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Financial Services Law Insights and Observations

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  • Arizona establishes mortgage broker provisions

    On April 22, the Arizona governor signed SB 1204, which amends state provisions regarding mortgage broker and banker licensing. Among other things, the bill: (i) provides that “a parent company may apply for and be granted a certificate of exemption on behalf of an entity that allows a responsible individual to reside out of state,” as long as certain criteria is met; (ii) establishes qualifications, application, bond, fees, and renewal requirements for licensing of mortgage brokers; and (iii) states that “[a] person shall APPLY for a license or for a renewal of a license in writing on the forms, in the manner and accompanied by the information prescribed by the deputy director.”

    Licensing State Issues State Legislation Arizona Mortgages

  • Arizona amends data breach notification requirements

    Privacy, Cyber Risk & Data Security

    On March 29, the Arizona governor signed HB 2146, amending the Arizona Revised Statutes’ security breach notification requirements. Specifically, if a person conducting business in the state that “owns, maintains or licenses unencrypted and unredacted computerized personal information becomes aware of a security incident” involving more than 1,000 individuals, the person is required to notify the three largest national consumer reporting agencies, the state attorney general, and the director of the Arizona Department of Homeland Security within 45 days. The bill also makes various technical corrections and will take effect 90 days after legislature adjourns.

    Privacy/Cyber Risk & Data Security State Legislation State Issues Arizona Data Breach

  • Arizona and Utah modify various licensing provisions

    On March 24, the Arizona governor signed HB 2612, which eliminates requirements for there to be a finding on whether an applicant is law abiding, honest, trustworthy, and of good moral character in order to be eligible for a license, permit, or certification. This applies to bank or in-state financial institution acquisitions, banking, consumer lenders, trust companies, escrow agents, mortgage brokers, mortgage bankers, commercial mortgage brokers, loan originators, financial institution holding companies, premium finance companies, real estate appraisers and appraisal management companies, among others. The bill also makes other technical and conforming changes and takes effect 90 days after adjournment of the legislature.

    Earlier, on March 23, the Utah governor signed HB 69, which modifies various licensing provisions under the state’s Residential Mortgage Practices and Licensing Act. The bill also makes various amendments under the Real Estate Licensing and Practices Act related to licensing, fees, and disciplinary actions. Among other things, the bill amends the general qualifications of licensure to make residential mortgage loans, including provisions related to mandatory education requirements for both state applicants and applicants licensed in other states and criminal background checks. Specifically, the bill removes a provision that states a “license is immediately and automatically revoked if the criminal background check discloses the applicant fails to accurately disclose a criminal history involving: (A) the real estate industry; or (B) a felony conviction on the basis of an allegation of fraud, misrepresentation, or deceit.” Additional amendments authorize the commission to impose sanctions against licensees and unregistered persons that were found to be in violation of a provision of the act; discuss the process for filing a written request for the vacation of a license revocation; address pending transactions should the death of a principal broker occur; and remove provisions regarding the payment of certain expenses and costs. The bill takes effect 60 days after adjournment of the legislature.

    Licensing State Issues State Legislation Utah Arizona Mortgages

  • 9th Circuit denies bid to block Arizona’s dealer data privacy law

    Courts

    On October 25, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s order denying a motion for preliminary injunction against enforcement of an Arizona statute designed to strengthen privacy protections for consumers whose data is collected by auto dealers. Under the Dealer Law, database providers are prohibited from limiting access to dealer data by dealer-authorized third parties and are required to create a standardized framework to facilitate access. The plaintiffs—technology companies that license dealer management systems (DMS)—sued the Arizona attorney general and the Arizona Automobile Dealers Association in an attempt to stop the Dealer Law from taking effect. The plaintiffs contended that the Dealer Law is preempted by the Copyright Act because it gives dealers the right to access plaintiff’s systems and create unlicensed copies of its dealer management system, application programming interfaces, and data compilations. The plaintiffs further claimed the Dealer Law is a violation of the U.S. Constitution’s contracts clause.

