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Financial Services Law Insights and Observations


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  • California Department of Real Estate issues FAQs regarding licensing process

    State Issues

    On September 21, the California Department of Real Estate issued FAQs on licensing processes during Covid-19. The FAQs respond to questions regarding, among other things, how to determine whether an exam has been cancelled and how to reschedule the exam, the best way to complete a renewal of an expiring real estate license, completing continuing education requirements, and whether the DRE will accept electronic signatures on licensing documents.

    State Issues Covid-19 California Licensing Examination Real Estate Mortgage Licensing

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  • CSBS announces single exam for money transmitters

    State Issues

    On September 15, the Conference of State Bank Supervisors (CSBS) announced the launch of a single, streamlined examination for money transmitters operating nationwide (i.e., in 40 or more states), known as “MSB Networked Supervision.” The single exam—which will apply to “78 of the nation’s largest payments and cryptocurrency companies”—will be led by one state overseeing a group of examiners sourced from around the country. MSB Networked Supervision is a result of recommendations from the CSBS Fintech Industry Advisory Panel and CSBS Vision 2020 (covered by InfoBytes here).

    State Issues Money Service / Money Transmitters State Regulator Examination Supervision Vision 2020 Licensing CSBS Fintech

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  • Nevada Dept. of Business and Industry extends work from home guidance

    State Issues

    On August 21, the Nevada  Department of Business of Industry, Division of Mortgage Lending extended its provisional guidance allowing licensed mortgage loan originators to work from home (previously covered here and here) until December 31, 2020.

    State Issues Covid-19 Nevada Licensing Mortgage Origination Mortgages

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  • Georgia adds installment lender and branch approval licenses to NMLS

    On September 1, NMLS announced that it is now accepting installment lender and branch approval license applications and transition filings for Georgia licensees. New applicants and existing licensees may now make submissions for Georgia Department of Banking and Finance licenses directly through NMLS. According to the announcement, “[c]ompanies holding these license types are required to submit a license transition request through NMLS by filing a Company Form (MU1) and an Individual Form (MU2) for each of their control persons by October 15.” The transition follows the enactment of SB 462, which took effect June 30. The statute transferred all “duties, powers, responsibilities, and other authority relative to industrial loans from the Industrial Loan Commissioner to the Department of Banking and Finance,” which utilizes the NMLS to manage its licensees. Specific details on the licensing requirements in Georgia can be accessed here.

    Licensing State Issues Installment Loans NMLS

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  • California DBO addresses MTA licensing exemptions

    State Issues

    Last month the California Department of Business Oversight (CDBO) released two new opinion letters covering aspects of the California Money Transmission Act (MTA) related to the sale of foreign currency and the agent of the payee exemption.

    • Sale of Foreign Currency. The redacted opinion letter concludes that the company’s banknote replenishment service does not trigger the licensing requirements of the MTA because the company does not engage in “selling  or receiving payment instruments, selling or receiving stored value, or receiving money for transmission.” Moreover, the CDBO determined that the company “does not issue anything to the business except for the foreign currency that was ordered, and does not receive money from the business for purpose of transmission.” 
    • Agent of Payee Exemption - Payment Processing Service. The redacted opinion letter concludes that neither the company’s pay-in services nor pay-out services are exempt from the MTA. According to the letter, the company provides payment processing services to online gaming operators (merchants), which allow the merchants’ customers to submit payments to engage in online gaming, such as sports betting and daily fantasy sports betting. The CDBO determined that the pay-in and pay-out services provided by the company “constitute ‘receiving money for transmission,’” as required for the MTA to apply, because the company “receives money from the [c]ustomers for transfer to the [m]erchants” for the pay-in service and “receives money from the [m]erchants for transfer to the [c]ustomers” for the pay-out service.  However, the agent of the payee exemption does not apply to the pay-in services, despite an agreement that establishes the company as the merchant’s agent, because the funds received by the company are not owed to the merchant when they are received by the company. Instead, such funds are retained in an account for the benefit of the merchant until a gambling debt is owed to the merchant. For the pay-out services, the exemption does not apply because the merchant’s customer does not provide any goods or services to the merchant for which the merchant’s payment to the customer is owed. The CDBO also advised that some of the proposed payments described in the company’s request may involve sports betting, which is an illegal activity in the state, and cautioned that the opinion “applies only to activities that are currently legal in California and does not relieve [the company] from its obligation to comply with other applicable state and federal laws.” Furthermore, the CDBO stated that MTA licenses cannot be issued to companies engaged in the transmission of money to facilitate unlawful activities.

