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Arizona governor announces cooperation program with state banks to provide foreclosure and eviction protection
On March 30, Arizona Governor Doug Ducey announced a cooperative agreement with state banks to protect small businesses and families that have been impacted by the Covid-19 crisis from evictions and foreclosure. Under the initiative, banks and mortgage servicers are suspending evictions and foreclosures for up to 60 days, which may be extended longer to overlap with the declared state of emergency. Under the program, banks and servicers have established payment forbearance programs for mortgages, and also have established payment deferral programs for specific (non-mortgage) consumer loans and for small businesses. The announcement also noted that state banks are working to lend Paycheck Protection Program loans as provided by the Small Business Administration through the CARES Act.
Michigan Department of Insurance and Financial Services issues FAQs for Consumer Finance Licensees and Registrants
On March 27, the Michigan Department of Insurance and Financial Services (Department) issued FAQs for Consumer Finance Licensees and Registrants. The FAQs provide responses to questions regarding examinations, the Department’s reduction of services, scams, and working with consumers such as waiving or reducing late fees, offering payment accommodations, and adjusting or modifying terms on existing loans where possible.
Maryland banking regulator outlines expectation for working with borrowers
On March 27, Maryland’s Commissioner of Financial Regulation issued an industry advisory with guidance regarding consumer credit for borrowers impacted by Covid-19. The guidance warns licensees against using the health crisis as an opportunity to increase fees or interest rates and instructs them to keep applicants and clients informed of disruptions or delays in credit decisions or changes to times and methods of communication. The advisory also “strongly urges” licensees to takes steps to mitigate the health crisis by, among other things: waiving late fees and online and telephone payment fees; foregoing credit reporting or reporting payment information in a manner that minimizes negative impact on credit histories; offering modification, forbearance or other options to allow borrowers to reduce or defer payments; ensuring that borrowers are able to timely make inquiries and manage their accounts; reaching out to borrowers proactively to provide information on available assistance; and ensuring that all borrower-facing staff are fully informed regarding available assistance and proactive in informing borrowers. Licensees are reminded to comply with applicable Maryland law, including all fair lending requirements, and to retain appropriate documentation to support decisions regarding mitigation offers.
CFPB issues guidance to student loan borrowers on Covid-19 debt relief
On March 27, the CFPB issued guidance on the student loan provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Pursuant to the Act, borrowers with federally held student loans will automatically have their loan principal and interest payments paused until September 30. Borrowers do not need to take any action to have their payments suspended and interest will not accrue during this period. The CFPB also provided additional guidance on the impact on privately held student loans and federal loans held by commercial lenders, and provided information to help borrowers avoid student loan debt relief scams.
9th Circuit holds extraneous information violates FCRA standalone disclosure requirement
On March 20, the U.S. Court of Appeals for the Ninth Circuit partially reversed a district court’s dismissal of a Fair Credit Reporting Act (FCRA) action, concluding that a company’s disclosures contained “extraneous information” in violation of the FCRA’s standalone disclosure requirement. The plaintiff filed a putative class action lawsuit against his former employer (defendant) after his employment—which was contingent on passing a background check—was ultimately terminated based on the results of his credit report. According to the plaintiff, the defendant violated two sections of the FCRA: (i) that the disclosure form was not clear and conspicuous and was encumbered by extraneous information; and (ii) that the defendant failed to notify him in the pre-adverse action notice that he could discuss the consumer report directly with the defendant prior to his termination. The district court dismissed the allegations, concluding that the disclosure met the FCRA’s disclosure requirements because it was not overshadowed by extraneous information, and “that the FCRA does not require that pre-adverse action notices inform an employee how to contact and discuss a consumer report directly with the employer.”
On appeal, the 9th Circuit reversed the district court’s ruling on whether the signed disclosure form contained extraneous information, concluding that because the disclosure form also included information about plaintiff’s rights to obtain and inspect information gathered by the consumer reporting agency about the plaintiff, it went beyond the FCRA’s standalone disclosure requirement. Noting that the FRCA requires a standalone disclosure but does not define the term “disclosure,” the 9th Circuit stated that a company may “briefly describe what a ‘consumer report’ entails, how it will be ‘obtained,’ and for which type of ‘employment purposes’ it may be used.” Finding that the clear and conspicuous standard was established in a case decided after the district court had dismissed plaintiff’s case, the court remanded the case to the district court to determine whether the defendant’s disclosure form satisfied the clear and conspicuous standard. However, the appellate court affirmed the dismissal of the plaintiff’s other claim, agreeing with the district court that the FCRA only requires employers to provide “a description of the consumer’s right to dispute with a consumer reporting agency the completeness or accuracy of any item of information contained in the consumer’s file at the consumer reporting agency.”
