InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
South Carolina regulator extends interim guidance to mortgage brokers permitting remote work
On July 30, South Carolina Department of Consumer Affairs updated and extended its interim guidance for mortgage brokers, previously covered here. The interim guidance permitting mortgage loan originators to work remotely will be effective until rescinded. The Department will provide fifteen days’ notice to affected businesses before rescinding the guidance.
California Consumer Financial Protection Law still pending
On June 29, California Governor, Gavin Newsom, signed SB 74, Budget Act of 2020 (and accompanying budget summary), which allocates $10.2 million in 2020-21 growing to $19.3 million in 2022-23 to the Department of Business Oversight, contingent on the enactment of the California Consumer Financial Protection Law (Law). As previously covered by a Buckley Special Alert (which details an earlier version of the proposal), the Law was originally proposed as a trailer bill to the state’s budget, but was not finalized by lawmakers prior to the June 15th budget deadline. In this version, the proposed budget and Law would: (i) revamp and rename the state’s Department of Business Oversight (DBO) to the Department of Financial Protection and Innovation (DFPI); (ii) establish an Office of Financial Technology Innovation to study emerging technologies in the financial industry; (iii) expand the DFPI’s authority to protect consumers from predatory practices by, among other things, prohibiting unlawful, unfair, deceptive, or abusive acts (consistent with Section 17200); and (iv) foster the responsible development of new financial products. California lawmakers now have until August 31 (end of session) to finalize “the statutory framework needed to implement the [Law].”
Notably, on August 6, the Assembly is holding a hearing to discuss the proposal and is seeking public feedback. Written comments should be submitted to BudgetSub6@asm.ca.gov prior to the hearing date.
State AGs ask court to vacate Department of Education’s 2019 “Institutional Accountability” regulations
On July 15, a coalition of state attorneys general from 22 states and the District of Columbia filed a complaint in U.S. District Court for the Northern District of California against Secretary of Education Betsy DeVos and the Department of Education, asking the court to vacate the Department’s 2019 final Institutional Accountability regulations (2019 Rule). As previously covered by InfoBytes, the 2019 Rule—which took effect July 1, 2020—revises protections for student borrowers who were significantly misled or defrauded by their higher education institutions, and establishes standards for “adjudicating borrower defenses to repayment claims for Federal student loans first disbursed on or after July 1, 2020.” Loans disbursed prior to July 1, 2020 remain subject to defenses under prior regulations issued in 2016 (2016 Rule). Earlier this year, H.J. Res. 76, which provided for congressional disapproval of the 2019 Rule (covered by InfoBytes here), was vetoed by President Trump.
The AGs allege in their complaint that the Department’s 2019 Rule, among other things, “completely eliminate[s] violations of applicable state consumer protection law as a viable defense to repayment of federal student loans” and “impose[s] additional requirements on a viable misrepresentation defense that are so onerous that they make this defense impossible for a student borrower to assert successfully.” Moreover, the AGs contend that the Department has “failed to meet its congressional mandate to specify actual borrower defenses” by promulgating a rule that serves only to prevent borrowers from obtaining relief. On these grounds, the AGs claim the 2019 Rule violates the Administrative Procedure Act (APA).
The AGs highlight several aspects of the 2019 Rule that support its claims, including that the elimination of the 2016 Rule’s limitations on the use of class action waivers and mandatory predispute arbitration agreements is arbitrary and capricious. According to the AGs, the Department’s “conclusion that requiring schools to disclose their use of mandatory predispute arbitration agreements and class action waivers will adequately protect borrowers is also contrary to substantial evidence and [the Department’s] own prior conclusions.”
California DBO: Pandemic caused sharp uptick in consumer complaints and inquiries
On July 29, the California Department of Business Oversight (DBO) announced a large uptick in consumer complaints and inquiries received since the beginning of the Covid-19 pandemic. From March through the end of June, the DBO states that consumer complaints increased more than 37 percent, email inquiries increased 86 percent, and consumer calls increased 22 percent. These sharp increases, DBO notes, are primarily due to Covid-19-related concerns about “mortgages, student loans, personal loans, questionable investments, and apparent fraudulent schemes.”
Louisiana Office of Financial Institutions issues emergency declaration to notification filers
On July 25, the Louisiana Office of Financial Institutions issued an emergency declaration to notification filers. The declaration waives the $50 late fee for notification filer renewal applications postmarked after April 16, 2020, and grants notification filers an extension to submit the renewal application and renewal fee until August 31, 2020.
Louisiana Office of Financial Institutions, Securities Division, reissues update on operations
On July 24, the Louisiana Office of Financial Institutions, Securities Division, reissued an earlier announcement on its operations, which was previously covered here. The announcement provides that: (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.
Louisiana Office of Financial Institutions extends emergency declarations to non-depository entities
On July 24, the Louisiana Office of Financial Institutions extended emergency declarations for residential mortgage lenders, check cashers, bond for deed escrow agents and repossession agents, brokers and lenders licensed under the Louisiana Consumer Credit Law and Deferred Presentment and Small Loan Act, and pawnbrokers. The orders were previously covered here. Such entities are granted the authority to temporarily close licensed locations within Louisiana or to temporarily close and/or relocate to another location within the state. Mortgage loan originators are permitted to work from home, whether located in Louisiana or another state, even if the home is not registered with the LOFI. The declarations also provide instructions for notifying the LOFI of a temporary location change. The declarations will remain in effect as long as there is a public health emergency relating to Covid-19, or until rescinded or replaced.
Louisiana Office of Financial Institutions extends relief provided to state-chartered financial institutions
On July 24, the Louisiana Office of Financial Institutions issued an emergency declaration continuing relief previously provided to Louisiana-chartered financial institutions, as provided in an earlier declaration previously covered here. Among other things, the declaration extends parity granted to loans made under the Main Street Lending Program established by the Federal Reserve System and loans made under the Small Business Administration's Paycheck Protection Program. The declaration also extends relief relating to temporary branch office closures, relocations, reduced operations, and annual meetings.
Washington governor issues proclamation further extending eviction relief
On July 24, the Washington governor issued Proclamation 20-19.3, which amends and extends earlier proclamations regarding evictions and related housing practices. Specifically, Proclamations 20-05 and 20-19 (previously covered here), and any subsequent orders, are amended and extended to temporarily prohibit residential evictions and impose related restrictions. Continuing through October 15, 2020, landlords, property owners, and property managers of residential dwellings and commercial rental properties in Washington may not, among other things, evict a tenant, assess certain fees, or increase the rate of rent or the amount of any deposit, except in certain limited circumstances.
Illinois reissues and extends several Covid-19 executive orders
On July 24, the Illinois governor issued Executive Order 2020-48, which extends several earlier executive orders through August 22, 2020. Among others, the order extends Executive Order 2020-25 regarding garnishment and wage deductions (previously covered here) and Executive Order 2020-30 regarding residential evictions (previously covered here and here).