InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
FHFA directs enterprises to grant flexibilities for appraisal and employment verifications
On March 23, FHFA directed Fannie Mae and Freddie Mae to provide alternative flexibilities for lenders to satisfy appraisal and employment verification requirements through May 17, 2020.
Massachusetts Governor issues “stay at home” order
On March 23, Massachusetts Governor Baker issued a statewide emergency order requiring non-essential businesses and organizations to close as of March 24 at 12pm. Financial services, including workers needed to process and maintain systems for processing financial transactions, and workers needed to provide consumer access to banking and lending services, are considered essential services exempt from the order.
Delaware issues stay at home order
On March 22, the Delaware governor issued an order to close all non-essential businesses. The order went into effect at 8:00 AM and remains in effect until May 15, or until “the public threat is eliminated.” Businesses that provide certain financial activities are considered essential businesses that may remain open. For example, monetary authorities and businesses engaged in credit intermediation and related activities, securities commodity contracts, and other financial investment and related activities, insurance carriers and related activities, and funds, trusts, and other financial activities may remain open. An FAQ was also issued to address questions regarding non-essential closures.
Ohio issues stay at home order
On March 22, the Ohio Department of Health issued a stay home order for all persons not engaged in essential businesses and operations, which include, among others, financial and insurance institutions such as banks, currency exchanges, consumer lenders, including but not limited to pawnbrokers, consumer installment lenders and sales finance lenders, credit unions, appraisers, title companies, financial markets, trading and futures exchanges, payday lenders, affiliates of financial institutions, entities that issue bonds, related financial institutions, and institutions selling financial products. Essential businesses and operations also include insurance companies, underwriters, agents, brokers, and related insurance claims and agency services. The order became effective at 11:59 PM on March 23, 2020, and will remain in force until 11:59 PM on April 6, 2020.
California Department of Business Oversight issues guidance to financial institutions
On March 22, the California Department of Business Oversight (DBO) issued guidance to financial institutions whose customers may be suffering from loss of income or other financial hardship as a result of the Covid-19 pandemic. As directed by Governor Newsom’s Executive Order N-28-20 (previously discussed here), the DBO encourages financial institutions to adopt the following practices, among others, during the state of emergency:
- Waiving certain fees (e.g., ATM fees, overdraft fees, late payment fees, early withdrawal penalties)
- Increasing ATM daily cash withdrawal limits;
- Easing restrictions on cashing out-of-state and non-customer checks;
- Increasing credit card limits for creditworthy borrowers; and
- Offering payment accommodations, such as allowing borrowers to defer or skip some payments or extending the payment due date, which would avoid delinquencies and negative credit bureau reporting caused by Covid-19-related disruptions.
The guidance provides that prudent efforts to modify the terms on existing loans for affected customers will not be subject to examiner criticism. The guidance provides additional insight on financial condition review, supervisory response, and regulatory relief, regulatory reporting requirements, alternative service options for customers, and the permissibility of holding certain meetings (e.g., annual shareholder meetings, board of director meetings) via videoconference or teleconference.
California Department of Business Oversight issues guidance for lenders
On March 22, the California Department of Business Oversight (DBO) issued guidance directed at escrow agents, finance lenders and servicers, student loan servicers, residential mortgage lenders and servicers, and MLOs whose customers may be suffering from loss of income or other financial hardships as a result of the Covid-19 pandemic. The guidance states that the DBO will not take enforcement action against licensees for operating unlicensed branches if, during the state of emergency, employees conduct activities from home that normally would require a branch license, provided that appropriate measures are taken to protect consumers and their data. The DBO also will not criticize student loan servicers or licensees sponsoring MLOs who permit their respective employees to work from home, provided that certain conditions are met. While the foregoing applies to Escrow Law licensees, the DBO notes that it cannot modify any restrictions that may be imposed by the Fidelity Corporation or the licensee’s surety bond. The DBO offers additional recommendations to licensees, including offering payment accommodations to avoid delinquencies and negative credit bureau reporting, easing terms for new mortgage loans to affected borrowers, and exercising discretion in determining which of their services and transactions are “essential services” for the purposes of “stay-in-place” or “shelter-in-place” orders. The DBO also noted that it will not criticize any late mortgage recordation that result from the closure of a county recorder’s office due to Covid-19.