    State Issues Licensing California Money Service / Money Transmitters State Regulator CDBO California Money Transmission Act

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  • Kansas extends remote work guidance for certain licensees

    State Issues

    On August 27, the Kansas Office of the State Bank Commissioner extended its remote work guidance, previously covered here and here, for mortgage companies, mortgage loan originators, supervised loan licensees, credit services organizations, money transmitters, and credit notification registrants. Licensed or registered individuals and entities are permitted to work from their residences or a company designated location, provided certain requirements are met, through December 31, 2020.

    State Issues Covid-19 Kansas Licensing Mortgages Mortgage Origination Loan Origination Credit Services Business Money Service / Money Transmitters

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  • Connecticut Department of Banking extends work from home guidance for licensees

    State Issues

    On August 21, the Connecticut Department of Banking issued a memorandum extending through December 31, 2020, its no-action position (previously discussed here and here) with respect to various licensees temporarily working from home during Covid-19, provided that certain criteria set forth in the memorandum are met.

    State Issues Covid-19 Connecticut Banking Licensing

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  • Texas Office of Consumer Credit updates guidance urging motor vehicle sales finance licensees to work with borrowers

    State Issues

    On August 20, the Texas Office of the Consumer Credit Commissioner updated its advisory bulletin urging motor vehicle sales finance licensees to work with consumers during the Covid-19 crisis (previously covered herehere, here, and here). Among other measures, the regulator urges licensees to increase consumer communication regarding the effects of Covid-19 for licensees, work out modifications for payment difficulties, waive certain charges, and suspend repossessions. The guidance also reminds licensees of legal requirements for using electronic signatures, and continues to permit licensees to conduct activity from unlicensed locations, subject to certain conditions. The guidance is in effect through September 30, 2020, unless withdrawn or revised.

    State Issues Covid-19 Texas Consumer Credit Auto Finance Licensing Repossession ESIGN Fintech Consumer Finance

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  • District court certifies class in a lawsuit against an unlicensed debt collector


    On August 17, the U.S. District Court for the District of Utah certified two classes related to a debt collector’s efforts to pursue judgments on defaulted debts without being appropriately registered with the state. The order certified two classes: one for class claims arising under the FDCPA, and another for class claims brought under the Utah Consumer Sales Practices Act (UCSPA). The court certified the UCSPA class for liability purposes only, as the statute does not allow a plaintiff to seek statutory damages on behalf of a class, leaving “issues related to what relief may be available for which class members to subsequent proceedings.” According to the order, the lead plaintiff filed a lawsuit against the defendant after it attempted to collect unpaid medical debt. The defendant obtained a judgment but was not registered as a debt collector in the state when it filed the action. The defendant argued that Utah’s registration requirement did not apply to it and filed a motion for summary judgment, but the court disagreed and allowed the plaintiff to seek certification for two classes of individuals who had debt collection lawsuits filed against them in Utah by the defendant while it was unlicensed. Among other things, the defendant argued that the plaintiff’s proposed class included individuals without an underlying consumer debt, which destroyed commonality under Rule 23. The court agreed and limited the proposed FDCPA class to individuals who were sued for a “debt” as defined by 15 U.S.C. § 1692a(5). However, the court stated that the need for individualized determinations concerning each class member’s debt did not upset Rule 23’s predominance requirement, and concluded that the issue does not predominate over the question of whether the failure to register as a debt collector was a violation of the FDCPA and UCSPA. The court also disagreed with the defendant’s res judicata argument to defeat the certification request, ruling that even though the defendant ultimately obtained a judgment against the lead plaintiff—which it also allegedly did for at least 645 other members of the class—that was not enough to prove a conflict existed between the lead plaintiff and the other unaffected members of the class.

    Courts Debt Collection Class Action FDCPA State Issues Licensing

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  • Arkansas Securities Department extends work-from-home guidance

    State Issues

    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.

    State Issues Covid-19 Arkansas Securities Licensing Mortgages Mortgage Licensing Privacy/Cyber Risk & Data Security

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