Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
On March 13, the West Virginia Division of Financial Institutions issued temporary guidance permitting employees of regulated entities to work from home or another remote location approved by the financial institution. Temporary assignments under the guidance are permitted from March 13 through May 1. The Division emphasized that regulated institutions should ensure that privacy and security issues are adequately addressed. The Division reminded depository entities of the prior notice requirements for branch closures or limited service, and requested that they review and implement pandemic preparedness plans. The guidance also addressed requirements specific to mortgage loan originators, indicating that they must, among other things, maintain records identifying the dates and locations where each licensed originator worked remotely and have current and approved policies for access to secure origination systems. In addition, MLOs and other employees working remotely may not meet with borrowers at an unlicensed branch location.
On March 13, the Minnesota Commerce Department released guidance to licensed collection agencies granting permission for individual debt collectors to work from home, even where the residence is not a licensed branch location. The collection agencies should ensure that no activity will be conducted in person with members of the public from the home location, the licensee must “at all times exercise supervision of the activity being performed” at the home office, and ensure there are the appropriate safeguards to protect consumer data and information. The guidance is effective through April 30.
Mississippi Department of Banking and Consumer Finance encourages institutions to work with customers during pandemic
On March 13, Mississippi’s Department of Banking and Consumer Finance announced regulatory guidance encouraging financial institutions to work with customers and communities affected by the Covid-19 pandemic. Specifically, financial institutions are encouraged to engage in various efforts, including: (i) waiving fees such as ATM, overdraft, and late fees; (ii) increasing ATM daily cash withdrawal limits; (iii) easing restrictions on cashing checks; (iv) increasing credit card limits for creditworthy borrowers; and (v) offering payment accommodations including forbearance. The Department also addressed financial condition review, supervisory responses, and regulatory relief, as well as reporting requirements, and making alternative service options available to customers.
On March 13, the New Hampshire Banking Department (NHBD) issued a memorandum to state-chartered banks, credit unions, and trust companies encouraging them to work constructively with customers experiencing difficulty due to Covid-19 and offering guidance on branch closures, annual meetings, examinations, and liquidity. Banks and credit unions do not need prior authorization to use only the drive-through portion of a branch or adjust normal business hours but must submit applications to the NHBD for branch closures in excess of 48 hours. If necessary, credit unions may conduct annual meetings via video or teleconference and both banks and credit unions may request adjustments to examination schedules or additional time to respond to consumer complaints. Finally, institutions are asked to closely monitor liquidity levels in the event of higher than normal consumer cash withdrawals and ensure sources of liquidity are readily available.
On March 13, the Texas Credit Union Department clarified its supervisory stance regarding how credit unions react to swiftly changing conditions resulting from Covid-19. The regulator indicated that while credit unions and their management teams should consult with appropriate legal and medical professionals when making Covid-19 related decisions, they are free to react as the Covid-19 scenario plays out so long as their decisions are reasonable and documented.
On March 13, the Wisconsin Department of Financial Institution sent a letter to credit unions to support and reinforce the guidelines issued by the Federal Financial Institutions Examination Council on March 6, which recommended steps for credit unions to proactively prevent disruptions of operation and minimize contact with customers. The letter also encouraged credit unions to consider postponing annual meetings or conducting such meetings remotely.
On March 10, Federal Housing Finance Agency Director Mark Calabria released a statement reminding mortgage servicers that borrowers impacted by Covid-19 and experiencing payment hardship would be eligible for hardship forbearance options set forth in the relevant Fannie Mae and Freddie Mac servicing guidelines. Calabria directed sellers and servicers to guidance issued the same day by Freddie Mac, which also reminds sellers and servicers that business continuity plans must be in place in order to conduct business operations in the event of an interruption. Fannie Mae has provided similar guidance to its seller/servicers.
Separately, on March 9, the Federal Housing Administration (FHA) issued a notice to all FHA-approved mortgagees and servicers reminding entities of loss mitigation program options that should be offered to distressed borrowers, including those impacted by Covid-19, to prevent foreclosures. These options, FHA noted, are available in the Single Family Housing Policy Handbook, 4000.1 Section III.A.2.
