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Financial Services Law Insights and Observations

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  • Idaho regulator provides updates on agency operations

    State Issues

    On March 26, the Idaho Department of Finance provided updates to its registrants and licensees regarding the Department’s current operations. In particular, the Department noted that staff are continuing to process licensing and registration applications, but companies may choose to transition their license records to the NMLS. The Department noted that field examinations continue remotely, using phone and email in lieu of onsite reviews. Finally, deadlines for submitting call reports and financial statements have been extended by 60 days.

    State Issues Covid-19 Idaho Licensing

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  • Idaho regulator issues “Work from Home” guidance

    State Issues

    On March 12, the Idaho Department of Finance issued guidance to its licensees and registrants permitting employees to work from home even where the residence is not a licensed branch. The Department stated it will not take action against a licensee or registrant so long as the licensable activities meet specified data security and privacy requirements, and the licensee or registrant avoids advertising the unlicensed address or phone number, meeting consumers at the residence, or otherwise holding out or suggesting that the residence is a licensed location. The guidance is effective until June 30.

    State Issues Covid-19 Idaho Licensing

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  • North Carolina sets up “essential supplier” vetting process

    State Issues

    North Carolina Emergency Management announced that it created a process to vet businesses to determine whether they are essential suppliers that can continue operations if emergency closures are declared. To seek a determination, businesses should email beoc@ncdps.gov, providing: 1. business name; 2. contact information; 3. why it is critical that the business continue operations; 4. business website.

    State Issues Covid-19 North Carolina

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  • North Carolina governor prohibits mass gatherings, closes certain businesses

    State Issues

    On March 23, the governor of North Carolina issued an executive order prohibiting mass gatherings of 50 or more. The order does not specifically address financial institutions.

    State Issues Covid-19 North Carolina

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  • NYDFS encourages insurance licensees to use E-Signatures

    State Issues

    The NYDFS issued guidance encouraging regulated insurance persons to use and accept electronic signatures and records to facilitate insurance transactions in instances that cause no consumer harm. The NYDFS reminded licensees that both New York’s Electronic Signatures and Records Act and the federal Electronic Signatures in Global and National Commerce Act permit the use of electronic signatures and records if the consumer consents. The NYDFS also stated it does not require consumer consent be obtained in any particular way.

    State Issues Covid-19 New York NYDFS Licensing Insurance Licensing E-Signature

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  • NYDFS suspends license expiration for individual insurance producers for 60 days

    State Issues

    On March 25, the NYDFS suspended the license expiration of all individuals who are licensed insurance producers – brokers, agents, intermediaries and other persons required to be licensed in order to sell, solicit or negotiate insurance in New York – for 60 days. The NYDFS issued the temporary suspension in light of the hardship that individuals may face obtaining the continuing education credits required for license renewals. At the end of this 60-day period, all licenses that would have expired without the extension will automatically expire unless the producer has submitted a license renewal application and completed all necessary continuing education credits.

    State Issues Covid-19 New York NYDFS Licensing Insurance Licensing

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  • FDIC, OCC, NCUA identify essential critical infrastructure workers during Covid-19

    Federal Issues

    On March 26, the FDIC issued FIL-25-2020 stating that the financial services sector is a “critical infrastructure” during the Covid-19 pandemic pursuant to the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency’s (CISA) March 19 guidance. The guidance is intended to help state, local, and industry partners identify critical infrastructure sectors and essential workers in order to ensure continuity of critical functions. The FIL advises company leadership to provide workers with documentation identifying them as critical infrastructure workers who need “to travel inside restricted areas in order to support critical infrastructure.”

    On March 25, the OCC issued similar guidance pursuant to CISA’s guidance. Bulletin 2020-23 encourages essential critical infrastructure workers to maintain normal work schedules during the Covid-19 pandemic, and offers guidance for banks concerning workers who may need to move within and between restricted areas. Essential critical infrastructure workers include those who are needed to: (i) “process and maintain systems for processing financial transactions and services (e.g., payment, clearing and settlement; wholesale funding; insurance services; and capital markets activities)”; (ii) “provide consumer access to banking and lending services,” such as ATMs and armored cash carriers; and (iii) support financial institutions (e.g., staffing data and security operations centers). The workers also include key third party providers who deliver core services. The OCC advises banks to, among other things, update business continuity plans and provide documentation to workers detailing work-related travel.

    The NCUA also sent a letter to member boards of directors, chief executive officers, chief information officers, and chief information security officers identifying essential critical infrastructure workers pursuant to CISA’s guidance. Updates to Covid-19 NCUA resources are available here.

