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On April 5, HUD announced disaster assistance for areas in Arkansas impacted by severe storms and tornadoes on March 31. The disaster assistance follows President Biden’s major disaster declaration on April 2. According to the announcement, HUD is providing immediate foreclosure relief, making FHA mortgage insurance available to disaster victims, and providing information on housing providers, as well as HUD-approved housing counseling agencies, among other measures. Specifically, HUD is providing an automatic 90-day moratorium on foreclosures of FHA-insured home mortgages for covered properties, as well as an automatic 90-day extension for home equity conversion mortgages, effective April 2. It is also making various FHA insurance options available to victims whose homes require repairs or were destroyed. HUD’s Section 203(h) program allows borrowers from participating FHA-approved lenders to obtain 100 percent financing, including closing costs, for homes that require “reconstruction or complete replacement.” HUD’s Section 203(k) loan program enables individuals to finance the repair of their existing homes or to include repair costs in the financing of a home purchase or a refinancing of a home through a single mortgage. HUD is also allowing administrative flexibilities for community planning and development grantees, as well as to public housing agencies and Tribes. Additionally, HUD is advising consumers who believe they have experienced housing discrimination as a result of the disaster to reach out to the agency’s Office of Fair Housing and Equal Opportunity.
On April 5, the FDIC issued FIL-14-2023 to provide regulatory relief to financial institutions and help facilitate recovery in areas of Arkansas affected by severe storms and tornadoes on March 31. The FDIC acknowledged the unusual circumstances faced by institutions affected by the storms and encouraged institutions to work with impacted borrowers to, among other things: (i) extend repayment terms; (ii) restructure existing loans; or (iii) ease terms for new loans, provided the measures are done “in a manner consistent with sound banking practices.” Additionally, the FDIC noted that institutions “may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery.” The FDIC will also consider regulatory relief from certain filing and publishing requirements and instructs institutions to contact the Dallas Regional Office for consideration. Earlier, on March 30, the FDIC issued FIL-12-2023 to provide similar regulatory relief to financial institutions and help facilitate recovery in areas of Mississippi affected by severe storms, straight-line winds, and tornadoes on March 24 and 25.
On March 21, Arkansas enacted HB 1439 to clarify the sponsorship process and amend licensing requirements under the state’s Fair Mortgage Lending Act. The amendments modify the definition of a “transitional loan officer license” to mean a license that is issued to an individual who is employed “and sponsored by” a licensed mortgage banker or mortgage broker. The term “sponsor” was also added and defined as a licensed mortgage broker or mortgage banker “that has assumed the responsibility for and agrees to supervise the actions of a loan officer or transitional loan officer.” HB 1439 also amends provisions relating to the termination of a loan officer’s license to provide that should the employment of a loan officer or a transitional loan officer be surrendered or canceled, a “sponsor shall terminate the sponsorship of the loan officer or transitional loan officer with the commissioner within thirty (30) days from the date that the loan officer or transitional loan officer ceased to be employed or ceased activities for the sponsor.” Sponsorship termination extinguishes any rights of a loan officer or a transitional loan officer to engage in mortgage loan activity. The license will be marked as “approved-inactive” until a licensed mortgage broker or mortgage banker files an application with the commissioner to sponsor the loan officer. The “approved-inactive” status may be changed to “approved” if a licensed mortgage broker or mortgage banker files an application for sponsorship, pays a $50 fee, and provides sponsorship notice to the commissioner. The amendments will take effect 90 days following the adjournment of the legislature.
On November 14, the U.S. Court of Appeals for the Eighth Circuit granted an emergency motion for injunction pending appeal filed by state attorneys general from Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina to temporarily prohibit the Secretary of Education from discharging any federal loans under the agency’s student debt relief plan (announced in August and covered by InfoBytes here). Earlier in October, the 8th Circuit issued an order granting an emergency motion filed by the states, which requested an administrative stay prohibiting the discharge of any student loan debt under the cancellation plan until the appellate court had issued a decision on the states’ motion for an injunction pending an appeal. (Covered by InfoBytes here.) The October order followed a ruling issued by the U.S. District Court for the Eastern District of Missouri, which dismissed the states’ action for lack of Article III standing after concluding that the states—which attempted “to assert a threat of imminent harm in the form of lost tax revenue in the future”— failed to establish imminent and non-speculative harm sufficient to confer standing.