On March 6, the Federal Reserve, FDIC, OCC, NCUA, Conference of State Bank Supervisors, and the CFPB—through the Federal Financial Institutions Examination Council—issued an Interagency Statement on Pandemic Planning, which, among other things, updates 2006 and 2007 guidance on the need for business continuity plans (BCPs) that address the effects of pandemics. The interagency statement encourages banks to develop plans that, among other things, limit disruption of operations, minimize staff contact by utilizing remote access, and plan for staffing challenges by cross-training bank staff. The statement recommends that the BCPs of financial institutions should include: (i) a preventive program; (ii) a documented strategy that applies to the stages of the pandemic; (iii) a “comprehensive framework of facilities, systems, or procedures to ensure that the institution’s critical operations will continue” (iv) a testing program; and (v) an oversight program to ensure ongoing review and updates to the plan.” The statement also lists websites that offer information on pandemic planning activities. The FDIC and the OCC also published advisories, FIL-14-2020, and OCC 2020-13, respectively.
On March 9, the agencies issued a joint press release encouraging the financial institutions to “meet the financial needs of customers and members affected by” COVID-19. Also, the U.S. Senate sent a letter to trade associations encouraging them to provide job security for employees who self-quarantine or must miss work to take care of sick family members, and to ensure staff will not be required to use all sick leave/vacation leave or “report for work when such leave is exhausted.” The letter urges the entities to work with their customers by waiving late fees and overdraft fees among other measures. The Connecticut Department of Banking issued its own guidance as well regarding temporary remote work, and on March 5, the Washington Department of Financial Institutions issued similar guidance.
On March 10, CFPB Director Kathy Kraninger testified at a Senate Banking Committee hearing regarding the Bureau’s Semi-Annual Report to Congress. The hearing examined the report (covered by InfoBytes here), which outlines the Bureau’s work from April 1, 2019, through September 30, 2019.
In her opening remarks, Kraninger pointed to the newly announced measures that the Bureau has initiated to carry out the CFPB’s mission to prevent consumer harm, including the advisory opinion program, the updated Responsible Business Conduct bulletin, and proposed legislation to begin a whistleblower award program. (Covered by InfoBytes here.) In response to questions about the constitutionality of the CFPB’s structure, Kraninger stated that she was “incredibly encouraged” when the Supreme Court granted certiorari in Seila Law as it should provide “certainty and clarity.” Kraninger also addressed the Bureau’s COVID-19 preparedness by saying that the financial regulators are in “routine contact with the institutions we regulate” and that they maintain a steady flow of information with the Treasury Department, as well as with OPM, CDC, and FEMA to ensure coordinated operations. A number of Senators asked about the effects of COVID-19 on the economy, including with respect to new scams designed to take advantage of panicked consumers, consumers losing pay and benefits due to employer shut downs, and whether financial institutions are making accommodations for consumers during this time. Kraninger responded that financial institutions will have “supervisory flexibility” to help consumers and ensured that the CFPB is taking steps such as encouraging the public to attend the Bureau’s events via webcast. She also confirmed that the Financial Stability Oversight Council, of which she is a member, will meet this month. Other covered topics included small dollar loans and payday lending, supervision and enforcement, and the timeline for rulemaking on amendments to the qualified mortgage and ability to repay requirements. (Covered by InfoBytes here.)
On March 12, the South Dakota Division of Banking issued a memorandum encouraging state-chartered banks to review recent pandemic planning guidance issued by the Federal Financial Institutions Examination Council and then revise or establish appropriate pandemic plans. The Division advised that the plans should be integrated into business continuity plans and consider ways to maintain essential financial services for customers while limiting impact to employees. Finally, the Division indicated that it will monitor the impact of Covid-19 and alter onsite examination activities as needed.
- APPROVED Webcast: CFL license transition to NMLS
- Jonice Gray Tucker to discuss “Justice for all: Achieving racial equity through fair lending” at CBA Live
- Warren W. Traiger to discuss “On the horizon for CRA modernization” at CBA Live
- Jonice Gray Tucker to discuss “Government investigations, and compliance 2021 trends” at the Corporate Counsel Women of Color Career Strategies Conference
- Max Bonici to discuss “BSA/AML trends: What to expect with the implementation of the AML Act of 2020” at the American Bar Association Banking Law Fall Meeting