    Federal Issues Agency Rule-Making & Guidance FDIC OCC NCUA Covid-19 Department of Homeland Security

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  • Banking regulators urge small-dollar lending during Covid-19 crisis

    Federal Issues

    On March 26, the FDIC, Federal Reserve Board, CFPB, NCUA, and OCC issued a joint statement encouraging banks, savings associations, and credit unions to offer responsible, small-dollar loans to consumers and small businesses affected by Covid-19. The agencies recognize that small-dollar lending can play an important role in meeting credit needs during this time period, and recommend that financial institutions offer loans “through a variety of structures including open-end lines of credit, closed-end installment loans, or appropriately structured single payment loans.” For borrowers experiencing unexpected circumstances who cannot repay a loan as structured, financial institutions are “further encouraged to consider workout strategies designed to help borrowers to repay the principal of the loan while mitigating the need to re-borrow.” All loans, however, should be offered in a manner “consistent with safe and sound practices” that “provides fair treatment of consumers, and complies with applicable statutes and regulations, including consumer protection laws.”

    Federal Issues Agency Rule-Making & Guidance FDIC Federal Reserve CFPB OCC NCUA Small Dollar Lending Small Business Lending Covid-19

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  • CFPB outlines regulatory flexibility related to Covid-19

    Federal Issues

    On March 26, the CFPB announced several regulatory flexibility measures to help financial companies work with consumers affected by Covid-19. Specifically, the measures postpone certain industry data collections on Bureau-related rules. These include:

    • HMDA. Quarterly information reporting by certain mortgage lenders as required under HMDA and Regulation C will not be expected during this time. However, entities should continue collecting and recording HMDA data in anticipation of making annual submissions. Entities will be provided information by the Bureau on when and how to commence new quarterly HMDA data submissions. (See statement here.)
    • TILA. During this time, annual submissions required under TILA, Regulation Z, and Regulation E “concerning agreements between credit card issuers and institutions of higher education; quarterly submission of consumer credit card agreements; collection of certain credit card price and availability information; and submission of prepaid account agreements and related information” will not be expected. (See statement here.)
    • Section 1071. A survey seeking information from financial institutions on the cost of compliance in connection with pending rulemaking on Section 1071 of the Dodd-Frank Act has been postponed. As previously covered by InfoBytes, under the terms of a stipulated settlement resolving a 2019 lawsuit that sought an order compelling the Bureau to issue a final rule implementing Section 1071, the Bureau agreed to outline a proposal for collecting data and studying discrimination in small-business lending.
    • PACE Financing. A survey of firms providing Property Assessed Clean Energy (PACE) financing to consumers for the purposes of implementing Section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act has been postponed.
    • Supervision and Enforcement. The Bureau’s policy statement provides “that it does not intend to cite in an examination or initiate an enforcement action against any entity for failure to submit to the Bureau” specified information related to credit card and prepaid accounts. However, the Bureau’s announcement advises entities to “maintain records sufficient to allow them to make delayed submissions pursuant to Bureau guidance.” With respect to operational challenges facing institutions due to Covid-19, the Bureau states that it will work with institutions when scheduling examinations and other supervisory activities to minimize disruption and burden. “[W]hen conducting examinations and other supervisory activities and in determining whether to take enforcement action, the Bureau will consider the circumstances that entities may face as a result of the [Covid-19] pandemic and will be sensitive to good-faith efforts demonstrably designed to assist consumers,” the announcement states.

    Federal Issues CFPB Agency Rule-Making & Guidance Data Collection / Aggregation Mortgages Data HMDA Credit Cards Prepaid Cards TILA Dodd-Frank PACE Programs Examination Supervision Consumer Finance Covid-19

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  • Fannie, Freddie develop payment deferral program

    Federal Issues

    On March 25, Fannie Mae announced the release of a new payment deferral program developed with Freddie Mac at the direction of the FHFA. Fannie Mae issued Lender Letter LL-2020-05 and Freddie Mac issued Bulletin 2020-6 to introduce the new workout option which “enables servicers to assist eligible borrowers who have resolved a temporary hardship and resumed their monthly contractual payments but cannot afford either a full reinstatement or repayment plan to bring the loan current.” The lender letter and the bulletin cover, among other things: (i) criteria necessary to be eligible for a payment deferral; (ii) terms of payment deferral; (iii) steps to complete a payment deferral; (iv) applicable fees; (v) reimbursement for expenses; and (iv) servicer incentive fees. Servicers may begin to evaluate borrowers for the deferral payment program on July 1, but no later than January 1, 2021.

    Federal Issues Fannie Mae Freddie Mac FHFA Mortgages Covid-19 GSE

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