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  • Louisiana Office of Financial Institutions extends emergency declarations to non-depository entities

    State Issues

    On July 24, the Louisiana Office of Financial Institutions extended emergency declarations for residential mortgage lenders, check cashers, bond for deed escrow agents and repossession agents, brokers and lenders licensed under the Louisiana Consumer Credit Law and Deferred Presentment and Small Loan Act, and pawnbrokers. The orders were previously covered here. Such entities are granted the authority to temporarily close licensed locations within Louisiana or to temporarily close and/or relocate to another location within the state. Mortgage loan originators are permitted to work from home, whether located in Louisiana or another state, even if the home is not registered with the LOFI. The declarations also provide instructions for notifying the LOFI of a temporary location change. The declarations will remain in effect as long as there is a public health emergency relating to Covid-19, or until rescinded or replaced.

    State Issues Covid-19 Louisiana Non-Depository Institution Mortgage Lenders Check Cashing Escrow Auto Finance Repossession Broker-Dealer Lending Consumer Credit Licensing Mortgage Origination

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  • District court denies interlocutory appeal request in escrow interest action

    Courts

    On July 9, the U.S. District Court for the District of Maryland denied a national bank’s request for interlocutory appeal of the court’s February decision denying the bank’s motion to dismiss an action, which alleged that the bank violated Maryland law by not paying interest on escrow sums for residential mortgages. As previously covered by InfoBytes, after the bank allegedly failed to pay interest on a consumer’s mortgage escrow account, the consumer filed suit against the bank alleging, among other things, a violation of Section 12-109 of the Maryland Consumer Protection Act (MCPA), which “requires lenders to pay interest on funds maintained in escrow on behalf of borrowers.” The court rejected the bank’s assertion that the state law is preempted by the National Bank Act (NBA) and by the OCC’s 2004 preemption regulations. The court concluded that under the Dodd-Frank Act, national banks are required to pay interest on escrow accounts when mandated by applicable state or federal law.

    The bank subsequently moved for an interlocutory appeal. In denying the bank’s request, the court explained that there was not a difference of opinion among courts as to whether the NBA preempts Maryland’s interest on escrow law. Specifically, the court noted that its “conclusion aligns with the only other two courts that have examined [the] particular question,” citing to the U.S. Court of Appeals for the Ninth Circuit’s decision in Lusnak v Bank of America and the Eastern District of New York’s decision in Hymes v. Bank of America (covered by InfoBytes here and here, respectively). After finding there is no “difference of opinion as to any ‘controlling legal issue,’” the court concluded the motion failed to satisfy the requisite elements for an interlocutory appeal.

    Courts State Issues Maryland National Bank Act Escrow Preemption Ninth Circuit Appellate New York Mortgages Dodd-Frank

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  • CFPB issues proposed rule on Regulation Z HPML escrow exemptions

    Agency Rule-Making & Guidance

    On July 2, the CFPB issued a notice of proposed rulemaking (NPRM) to amend Regulation Z, as required by the Economic Growth, Regulatory Relief, and Consumer Protection Act, and exempt certain insured depository institutions and credit unions from the requirement to establish escrow accounts for certain higher-priced mortgage loans (HPMLs). Under the proposed amendment, any loan made by an insured depository institution or credit union that is secured by a first lien on the principal dwelling of a consumer would be exempt from Regulation Z’s HPML escrow requirement if (i) the institution has assets of no more than $10 billion; (ii) “the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year”; and (iii) the institution meets certain existing HPML escrow exemption criteria. Comments on the NPRM will be accepted for 60 days following publication in the Federal Register.

    Agency Rule-Making & Guidance CFPB Escrow Mortgages Regulation Z TILA EGRRCPA

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  • Hawaii regulator extends guidance permitting licensees to reduce office hours, temporarily close offices

    State Issues

    On July 2, the Hawaii Division of Financial Institutions extended earlier guidance, previously covered here, that temporarily permits licensees with locations in Hawaii to reduce hours or close offices during Hawaii’s Covid-19 emergency period. Notice of temporary closure or relocation from certain licensees, including escrow depositories and financial institutions, is required.  The guidance is extended to July 31, 2020.