CFPB outlines regulatory flexibility related to Covid-19
On March 26, the CFPB announced several regulatory flexibility measures to help financial companies work with consumers affected by Covid-19. Specifically, the measures postpone certain industry data collections on Bureau-related rules. These include:
- HMDA. Quarterly information reporting by certain mortgage lenders as required under HMDA and Regulation C will not be expected during this time. However, entities should continue collecting and recording HMDA data in anticipation of making annual submissions. Entities will be provided information by the Bureau on when and how to commence new quarterly HMDA data submissions. (See statement here.)
- TILA. During this time, annual submissions required under TILA, Regulation Z, and Regulation E “concerning agreements between credit card issuers and institutions of higher education; quarterly submission of consumer credit card agreements; collection of certain credit card price and availability information; and submission of prepaid account agreements and related information” will not be expected. (See statement here.)
- Section 1071. A survey seeking information from financial institutions on the cost of compliance in connection with pending rulemaking on Section 1071 of the Dodd-Frank Act has been postponed. As previously covered by InfoBytes, under the terms of a stipulated settlement resolving a 2019 lawsuit that sought an order compelling the Bureau to issue a final rule implementing Section 1071, the Bureau agreed to outline a proposal for collecting data and studying discrimination in small-business lending.
- PACE Financing. A survey of firms providing Property Assessed Clean Energy (PACE) financing to consumers for the purposes of implementing Section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act has been postponed.
- Supervision and Enforcement. The Bureau’s policy statement provides “that it does not intend to cite in an examination or initiate an enforcement action against any entity for failure to submit to the Bureau” specified information related to credit card and prepaid accounts. However, the Bureau’s announcement advises entities to “maintain records sufficient to allow them to make delayed submissions pursuant to Bureau guidance.” With respect to operational challenges facing institutions due to Covid-19, the Bureau states that it will work with institutions when scheduling examinations and other supervisory activities to minimize disruption and burden. “[W]hen conducting examinations and other supervisory activities and in determining whether to take enforcement action, the Bureau will consider the circumstances that entities may face as a result of the [Covid-19] pandemic and will be sensitive to good-faith efforts demonstrably designed to assist consumers,” the announcement states.
Special Alert: California governor releases Covid-19 relief package
On March 25, California Governor Gavin Newsom announced a financial relief package (Proposal) and related guidance to assist borrowers in California experiencing financial hardship as a result of the Covid-19 outbreak. According to the news release, the relief efforts are being supported by several of the nation’s largest national banks, as well as by nearly 200 state-chartered banks, credit unions, and other servicers operating in California (Participating Financial Institutions). Under the Proposal, California borrowers of residential mortgage loans may be eligible for relief with respect to mortgage payments, credit reporting, foreclosures, evictions, and late fees and charges.
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Click here to read the full special alert
If you have any questions regarding California’s financial relief package, or other related issues, please contact a Buckley attorney with whom you have worked in the past. You can also visit our Covid-19 News & Resources page for a compendium of issuances by federal and state agencies, as well as GSEs and other sources.
NYDFS provides emergency relief to consumers
On March 24, NYDFS issued an emergency regulation providing financial relief to New Yorkers affected by Covid-19. Among other things, New York regulated institutions must (i) make applications for forbearance of any payment due on a residential mortgage of a property located in New York, widely available to any individual who resides in New York and who demonstrates financial hardship as a result of the Covid-19 pandemic; and (ii) subject to the safety and soundness requirements of the regulated institution, grant such forbearance for a period of 90 days to any such individual. New York regulated banking organizations must also provide certain financial relief to individuals who can demonstrate financial hardship, including eliminating fees charged for use of certain ATMs, overdraft fees, and credit card late payment fees. The regulations also establish requirements for institutions regarding the criteria for individuals to qualify for relief, application processing, and record retention, including expedited timelines to process applications for relief.
Minnesota Department of Commerce warns consumers about unlicensed predatory lenders
On March 25, Minnesota’s Department of Commerce issued a warning to consumers not to borrow from unlicensed online lenders that advertise and offer short-term, payday, or installment loans during the Covid-19 pandemic. The announcement offered tips to consumers, including verifying the lender is licensed, reading the fine print, considering alternative loan products, and consulting with credit counseling services.
West Virginia issues stay at home order
On March 23, the West Virginia governor issued a stay at home order requiring non-essential businesses and operations to temporarily cease operations. Essential businesses and operations include financial and insurance institutions, including banks and banking services such as ATM services, currency exchanges, consumer lenders, credit unions, appraisers, title companies, financial markets, trading and futures exchanges, payday lenders, affiliates of financial institutions, professional debt collectors and related creditor service workers, workers engaged in payment clearing and settlement, wholesale funding, and capital markets activities, entities that issue bonds, related financial institutions, institutions selling financial products, insurance companies, underwriters, agents, brokers, and related insurance claims and agency services. Additionally, essential businesses and operations include those businesses that sell, manufacture, or supply other essential businesses and operations with the support of materials necessary to operate. The order becomes effective at 8:00 PM on March 24, 2020, and remains in effect until terminated by subsequent executive order.