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Florida Office of Financial Regulation sets forth options related to the operation of various financial services industries
On March 20, the Florida Office of Financial Regulation issued guidance to consumer finance industries regarding remote work. Specifically, mortgage loan originators may work remotely so long as they do not conduct business in a manner that would require a license for their home. In addition, state licensed mortgage companies are advised to take precautions to maintain safety and security of data and records in connection with remote work.
New Hampshire Banking Department issues FAQs on mortgage foreclosure
On March 20, the New Hampshire Banking Department issued FAQs discussing mortgage foreclosures during the Covid-19 pandemic. Among other things, the FAQs clarified that New Hampshire Emergency Order #4 temporarily prohibits any judicial or non-judicial foreclosure action in New Hampshire during New Hampshire’s Covid-19 State of Emergency, regardless of where the lender is located.
Colorado Dept. of Regulatory Agencies relaxes MLO work location rules
On March 16, the Colorado Department of Regulatory Agencies sent an email reiterating that Colorado mortgage loan originatos (MLO) may perform licensed activities at a location other than at their registered work location. The Division notes that Colorado does not have any requirements regarding specific work locations at either the company or individual MLO level.
Arkansas Securities Dept. relaxes certain time constraints
The Arkansas Securities Department (ASD) issued a statement providing that certain time constraints in statutes and rules that regulate the securities, non-depository mortgage lending, and money services industries may prevent or hinder the Department’s ability to render maximum assistance to the citizens of Arkansas while they are adhering to guidelines to prohibit the spread of disease. The statement provides that those statutes and rules administered by the Commissioner that have specific time constraints will be relaxed through April 16, 2020 when it is shown the need is related to Covid-19.
California State Assembly Banking and Finance Committee issues memorandum on Covid-19 banking and finance 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.”
Alabama allows MLOs to work from home
On March 12, the Alabama State Banking Department issued a statement reminding all licensees to update business continuity plans. In addition, the statement also allows licensees to relocate offices or to permit Mortgage Loan Originators to work from home to help prevent the spread of Covid-19. The Department encourages licensees to maintain compliance with all applicable laws and regulations, and to notify the Department of any relocation, closure or remote work.
On March 16, the Alabama Governor issued a statement expressing confidence in the measures that financial institutions have put in place. The statement notes that Alabama banks are required to have business continuity plans in place to address emergency situations.
Appellate court affirms dismissal of RESPA kickback suit
On March 13, the U.S. Court of Appeals for the Fourth Circuit affirmed the dismissal of a putative class action filed by two consumers (plaintiffs) against a real estate brokerage group (real estate defendant) and a title company (title defendant), (collectively defendants), alleging a kickback scheme in violation of RESPA. The plaintiffs bought a house in 2008 with the help of a real estate agent affiliated with the real estate defendant. The real estate agent told the plaintiffs that the title defendant would provide settlement services, after which the plaintiffs filed an acknowledgment that they understood they could use the title company of their choice for their closing, and that they were not first-time homebuyers. The plaintiffs indicated their approval to use the settlement company selected by the real estate agent. Five years later, the plaintiffs filed suit, claiming that the real estate agent’s referral to the title defendant violated RESPA. The consumers, as lead class members, alleged that a marketing agreement between the defendants provided for payments by the title defendant to the real estate defendant for settlement services referrals. The plaintiffs claimed that the illegal kickback arrangement denied class members of ‘“impartial and fair competition between settlement service[s] providers in violation of RESPA.’”
The district court granted the defendants’ motion for summary judgement, holding that the plaintiffs lacked Article III standing to file suit because they were not overcharged in the settlement of their real estate transaction and did not otherwise show an injury-in-fact. In addition, the court determined that the claim was time-barred under RESPA’s one-year statute of limitations.
On appeal, the 4th Circuit agreed with the district court that the plaintiffs lacked standing, noting that “a statutory violation is not necessarily synonymous with an intangible harm that constitutes injury-in-fact.” The appellate court pointed out that the plaintiffs did not claim to have been overcharged for settlement services, and indeed, the plaintiffs agreed that the settlement service fees were reasonable. The appellate court also rejected the plaintiffs’ assertion that they suffered a concrete injury due to the lack of competition between settlement service providers.
Arizona attorney general requests financial assistance for Arizona consumers
On March 19, Arizona’s attorney general issued a request for financial and lending institutions to provide temporary relief to their Arizona customers. The governor’s requests for institutions included taking the following actions for at least 90 days: (ii) forbearing or deferring payments on mortgages, automobile loans, and consumer loans; (ii) postponing foreclosures and evictions; (iii) ceasing automobile repossessions; (iv) waiving late fees and default interest for late payments; and (v) halting negative credit reporting.
Texas Department of Savings and Mortgage Lending issues guidance on mortgage examinations
On March 12, the Texas Department of Savings and Mortgage Lending announced that the Department will begin minimizing on-site mortgage examinations and conducting them off-site to the extent possible.
California orders moratorium on foreclosures and evictions
On March 16, California Governor Gavin Newsom issued Executive Order N-28-20 requesting that financial institutions implement an immediate moratorium on foreclosures and related evictions arising from the nonpayment of rent or mortgage payments due to a substantial decrease in income or increase in medical expenses caused by the Covid-19 pandemic.