    State Issues Covid-19 Hawaii Licensing Mortgage Licensing Escrow Financial Institutions

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  • CFPB releases spring 2020 rulemaking agenda

    Agency Rule-Making & Guidance

    On June 30, the CFPB released its spring 2020 rulemaking agenda. According to a Bureau announcement, the information details the regulatory matters that the Bureau “expect[s] to focus on” between May 1, 2020 and April 30, 2021. The announcement notes that the agenda was set before the Covid-19 pandemic struck and while the Bureau “continues to move forward with other regulatory work,” it will prioritize work related to supporting consumers and the financial sector during and after the Covid-19 pandemic.

    In addition to the rulemaking activities already completed by the Bureau in May and June of this year, the agenda highlights other regulatory activities planned, including:

    • Escrow Rulemaking. The Bureau intends to issue a proposed rule to implement Section 108 of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, which directs the Bureau to exempt certain loans made by creditors with assets of $10 billion or less (and that meet other criteria) from the escrow requirements applicable to higher-priced mortgage loans.
    • Small Business Rulemaking. The Bureau states that in September 2020, it will publicly release materials for an October panel (convening under the Small Business Regulatory Enforcement Fairness Act) with small entities likely to be directly affected by the Bureau’s rule to implement Section 1071 of Dodd-Frank.
    • HMDA. The Bureau states that two rulemakings are planned, including (i) a proposed rule that follows up on a May 2019 advanced notice of proposed rulemaking which sought information on the costs and benefits of reporting certain data points under HMDA and coverage of certain business or commercial purpose loans (covered by InfoBytes here); and (ii) a proposed rule addressing the public disclosure of HMDA data.
    • Debt Collection. The Bureau intends to release the final rule amending Regulation F to implement the Fair Debt Collection Practices Act in October 2020 (InfoBytes coverage of the May 2019 proposed rule here). Additionally, “at a later date” the Bureau intends to finalize the February supplemental proposal, which covers time-barred debt disclosures (covered by a Buckley Special Alert here).
    • Qualified Mortgages (QM). The Bureau states it is considering issuing a proposed rule “later this year” that would create a new “seasoning” definition of a QM under Regulation Z, allowing for QM status after the borrower has made consistent timely payments for a defined period.

    Additionally, in its announcement, the Bureau notes that it is (i) participating in an interagency rulemaking process on quality control standards for automated valuation models (AVMs) with regard to appraisals; and (ii) continuing to review and conduct the five-year lookback assessments under Section 1022(d) of Dodd-Frank.

    Agency Rule-Making & Guidance CFPB Rulemaking Agenda HMDA Small Business Lending Regulation Z Debt Collection ECOA Escrow EGRRCPA Mortgages

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  • Louisiana Office of Financial Institutions updates non-depository emergency declarations

    State Issues

    On June 5, the Louisiana Office of Financial Institutions updated its non-depository 2020 Covid-19 emergency declarations to extend earlier guidance regarding closure of licensed locations and temporary location changes for residential mortgage lenders, brokers and originatorscheck casherslenders or brokers licensed pursuant to the Louisiana Consumer Credit Law and the Louisiana Deferred Presentment and Small Loan Act, pawnbrokers, and repossession agents and bond for deed escrow agents. The original emergency declarations were previously covered here, here, here, here, here, here, and here. The declarations extend the guidance until June 26, 2020, unless terminated sooner.

    State Issues Covid-19 Mortgage Lenders Mortgages Broker-Dealer Mortgage Origination Check Cashing Lending Repossession Bond Escrow

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  • Louisiana Office of Financial Institutions declares emergency for repossession and escrow agents

    State Issues

    On April 9, Louisiana Office of Financial Institutions Commissioner John Ducrest declared a state of emergency and issued guidance for repossession agents and bond for deed escrow agents due to the Covid-19 crisis. The order: (i) granted authority to temporarily close or relocate operations, services, and products; (ii) waived the 30-day notification requirement pertaining to closures or relocations of operations, services, and products; and (iii) provided guidance for reporting operational changes and temporary relocations. The declaration expires April 30, unless otherwise extended or renewed.

