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New York regulator issues guidance to state financial institutions regarding consumer relief
On June 17, the New York State Department of Financial Services issued guidance to state-regulated financial institutions, urging them to support consumers that have been negatively impacted by Covid-19. The department urged furnishers of credit information to, among other things, report accommodations reached under the CARES Act as “current,” unless the credit was delinquent prior to the accommodation; report certain Covid-19 related delinquencies as forborne, deferred, or affected by a natural or declared disaster consistent with the furnisher’s treatment of the account; and promptly conduct reasonable investigations of consumer-disputed credit information.
Texas Office of Consumer Credit updates guidance for regulated lenders
On June 12, the Texas Office of the Consumer Credit Commissioner issued updated guidance for regulated lenders navigating the Covid-19 crisis. The guidance: (1) addresses the June 1 due date for filing annual reports; (2) encourages lenders to work with consumers, including by working out modifications to assist with payments, waiving fees and charges, suspending charged-off accounts, and suspending repossessions of collateral or foreclosure of real property, among other things; (3) reminds lenders of legal requirements for using electronic signatures; and (4) permits lenders to conduct regulated lending activity from unlicensed locations, subject to certain conditions. The guidance is in effect through July 31, 2020, unless withdrawn or revised
Texas Office of Consumer Credit updates guidance urging motor vehicle sales finance licensees to work with borrowers
On June 12, the Texas Office of the Consumer Credit Commissioner issued an updated advisory bulletin urging motor vehicle sales finance licenses to work with consumers during the Covid-19 crisis (previously covered here and here). Among other measures, the regulator urged licensees to increase consumer communication, work out modifications, waive certain charges, and suspend repossessions. The guidance is in effect through July 31, 2020, unless withdrawn or revised
CFPB outlines plans for consumer financial law taskforce
On June 8, the CFPB published a blog post written by Todd Zywicki, the Chair of the Taskforce on Federal Consumer Financial Law, which discusses the future plans of the taskforce. In addition to the March request for information (RFI) seeking input on consumer protection areas for the taskforce to focus its research and analysis on (covered by InfoBytes here), the post notes that the taskforce intends to gain feedback from other public forums as well in order to produce a two-volume report. The first volume, among other things, will contain a history of consumer financial protection laws, a cost-benefit analysis of financial products and services, and an outline of the current regulatory framework. The second volume will include a set of recommendations for the Bureau “on ways to improve and strengthen the application of financial laws and regulations.” Through the fall, the taskforce will (i) analyze the comments received from the RFI; (ii) hold a public hearing; and (iii) participate in public listening sessions with the Bureau’s four advisory committees.
New Mexico issues order prohibiting writs of garnishment or writs of execution of consumer debt
On June 5, the New Mexico Supreme Court issued an order prohibiting writs of garnishment or writs of execution as they pertain to consumer debt collection cases. The order does not affect writs of garnishment and writs of execution issued prior to June 8, 2020. Other rules pertaining to consumer debt collection cases are also unaffected. The order does not apply to domestic support obligations, including support and spousal maintenance obligation. The order will remain in effect until amended or withdrawn by a future order.
Louisiana enacts Act limiting seizure of consumer stimulus payments
On June 4, the Louisiana governor signed Act No. 44, which exempts from seizure any consumer stimulus payments directly received by the debtor pursuant to federal law enacted to provide Covid-19 relief, with the exception of seizure for spousal or child support payments. This exemption does not apply to unemployment compensation received by the debtor. The act limits the circumstances in which government payments, grants, or loans received as a result of an “extraordinary emergency event” (which includes, among other things, a public health emergency affecting Louisiana) by a natural or judicial person who is a U.S. citizen domiciled in Louisiana may be seized, sold, attached, or restrained. The act became effective on June 4, 2020.
CFPB, CSBS issue CARES Act forbearance guidance
On June 4, the CFPB and the Conference of State Bank Supervisors (CSBS) issued joint guidance to assist mortgage servicers in complying with the CARES Act provisions granting a right to forbearance to consumers impacted by the Covid-19 pandemic. In addition to providing a statutory overview of the CARES Act protections related to forbearance and additional resources on how the CARES Act impacts other rules and regulations, the guidance contains specific FAQs based on observed or anticipated actions of mortgage servicers related to forbearance. Specifically, the FAQs address the following:
- Servicers are able to grant CARES Act forbearance periods for less than 180-days at a borrower’s request or if the borrower has provided consent. In situations where a borrower and a servicer cannot agree on the length of the forbearance, or where a servicer cannot communicate with the requesting borrower under certain circumstances, servicers are required to default to the term requested by the borrower, which cannot exceed 180 days.
- Servicers may not request information from borrowers supporting the need for forbearance. Borrowers do not need to prove hardship—an attestation of hardship due to Covid-19 is the only requirement established by the CARES Act for forbearance. Servicers must also grant forbearance to any requesting borrower with a federally-backed mortgage regardless of delinquency status.
- Servicers, depending on the facts and circumstances, may be at risk of legal violation or causing consumer harm if they offer “limited repayment options when others are reasonably available.”
- Examiners will evaluate originators’ communications with borrowers for legal compliance or to determine if consumer harm has occurred. Originators that mislead borrowers by using “loan closing attestations, notices or other communications to discourage borrowers from seeking forbearance” may be at risk of legal violation or causing consumer harm.
North Carolina Attorney General announces joint relief effort for North Carolinians facing Covid-19 financial hardship
On June 4, the North Carolina attorney general announced the Carolina Relief Plan, a voluntary agreement whereby participating financial institutions will offer certain financial relief to customers facing Covid-19 financial hardships. Relief includes, among other things, allowing eligible customers to request a forbearance on residential mortgage payments not otherwise covered by the CARES Act, assistance for payment extensions of auto loan accounts, and relief from monthly maintenance fees, overdraft fees, and CD early withdrawal penalties. Under the agreement, any participating financial institution also must: (1) offer to place a moratorium on residential mortgage foreclosures and consumer auto repossessions through at least June 30, 2020; (2) refrain from reporting loans subject to Covid-19 accommodations; and (3) inform customers about the assistance they are being offered and of the heightened risk of scams. One financial institution has signed onto the relief plan as of the time of the announcement.
California DBO takes action against company for PACE fraud
On May 27, the California Department of Business Oversight (CDBO) filed an order to ban an Encino-based company from the Property Assessed Clean Energy (PACE) industry for allegedly engaging in fraudulent behavior. According to the press release, the CDBO received 30 complaints from 2018 to 2019 alleging the company solicited homeowners by advertising a “free government program,” but used the homeowners’ personal financial information to submit contracts to PACE program administrators with forged electronic signatures. Additionally, complaints alleged various other fraudulent and illegal actions including, (i) the creation of false email accounts to have the PACE financing documents routed to the agents instead of the homeowners; and (ii) the impersonation of homeowners’ voices on state law required completion calls. The CDBO also asserts that the company sold products at three to five times the usual industry rate and used “high-pressure” sales tactics directed at the elderly and non-primary English speakers. In addition to the Desist and Refrain Order, which demands the company discontinue illegal practices and stop soliciting PACE contract, the CDBO notes that a similar but separate order will also be filed against the company president, who is a PACE solicitor agent.
Washington state issues Phase 2 guidance for real estate industry
On May 19, Washington issued guidelines for the real estate industry during Phase 2 of the state’s reopening plan. Among other things, the guidelines prohibit in-person meetings with customers except when necessary to view a property or sign documents and limit attendance at on-site activities—such as such as appraisals, viewings, or walkthroughs — to three people.