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CFPB issues 2019 fair lending report to Congress
On April 30, the CFPB issued its annual fair lending report to Congress, which outlines the Bureau’s efforts in 2019 to fulfill its fair lending mandate. According to the report, in 2019 the Bureau continued to focus on promoting fair, equitable, and nondiscriminatory access to credit, highlighting several fair lending priorities that continued from years past such as mortgage lending, student loans, and small business lending. The Bureau also highlighted three policies released over the last year to promote innovation and to facilitate compliance: the No-Action Letter Policy, the Trial Disclosure Program Policy, and the Compliance Assistance Sandbox Policy (covered by InfoBytes here). Additionally, the report discussed the Bureau’s efforts in encouraging consumer-friendly innovation to expand access to unbanked and underbanked consumers and communities. These include: (i) using alternative data in credit underwriting to expand credit access responsibly; (ii) issuing a request for information on the use of “Tech Sprints” (covered by InfoBytes here) to encourage regulatory innovation and stakeholder collaboration; (iii) continuing to enforce fair lending laws such as ECOA and HMDA, including reaching a settlement with one of the largest HDMA reporters nationwide to resolve HMDA reporting allegations; and (iv) engaging with stakeholders to discuss fair lending compliance, issues related to credit access, and policy decisions. The report also provides information related to supervision, enforcement, rulemaking, and education efforts.
Fannie Mae updates Single-Family Lender Letter 2020-03 regarding impact of Covid-19 on originations
On May 5, Fannie Mae issued updates to Lender Letter 2020-03. The letter is addressed to all Fannie Mae single-family sellers, and addresses the impact of Covid-19 on originations. Among other things, Fannie Mae extended temporary origination-related policies to June 30, 2020, reminded lenders of policies regarding the use of unemployment benefits as qualifying income, and clarified policies surrounding furloughed borrowers. Fannie Mae also updated guidance regarding age of documentation, verification of self-employment, market-based assets, powers of attorney, remote online notarization, and verbal verification of employment.
FHFA extends loan processing flexibilities offered by Fannie Mae and Freddie Mac
On May 5, FHFA announced that it extended several loan processing flexibilities offered by Fannie Mae and Freddie Mac to assist borrowers during the Covid-19 emergency. The flexibilities include permitting alternative appraisals for certain loans, alternative methods for verifying employment before loan closing, flexibilities for providing documentation related to renovation draws, and expanding the use of power of attorney and remote online notarization. The flexibilities are extended until at least June 30.
Missouri extends various executive orders issued in response to Covid-19
On May 4, the Missouri governor issued Executive Order 20-10, which extends Executive Orders 20-04 (authorizing specific departments to waive or suspend statutory requirements and administrative rules), 20-05 (relating to the restaurant industry), 20-06 (relating to organized militia), and 20-08 (relating to remote notarization), issued in response to Covid-19. Executive Order 20-04 was previously covered here and Executive Order 20-08 was previously covered here.
Florida regulator reminds money transmitters of license renewal extensions
On May 4, the Florida Office of Financial Regulation reminded Money Transmitter Part II licensees that the deadline to renew licenses has been extended to June 1, 2020 (previously covered here). Licensees that fail to renew by June 1 will be considered inactive and will need to pay an additional fee to reactivate the license. Inactive licenses not renewed by July 30, 2020 will expire.
Louisiana Office of Financial Institutions, Securities Division, issues update on operations
On May 1, the Louisiana Office of Financial Institutions, Securities Division, issued an update regarding its current operations during the statewide “stay at home” order. In particular, (i) paper copies of registration documents and payment of related fees can be mailed to the LOFI, and certain filings can be submitted electronically; (ii) examinations are being conducted remotely using phone and email correspondence in lieu of traditional on-site examinations; (iii) licensing staff continue to process licensing and registration applications through the CRD/IARD systems; and (iv) enforcement staff are limiting in-person contacts with witnesses and regulatory partners, and are using telecommunications technology to complete tasks remotely.
OCC appeals judgment in NYDFS fintech charter challenge
On April 23, the OCC filed its opening brief in the U.S. Court of Appeals for the Second Circuit to appeal a district court’s final judgment in an NYDFS lawsuit that challenged the agency’s decision to allow non-depository fintech companies to apply for Special Purpose National Bank charters (SPNB charter). As previously covered by InfoBytes, last October the district court entered final judgment in favor of NYDFS, ruling that the SPNB regulation should be “set aside with respect to all fintech applicants seeking a national bank charter that do not accept deposits,” rather than only those that have a nexus to New York State. The judgment followed the court’s denial of the OCC’s motion to dismiss last May (covered by InfoBytes here), in which the court concluded, among other things, that the OCC failed to rebut NYDFS’s claims that the proposed national fintech charter posed a threat to the state’s ability to establish its own laws and regulations, and that engaging in the “business of banking” under the National Bank Act (NBA) “unambiguously requires receiving deposits as an aspect of the business.” Highlights of the OCC’s appeal include:
- The OCC claims that NYDFS lacks standing and that its claims are unripe because its alleged injuries are premised on a non-depository fintech company receiving a SPNB charter and commencing business in the state. However, the OCC has yet to receive even an application. The OCC also argues that NYDFS “would not be prejudiced by waiting to resolve these claims until OCC takes affirmative steps to approve an application” because the period between preliminary conditional approval and final approval would provide “ample opportunity to challenge such an application.”
- The OCC argues that the district court erred in holding that the agency’s decision to accept SPNB charter applications from non-depository fintechs was not entitled to Chevron deference. Specifically, the term “business of banking” under the NBA is “ambiguous” on whether it requires deposit-taking, and the OCC’s resolution of that ambiguity is reasonable as it is consistent with U.S. Supreme Court case law.
- The OCC argues that even if NYDFS’s claims were justiciable (and even if the OCC’s interpretation was not entitled to Chevron deference), any relief NYDFS is entitled to receive must be limited to the state. The OCC contends that the district court’s decision to grant nationwide relief was improper because it is inconsistent with Article III, which establishes that “remedies should not extend beyond what is necessary to redress the plaintiff’s alleged injuries,” as well as equitable principles and the Administrative Procedure Act.
Illinois issues executive order amending and reissuing remote notarization and witnessing guidelines
On April 30, the Illinois governor issued an executive order amending and reissuing guidelines relating to remote notarization and witnessing. The guidelines are extended through May 29, 2020.
Illinois Department of Financial and Professional Regulation extends deadline for submission of financial statements for certain money transmitter licensees
On April 30, the Illinois Department of Financial and Professional Regulation issued guidance to persons or entities licensed pursuant to the Transmitter of Money Act (TOMA) regarding the submission of financial documents. TOMA licensees who are required to submit financial documents for renewal for the calendar year 2020 are granted an extension of 180 days after the licensee’s fiscal year for the submission of financial statements. All other requests for an extension of time will be considered on a case-by-case basis.
Alaska governor signs remote notarization bill into law
On April 30, the Alaska governor signed into law H.B. 124, which amends Alaska’s notarization law to permit remote notarization. The amendments set forth the requirements for conducting remote notarization, including the selection of technologies to perform the remote notarization and record keeping requirements.