In granting the emergency motion, the appellate court disagreed with the district court’s assertion that the states lacked standing. The 8th Circuit reviewed whether the state of Missouri could rely on any harm the Missouri Higher Education Loan Authority (MOHELA) might suffer as a result of the Department of Education’s cancellation plan. The appellate court found that the relationship between MOHELA and the state is relevant to the standing analysis, especially as Missouri law specifically directs MOHELA (which receives revenue from the student loan accounts it services) to distribute $350 million into the state’s treasury. As such, “MOHELA may well be an arm of the State of Missouri” under this reasoning, the appellate court wrote, adding that several district courts have concluded that MOHELA is an arm of the state. However, regardless of whether MOHELA is an arm of the state, the resulting financial impact due to the cancellation plan would, among other things, affect the state’s ability to fund public higher education institutions, the 8th Circuit noted. “Consequently, we conclude Missouri has shown a likely injury in fact that is concrete and particularized, and which is actual or imminent, traceable to the challenged action of the Secretary, and redressable by a favorable decision,” the appellate court wrote, adding that since one party likely has standing it does not need to address the standing of the other states. The appellate court also determined that “the equities strongly favor an injunction considering the irreversible impact the Secretary’s debt forgiveness action would have as compared to the lack of harm an injunction would presently impose.” The 8th Circuit explained that it considered several criteria, including the fact that the collection of student loan payments and the accrual of interest have both been suspended. The Missouri attorney general released a statement applauding the 8th Circuit’s decision.
The 8th Circuit’s decision follows a recent ruling issued by the U.S. District Court for the Northern District of Texas, which found that the student loan forgiveness program is “an unconstitutional exercise of Congress’s legislative power.” (Covered by InfoBytes here.)
On January 12, HUD announced disaster assistance for certain areas in Missouri impacted by severe storms, straight-line winds, and tornadoes in December 2021. The disaster assistance supplements state, tribal, and local recovery efforts in specific counties, and provides foreclosure relief and other assistance to affected homeowners following President Biden’s major disaster declaration on January 11. According to the announcement, HUD is providing an automatic 90-day moratorium on foreclosures of FHA-insured home mortgages for covered properties and is making FHA insurance available to victims whose homes were destroyed or severely damaged, such that “reconstruction or replacement is necessary.” HUD’s Section 203(k) loan program allows individuals who have lost homes to finance the purchase of a house or refinance an existing house along with the costs of repair, through a single mortgage. The program also allows homeowners with damaged property to finance the rehabilitation of existing single-family homes. HUD also announced it is allowing applications for administrative flexibility waivers for Community Planning and Development Grantees and public housing authorities. Recently, HUD announced it will provide the same foreclosure relief and assistance to Alabama, Arkansas, Kansas, and Washington state homeowners affected by severe storms, flooding, tornados, and wildfires in those states. (See press releases here, here, here, and here).
On January 12, the FDIC issued FIL-05-2022 to provide regulatory relief to financial institutions and help facilitate recovery in areas of Washington state affected by flooding and mudslides. The FDIC acknowledged the unusual circumstances faced by institutions and their customers affected by the severe weather events in certain counties of Washington and suggested that institutions work with impacted borrowers to, among other things, (i) extend repayment terms; (ii) restructure existing loans; or (iii) ease terms for new loans to those affected by the severe weather, provided the measures are done “in a manner consistent with sound banking practices.” The FDIC noted that it will consider the unusual circumstances when examining efforts to work with borrowers in affected communities and that institutions “may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery.” The FDIC will also consider regulatory relief from certain filing and publishing requirements. Earlier on January 5, the FDIC also issued FIL-01-2022 and FIL-02-2022 to provide the same regulatory relief to financial institutions and help facilitate recovery in areas of Arkansas and Colorado affected by severe storms, tornados, winds, and wildfires.
Arkansas passes law paving way for rules to permit mortgage employees to work outside a licensed location
On March 29, the Arkansas legislature passed SB149 (now known as Act 531), which, among other things, permits the Arkansas Securities Commissioner to issue a rule or order to establish terms and conditions pursuant to which mortgage loan activity under the Fair Mortgage Lending Act may be conducted outside of an entity’s main place of business or branches.
On August 18, the Arkansas Securities Department further extended interim regulatory guidance previously issued to licensed mortgage companies, mortgage loan officers, and branch managers. The original interim regulatory guidance, previously covered here, and extended in May, permits mortgage loan officers to conduct activities requiring a license from home, provided certain data security provisions are met. This guidance is extended through the duration of the emergency declared by the governor of Arkansas.
On May 22, the Arkansas Securities Department extended interim regulatory guidance previously issued to licensed mortgage companies, mortgage loan officers, and branch managers. The original interim regulatory guidance, previously covered here, permits mortgage loan officers to conduct activities requiring a license from home, provided certain data security provisions are met. This guidance is extended through September 1, 2020.
On May 11, the Arkansas Insurance Department issued a bulletin regarding compliance and licensing for admitted and surplus lines insurance carriers doing business in Arkansas. Insurers and other regulated entities are advised that they must continue to expeditiously adjust claims during Covid-19. The bulletin also provides guidance on regulatory filing deadlines, the permissibility of electronic filings and signatures, the status of on-site examinations by the department, license renewals, and continuing education deadlines.