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Financial Services Law Insights and Observations

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  • California governor extends tax, licensing deadlines

    State Issues

    On March 25, the governor of California issued an executive order intended to provide relief to small businesses. The order provides businesses filing a return of less than $1 million in taxes with a 90-day extension to file first quarter returns and make tax payments. The order also extends by 60 days deadlines for submitting applications, paying fees, and submitting audited financial reports for a number of business licensees, including card rooms and online payer services. The order also suspends the requirements to request and receive the consent of shareholders for shareholder meetings to be held by electronic transmission or by electronic video screen communication.

    State Issues California Small Business Covid-19 Licensing

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  • California DBO issues guidance on securities and franchise filings

    State Issues

    On March 22, the California Department of Business Oversight issued notice urging securities and franchise filers to submit filings electronically and request waivers of automatic effectiveness for paper filings. The notice also provides that effective immediately the DBO will accept use of e-signature software in lieu of notarization and will waive the additional filing fee for renewals filed after franchise registration has lapsed through June 30.

    State Issues Covid-19 California DBO Securities

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  • California governor extends tax, licensing deadlines

    State Issues

    On March 25, the governor of California issued an executive order intended to provide relief to small businesses. The order provides businesses filing a return of less than $1 million in taxes with a 90-day extension to file first quarter returns and make tax payments. The order also extended by 60 days deadlines for submitting applications, paying fees, and submitting audited financial reports for a number of business licensees, including card rooms and online payer services.  The order also suspends the requirements to request and receive the consent of shareholders for shareholder meetings to be held by electronic transmission or by electronic video screen communication.

    State Issues Covid-19 California Licensing Shareholders

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  • California Department of Business Oversight issues guidance to financial institutions

    State Issues

    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.

    State Issues Covid-19 California DBO

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  • California Department of Business Oversight issues guidance for lenders

    State Issues

    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.

    State Issues Covid-19 California DBO MLO Mortgages

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  • California Dept. of Real Estate issues Covid-19 licensing FAQs

    State Issues

    On March 20, the California Department of Real Estate issued Covid-19 FAQs for licensing and business practices. The FAQs confirm that DRE has cancelled all salesperson and broker license exams through April 30. However, DRE will not extend expiration dates or deadlines for licensees, or waiving fees for late submissions. The FAQs also address the process for rescheduling exams and license renewals. The FAQs note that while the DRE’s offices are closed until further notice, the DRE is still operational by phone, eLicensing, and mail, and indicates further questions and responses regarding business practices will be provided in the future.

    State Issues California Covid-19 Licensing

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  • California announces statewide shelter-in-place

    State Issues

    On March 19, the California Governor announced a statewide shelter in place. Per the announcement, nonessential businesses must close. Banks are considered “essential businesses” and may remain open in California.

    State Issues Covid-19 California

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  • Superior Court jury trials in California suspended

    State Issues

    On March 23, the chief justice of California ordered superior courts to suspend jury trials for 60 days to mitigate Covid-19 risk. The order also extends statutory deadlines for trials in civil and criminal proceedings, and permits courts to immediately adopt rules for addressing the impact of Covid-19 without the need for public comment.

    State Issues Covid-19 California

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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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  • California State Assembly Banking and Finance Committee issues memorandum on Covid-19 banking and finance issues

    State Issues

    On March 20, the California State Assembly Banking and Finance Committee issued a memorandum noting that state authority over large national banks “is significantly constrained by federal law.” The memorandum provides that, under the National Bank Act and related case law, courts have widely upheld federal preemption over state laws that “interfere with the business of banking.” As such, courts “would likely stop any attempts by the state to force banks to limit rates or fees, demand forbearance or loan modifications, or require banks to make certain loans.” While state officials may urge national banks to give their borrowers relief, “these requests do not carry the force of law.” The memorandum also discusses mortgage rates and home sales, noting that in the event that mortgage rates increase and negatively affect the real estate market, “state legislators have limited tools to address such problems.”

    State Issues National Bank Act Courts Preemption Mortgages Covid-19 California

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