    On appeal, the 9th Circuit agreed that the plaintiffs were not entitled to a preliminary injunction. The appellate court concluded that the Dealer Law was not preempted by the Copyright Act, because, among other things, the plaintiffs could comply with the Dealer Law without having to create a new copy of its software to process third-party requests. Moreover, the 9th Circuit noted that even if the plaintiffs had to create copies of their DMS on their servers to process third-party requests, they failed to established that those copies would infringe their reproduction right, and the copies the plaintiffs took objection to “would be copies of its own software running on its own servers and not shared with anyone else.” The appellate court further held that the Dealer Law was not a violation of the U.S. Constitution’s contracts clause because, among other things, plaintiffs did not show that complying with the Dealer Law prevented them from being able to keep dealer data confidential. “Promoting consumer data privacy and competition plainly qualify as legitimate public purposes,” the appellate court wrote. “[Plaintiffs] point[] out that the Arizona Legislature did not make findings specifying that those were the purposes motivating the enactment of the statute, but it was not required to do so. The purposes are apparent on the face of the law.”

    Courts Privacy/Cyber Risk & Data Security State Issues Consumer Protection State Attorney General Arizona Ninth Circuit Appellate

  • Arizona Supreme Court requires CARES Act attestations in eviction proceedings

    State Issues

    On July 7, the Arizona Supreme Court issued Administrative Order No. 2020-105 regarding the disposition of residential eviction cases during the Covid-19 public health emergency. Among other things, the order requires any complaint seeking eviction for non-payment of rent for any part of the period between March 27 and July 25, 2020 to include an attestation by the plaintiff that the property in which the tenant resides is not covered by the CARES Act.

    State Issues Covid-19 Arizona CARES Act Evictions Mortgages

  • Arizona regulator implements adjusted renewal process

    State Issues

    The Arizona Department of Financial Institutions announced the implementation of a new license renewal process that will enable licensees to renew licenses of the parent licensee and its branches at the same time. Previously, licensees were required to complete renewal at the parent level, and then repeat the process for each branch. The department is currently in the first phase of the project, which will cover renewals for advance fee loan brokers, debt management companies, and sales finance companies, which have licenses expiring in June 2020.

    State Issues Covid-19 Arizona Licensing Broker-Dealer

  • Arizona Department of Financial Institutions issues guidance to financial institutions working with customers affected by Covid-19

    State Issues

    On April 24, the Arizona Department of Financial Institution issued a statement to financial institutions working with customers affected by Covid-19. Financial institutions are encouraged to work with affected customers and communities including through, among other things, waiving certain fees, increasing ATM cash withdrawal limits, offering payment accommodations, and suspending actions to foreclose on homes and businesses. Prudent efforts to modify the terms on existing loans for affected customers will not be subject to department criticism. The statement also provides guidance on financial condition review, supervisory response and regulatory relief, regulatory reporting requirements, and alternative service options for customers.

    State Issues Covid-19 Arizona Bank Compliance ATM Consumer Finance Foreclosure

  • Arizona Department of Insurance issues guidance on insurance customer relief

    State Issues

    On April 16, the Arizona Department of Insurance issued Regulatory Bulletin 2020-04 to certain insurers. Such insurers are encouraged to offer relief to customers affected by Covid-19, such as refraining from cancelling or non-renewing policies due to non-payment during the hardship, working with insured on premium payments, waiving late fees, interest, and penalties, delaying premium increases, and suspending the use of credit reports for rating. Insurers implementing Covid-19 related customer relief programs must make an informational filing in SERFF to document their programs.

    State Issues Covid-19 Arizona Insurance Consumer Finance

  • Arizona authorizes remote online notarization

    State Issues

    On April 8, Arizona issued an executive order authorizing the use of remote online notarizations. The state had passed legislation legalizing remote online authorization in 2019 and the law was scheduled to take effect on July 1, 2020, but is now in effect due to the Covid-19 crisis.   

    State Issues Arizona Notary Covid-19

  • Arizona governor calls for moratorium on small business evictions

    State Issues

    On April 6, Arizona Governor Doug Ducey issued an executive order calling for a moratorium on small business evictions. The order applies to businesses impacted by the Covid-19 crisis and instructs landlords to work with tenants to waive late fees, penalties, and to develop rent repayment plans. In place until May 31, the order does not apply to foreclosure or eviction proceedings initiated before the March 11 declared state of emergency.

    State Issues Covid-19 Arizona Mortgages

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