District court grants DOJ’s request for TRO against website for selling nonexistent Covid-19 vaccine
On March 22, the U.S. District Court for the Western District of Texas granted the DOJ’s motion for a temporary restraining order against an allegedly fraudulent website. In its announcement of the court’s action, the DOJ detailed that it had filed a complaint against the operator of a website (defendant) that purported to offer Covid-19 World Health Organization vaccine kits to consumers for free, if the consumers paid $4.95 in shipping charges. In its complaint, the DOJ alleged that the defendant was engaged in a scheme to defraud consumers by charging them $4.95 for shipping for the vaccine—which does not exist—and collecting the consumers’ credit card information for purposes of “fraudulent purchases and identity theft.” The DOJ alleged that the defendant was “engaging in and facilitating a predatory wire fraud scheme exploiting the current Covid-19 pandemic.” Among other things, the Department also requested a permanent injunction against the defendant.
Treasury Department clarifies “Essential Critical Infrastructure Workforce” for the financial sector
On March 22, the Treasury Department issued a memorandum stating that the financial services sector is a “Critical Infrastructure Sector” pursuant to the Department of Homeland Security’s Cybersecurity and Infrastructure Security (CISA) March 19 guidance. The memorandum provides that the Essential Critical Infrastructure Workforce for the financial services sector includes workers who are needed to: (i) process and maintain systems for processing financial transactions and services (e.g., payment, clearing and settlement services, wholesale funding, insurance services, and capital markets); (ii) provide consumer access to banking and lending services, such as ATMs and movement of currency (e.g., armored cash carriers); and (iii) support financial institutions (e.g., staffing data and security operations centers). It also includes key third party providers who deliver core services.
On March 24, the Secretary of the Treasury Department, Steven Mnuchin released an additional statement addressing essential financial services workers, expressing strong support for the Department of Homeland Security’s CISA guidance.
CFPB extends comment period for proposed rulemaking on time-barred debt disclosures; CFPB and FTC release 2019 FDCPA report
On March 20, the CFPB announced it was extending the comment period on its Supplemental Notice of Proposed Rulemaking related to time-barred debt disclosures (covered by a Buckley Special Alert) for an additional 30 days. Given the challenges created by Covid-19, the comment period will now end June 5.
The same day, the CFPB and FTC released their annual report to Congress on the administration of the FDCPA, which highlights the 2019 efforts of the agencies. Under a memorandum of understanding, the agencies are provided joint FDCPA enforcement responsibility and may share supervisory and consumer complaint information, as well as collaborate on education efforts. Among other things, the report provides general demographic and economic data about consumer debt and the debt collection industry, and highlights enforcement actions, education efforts, and supervisory findings. The report also notes that the CFPB handled roughly 75,000 complaints filed by consumers about first- and third-party debt collectors in 2019, down from the 81,500 it received in 2018, and engaged in five public enforcement actions arising from alleged FDCPA violations. Judgments resulting from these actions yielded nearly $50 million in consumer redress and $11.2 million in civil money penalties.
With respect to the FTC, the report states that in 2019 the agency obtained approximately $25 million in judgments and permanently banned 23 companies and individuals that engaged in serious and repeated violations of law from working in the debt collection industry. The report also highlights the FTC’s comment letter on the Bureau’s May 2019 Notice of Proposed Rulemaking to implement the FDCPA and to address other debt collection issues, in which the agency stated that it “has long advocated for amendments and clarifications to existing laws to account for changes in the debt collection marketplace and consumer technology” (covered by InfoBytes here).
Washington Department of Financial Institutions issues notice concerning signature and notary requirements
On March 20, the Washington Department of Financial Institutions issued a notice concerning signature requirements on applications and notice filings required during the Covid-19 outbreak. The notice provides that the Securities Division requires all franchise filings to be made electronically through its online electronic filing system, and will not require “wet” signatures on filings. Where a signature is required, copies (including PDF copies) of signed documents are sufficient. Additionally, the Securities Division is waiving any notary requirements during the Covid-19 outbreak.