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Financial Services Law Insights and Observations

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  • New York announces New York Forward Loan Fund for small businesses, nonprofits, and small landlords

    State Issues

    New York has announced the creation of the New York Forward Loan Fund (NYFLF), a new state-based loan program to support small businesses, nonprofits, and small landlords (buildings with 50 units or less) in New York as they reopen from Covid-19-related shutdowns. The NYFLF is intended to provide working capital for upfront expenses related to complying with operational guidelines, such as inventory, marketing, and refitting for new social distancing guidelines. The loans will be available to individuals who did not receive a loan from either the U.S. Small Business Administration Paycheck Protection Program or the SBA Economic Injury Disaster Loans for Covid-19 in 2020. The NYFLF loans are interest bearing, are not forgivable, and must be repaid over a five-year term. Pre-applications for the program are being accepted.

    State Issues Covid-19 New York Small Business SBA

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  • Idaho Department of Finance extends work from home guidance for its licensees and registrants

    State Issues

    On May 22, the Idaho Department of Finance extended temporary work from home guidance previously issued to Idaho mortgage brokers and lenders, mortgage loan originators, regulated lenders, title lenders, payday lenders, and collection agency licensees and registrants. The original guidance, previously covered here, permits employees to work from home where the residence is not a licensed branch. The guidance is extended through September 1, 2020.

    State Issues Covid-19 Idaho Licensing Mortgage Broker Broker-Dealer Mortgage Lenders Loan Origination Mortgage Origination Title Loans Payday Lending Debt Collection

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  • Arkansas Securities Department extends work from home guidance for mortgage loan officers

    State Issues

    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.

    State Issues Covid-19 Arkansas Securities Mortgages Mortgage Lenders Licensing

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  • Indiana updates notary public requirements

    State Issues

    Indiana Secretary of State Connie Lawson issued an announcement highlighting new laws and regulations regarding continuing education for notaries public, remote notary authorization, and criminal history record checks for notaries public. As of March 31, active notaries public can receive authorization to conduct remote notarizations if they submit an application, complete an educational course, pay a $100 fee, and contract with an approved technology vendor. The new laws relating to continuing education and criminal history record checks take effect on July 1.

    State Issues Covid-19 Indiana Notary Fintech

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  • FTC and Utah add TSR charges to real estate seminar complaint

    Federal Issues

    On May 20, the FTC announced that it and the Utah Division of Consumer Protection amended their complaint against a Utah-based company and its affiliates (collectively, “defendants”) for allegedly using deceptive marketing to persuade consumers to attend real estate events costing thousands of dollars. The amended complaint adds additional defendants and new charges asserting the defendants violated the Telemarketing Sales Rule (TSR). As previously covered by InfoBytes, the U.S. District Court for the District of Utah issued a temporary restraining order against the defendants after the FTC and the Utah Division of Consumer Protection accused the defendants of violating the FTC Act, the Consumer Review Fairness Act (CRFA), and Utah state law, by marketing real estate events with false claims and celebrity endorsements. Among other things, the defendants allegedly told consumers they would (i) earn thousands of dollars in profits from real estate investment “flips” by using the defendants’ products; (ii) receive 100 percent funding for their real estate investments, regardless of credit history; and (iii) receive a full refund if they do not make “‘a minimum of three times’” the price of the workshop within six months. The amended complaint alleges that, in addition to the claims made at the real estate events, the defendants reiterated the false or misleading statements in the course of their telemarketing activities in violation of the TSR.

    Federal Issues Courts FTC Enforcement FTC Act UDAP TSR Deceptive Marketing State Issues

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  • NYDFS suspends license expiration for individual insurance producers for an additional 45 days

    State Issues

    On May 21, the New York State Department of Financial Services issued a supplement to Insurance Circular Letter No. 9, previously covered here, suspending the expiration of licenses for all individual insurance producers - brokers, agents, intermediaries, and other persons required to be licensed in order to sell, solicit, or negotiate insurance in New York – through July 8, 2020.

    State Issues Covid-19 NYDFS Licensing Insurance Broker-Dealer

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  • Auto financing company settles multistate subprime lending action for $550 million

    State Issues

    On May 19, the California attorney general, along with 33 other attorneys general, announced a multistate $550 million settlement with an auto sales financing company for allegedly placing subprime borrowers in auto loans that carried a high risk of default, in violation of state consumer protection laws. Specifically, California’s complaint alleges that the company violated the state’s Unfair Competition Law by, among other things, (i) extending auto loan credit to borrowers the company knew or should have known were likely to result in default and repossession; (ii) failing to disclose to borrowers the high risk of failure associated with the loans; (iii) requiring borrowers to make payments through methods that resulted in third-party fees; and (iv) misrepresenting borrowers’ ability to acquire repossessed vehicles already sent to auction. Additionally, the attorney general alleges that the company “turned a blind eye” to dealer abuse, resulting in higher origination prices for borrowers.

    According to the press release, the company will pay approximately $433 million in forgiveness of loans still owned by the company across the U.S. and will waive deficiency balances for borrower loans that the company no longer owns. Notably, certain borrowers who had defaulted as of December 31, 2019 but were still in possession of their vehicle will be allowed to keep the vehicle and have the deficiency balance on the loan waived. California’s settlement also requires injunctive measures such as (i) requiring the company to consider the borrower’s ability to repay the loan; (ii) barring the company from purchasing loans where the borrower’s residual income is zero or negative; (iii) setting reasonable debt to income ratios; and (iv) no longer requiring dealers to sell ancillary products.

    In addition to California, the multistate settlement includes: Illinois, Maryland, New Jersey, Oregon and Washington, who together with Attorney General Becerra comprise the executive committee; as well as the attorneys general of Arizona, Arkansas, Connecticut, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Nebraska, New Hampshire, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, West Virginia, Wyoming, and the District of Columbia.

    State Issues State Attorney General Auto Finance UDAP Deceptive

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  • 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

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  • State attorneys general send letter to auto manufacturers regarding Covid-19 practices

    State Issues

    On May 20, a coalition of state attorneys general sent a letter to ten major auto manufacturers relating to reports that dealerships have been engaging in predatory and harmful practices in connection with the return of leased vehicles during the Covid-19 pandemic. The coalition calls upon auto manufacturers to ensure that their financing arms and affiliated dealerships have appropriate controls to timely accept the return of leased vehicles during the pandemic. Further, car dealerships are urged to take certain steps, such as reviewing their lease-return policies for compliance with applicable law, assisting consumers with convenient lease returns, and refunding harmed consumers for certain costs arising from refused lease returns.  

    State Issues Covid-19 State Attorney General Auto Finance

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  • Rhode Island courts to recommence eviction proceedings on June 2, 2020

    State Issues

    On May 20, State of Rhode Island District Court issued Administrative Order 2020-02, announcing that it would recommence adjudicating eviction matters on June 2, and detailing a set of temporary practices and protocols for eviction matters. Similarly, on May 19, the State of Rhode Island Department of Business Regulation issued Certified Constables Bulletin 2020-1.2, noting that certified constables should conduct service of process and executions regarding eviction at a time and in a manner specified by the court.

    State Issues Covid-19 Rhode Island Evictions Mortgages

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