    State Issues Covid-19 Louisiana Repossession Escrow

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  • California Department of Business Oversight issues guidance to permit licensees to work from home

    State Issues

    On March 22, the California Department of Business Oversight (Department) issued guidance to escrow agents, finance lenders and servicers, student loan servicers, residential mortgage lenders and servicers, and mortgage loan originators in light of Covid-19 permitting employees of licensees to conduct activities from home that normally would require a branch license, provided that appropriate measures are taken to protect consumers and their data. Further, the Department will not criticize student loan servicers or licensees sponsoring MLOs who permit their respective employees to work from home, provided that certain data security and other conditions are met. Escrow Law licensees may also follow this guidance, however the licensees must still comply with the Fidelity Corporation or the licensee’s surety bond. Additionally, licensees are encouraged to assist consumers including through, among other things, offering payment accommodations.

    State Issues California Licensing Escrow Student Loan Servicer Mortgage Lenders Covid-19 MLO Bond

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  • District court: Maryland’s interest on escrow law not preempted by National Bank Act

    Courts

    On February 24, the U.S. District Court for the District of Maryland denied a national bank’s motion to dismiss a putative class action alleging the bank violated Maryland law by not paying interest on escrow sums for residential mortgages. After the bank allegedly failed to pay the mortgage escrow interest, the consumer filed a lawsuit asserting various claims including for violation of Section 12-109 of the Maryland Consumer Protection Act (MCPA), which “requires lenders to pay interest on funds maintained in escrow on behalf of borrowers.” In response, the bank filed a motion to dismiss on the basis that the state law is preempted by the National Bank Act (NBA) and by 2004 OCC preemption regulations.

    The court disagreed, determining that under the Dodd-Frank Act, national banks are required to pay interest on escrow accounts when mandated by applicable state or federal law. Citing previous decisions in similar escrow interest cases brought against the same bank in other states (covered by InfoBytes here and here), the court stated that Section 12-109 “does not prevent or significantly interfere with [the bank’s] exercise of its federal banking authority, because [Section] 12-109’s ‘interference’ is minimal, when compared with statutes that the Supreme Court has previously found were preempted.” The court noted that state law—which “still allows [the bank] to require escrow accounts for its borrowers”—provides that the bank must pay a small amount of interest to borrowers if it chooses to maintain escrow accounts. Moreover, the court concluded that the bank’s “suggestions about interference are belied by the fact that its direct competitors dutifully comply with [Section] 12-109.” As for the OCC’s 2004 preemption regulation, Section 34.4, the court determined that the regulation is entitled to minimal deference, and noted that it is not clear that the OCC, in promulgating the regulations, “ever considered whether the NBA preempts state laws that mandate payment of interest for escrow accounts.” According to the court, the regulations do not mention state escrow interest laws at all. As such, the court stated that it “will not defer to the OCC’s regulation, or to the agency’s current position that [Section] 12-109 is preempted.”

    Courts Escrow State Issues National Bank Act Interest Rate Consumer Finance

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  • CFPB releases annual HMDA and TILA adjustments

    Agency Rule-Making & Guidance

    On December 18, the CFPB announced final rules adjusting the asset-size thresholds under HMDA (Regulation C) and TILA (Regulation Z). Both rules take effect on January 1, 2020.

    Under HMDA, institutions with assets below certain dollar thresholds are exempt from the collection and reporting requirements. The final rule increases the asset-size exemption threshold for banks, savings associations, and credit unions from $46 million to $47 million, thereby exempting institutions with assets of $47 million or less as of December 31, from collecting and reporting HMDA data in 2020.

    TILA exempts certain entities from the requirement to establish escrow accounts when originating higher-priced mortgage loans (HPMLs), including entities with assets below the asset-size threshold established by the CFPB. The final rule increases this asset-size exemption threshold from $2.167 billion to $2.202 billion, thereby exempting creditors with assets of $2.202 billion or less as of December 31, from the requirement to establish escrow accounts for HPMLs in 2020.

    Agency Rule-Making & Guidance CFPB HMDA TILA Mortgages Escrow Regulation C Regulation Z

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