a lesser amount or no more than $5 greater than any previous payment installment.” This adjustment does not apply to “any mortgage modification or refinancing loan made in participation with and in compliance with the federal Making Homes Affordable program, or any other mortgage modification or refinancing loan eligible under any government sponsored enterprise requirements or funded through any federal or state program or litigation settlement.” The adjustment takes effect May 27.
Utah amends consumer lending requirements
On March 24, the Utah governor signed HB 319, which modifies provisions related to consumer lending in the state, including registration, reporting, and operational requirements for deferred deposit lenders. Among other things, the provisions require deferred deposit lenders to provide borrowers at least 30 days’ notice of default before initiating a civil action, allowing a borrower the opportunity to remedy the default. HB 319 also requires deferred deposit lenders seeking to renew a registration to report, for the immediately preceding calendar year, the total number of loans extended, the total dollar amount loaned, the number of borrowers who were extended loans, and the percentage of loans that were not repaid based on the terms of the loan, among other items. HB 319 further allows third party debt collection agencies to charge a “convenience fee” when debtors use a credit or debit card for the transaction of business, provided the convenience fee amount is disclosed prior to being charged and the debtor is given an alternative payment method that does not carry a fee. The amendments take effect 60 days following adjournment of the legislature.
Utah modifies credit reporting notification requirements
On March 24, the Utah governor signed HB 412, which modifies requirements for creditors when submitting negative credit reports to credit reporting agencies. Creditors are now required to provide written notification to the affected party “no more than 30 days after the day on which the creditor submits the negative credit report to the credit reporting agency.” Creditors may provide the written notice in-person, via first class mail, or electronically if the party consented to receive notices by email. The amendments take effect 60 days following adjournment of the legislature.
Washington state amends debt buyer provisions
On March 18, the Washington governor signed Substitute HB 2476, which clarifies the definition of a debt buyer and outlines prohibited activities. Among other activities, debt buyers are now (i) prohibited from bringing legal actions without providing evidence that the original debt contains the debtor’s signature, or for claims based on a credit card debt for which a signature does not exist, “a copy of the most recent monthly statement recording a purchase transaction, payment, or other extension of credit” (requirements related to breaches of contracts and electronic transactions are also provided); (ii) prohibited from seeking default judgments without providing evidence of the original debt; and (iii) required to provide certain disclosures when bringing legal action, including “[t]hat the action is being brought by, or for the benefit of, a person or entity engaged in the business of purchasing” debts for collection purposes, the date the claim was purchased, the identity of the debt purchaser, and “[t]hat the action is being commenced within, and is not barred by an applicable statute of limitations.” The amendments take effect 90 days after the adjournment of the session, and are applicable to “delinquent or charged off claims purchased for collection purposes by a debt buyer on or after the effective date of this section.”
Indiana amends UCCC provisions for consumer credit sales and loans
On March 18, the Indiana governor signed SB 395, which amends the state’s Uniform Consumer Credit Code (UCCC) to revise provisions related to consumer credit sales and consumer loans, among other things. Amendments include those that (i) authorize a seller to contract for and receive—subject to certain conditions—a nonrefundable prepaid finance charge based on the amount financed for an agreement for a consumer credit sale entered into after June 30, 2020 (precomputed consumer credit sales are prohibited); (ii) outline conditions related to the maximum allowed credit service charges for consumer credit sales; (iii) state that the amount of an authorized nonrefundable prepaid finance charge cannot be more than $75, $150, or $200, based on the amount financed, for consumer loan agreements entered into after June 30, 2020, where the loan is not secured by an interest in land (precomputed consumer loans are prohibited); and (iv) make conforming changes with respect to supervised loans, as well as conforming technical amendments throughout the UCCC to reflect the amendments. SB 395 also amends the effective date from July 1 of each even-numbered year to January 1 of each odd-numbered year for the adjustment of various dollar amounts in the UCCC based on changes in the Consumer Price Index. While certain amendments take effect upon the bill’s passage, most of the amendments become effective July 1.
Idaho amends requirements for mortgage lenders
On March 11, the Idaho governor signed HB 401, which, among other things, amends the definition of “mortgage lending activities” to include residential mortgage servicing and grants temporary authority to unlicensed individuals to originate loans if they are employed by a licensed broker or lender and meet additional criteria. HB 401 also eliminates certain prohibited practices. The amendments take effect July 1.
Vermont enacts data privacy and consumer protections
On March 5, the Vermont governor signed SB 110 to expand data privacy and consumer protection measures in the state. Among other things, SB 110 (i) expands the definition of personally identifiable information (PII) subject to the Security Breach Notice Act to also include taxpayer identification numbers, passport numbers, military identification card numbers, other government-originated identification numbers “commonly used to verify identity for a commercial transaction,” unique biometric data, and health records; (ii) provides that if a data breach is limited to the unauthorized acquisition of login credentials, data collectors are only required to provide notice to the state attorney general or the Department of Financial Regulation “if the login credentials were acquired directly from the data collector or its agent”; (iii) establishes requirements to ensure consumers are provided notice of a data breach; (iv) adopts online privacy protections for students, including prohibitions on the use of targeted advertising and the sale or rent of student information, as well as responsibilities for operators of online services or mobile applications; and (v) requires that consumer contracts clearly disclose any automatic renewal provisions and allow consumers to easily terminate contracts. SB 110 takes effect July 1.
Virginia eliminates fee for credit report security freezes
On March 10, the Virginia governor signed HB 509, which amends certain statutory provisions related to fees for security freezes on credit reports. Currently, a credit reporting agency (CRA) may charge a fee of not more than $5 when a consumer or his representative requests a security freeze on his credit report, though victims of identity theft are exempt from this fee. HB 509 prohibits CRAs from charging a fee for credit report freezes, regardless of whether the request comes from a victim of identity theft. The amendments take effect on July 1.