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Idaho enacts legislation modifying certain motor vehicle service contract provisions
On March 19, the Idaho governor signed HB 521, which updates a section of the Idaho Code pertaining to the “Idaho Motor Vehicle Service Contract Act” (the Act) to, among other things, “provide[] for state of Idaho regulation of motor vehicle service contracts.” HB 521 also modifies certain provisions surrounding motor vehicle service contracts by (i) clarifying the definition of a service contract; (ii) providing for service contract reimbursement policy requirements; (iii) setting forth rules associated with the sale of service contracts; (iv) specifying recordkeeping requirements; (v) providing for licensing; (vi) stipulating violation penalties; and (vii) noting that the legislation does not preclude a cause of action under the Idaho Consumer Protection Act. Furthermore, HB 521 notes that the “Idaho Insurance Guaranty Association Act shall not apply to any motor vehicle service contract, mechanical breakdown insurance or motor vehicle service contract liability insurance policy.” The Act is effective July 1.
Florida updates installment loan repayment terms and allowable delinquency charges
On March 19, the Florida governor signed SB 386, which amends Florida’s consumer finance law to remove the requirement that installment payments must be made monthly, and updates the allowable charges for delinquencies. Specifically, SB 386 now allows equal, periodic installment loan payments to be made every two weeks, semimonthly, or monthly. This provision does not apply to lines of credit. Additionally, SB 386 provides that a delinquency charge for a payment in default may not exceed $15 for payments due monthly; $7.50 for payments due semimonthly; and $7.50 or $5.00 for payments due every two weeks, depending on the number of payments due within a calendar month. The law is effective July 1.
CFPB and FTC issue annual report on 2017 debt collection activities
On March 20, the CFPB and the FTC issued an annual report to Congress on the agencies’ collective actions to combat illegal debt collection practices based on their shared enforcement responsibilities under the FDCPA. The report was released pursuant to a 2012 Memorandum of Understanding between the CFPB and the FTC that provides for coordination in enforcement, supervision, and consumer education. According to the report, the agencies’ actions against debt collectors include:
- CFPB. In addition to handling approximately 84,500 debt collection complaints in 2017, the CFPB reports it resolved one FDCPA enforcement case (previously covered by InfoBytes here) and filed two other complaints alleging FDCPA violations (previously covered by InfoBytes here and here). The Bureau also notes it uncovered a number of actions that the agency’s examiners deemed to be violations of the FDCPA, such as impermissible communications with third parties and implying authorized users are responsible for debt on the account. As for the Bureau’s pending FDCPA rulemaking, the report notes that the CFPB is still considering feedback from stakeholders regarding the July 2016 outline of proposals under consideration.
- FTC. The agency reports it obtained more than $64 million in judgments based on alleged violations of the FDCPA or the FTC Act and emphasized the FTC’s specific focus on phantom debt actions. In addition to working to educate consumers about their rights with regard to debt collection, the FTC emphasized multiple permanent injunctions, which prevent companies and individuals from working in the debt collection field again. As for research, the agency highlighted its July 2017 Military Consumer Financial Workshop, which covered debt collection as an issue faced by the military community (previously covered by InfoBytes here).
FTC and New York Attorney General announce orders banning debt collection operations from related activities
On March 22, the New York Attorney General’s office and the FTC announced settlements with the operators of an allegedly abusive debt collection scheme, resolving lawsuits filed in 2015. (See previous InfoBytes coverage here.) According to the FTC, the operators and associated companies allegedly violated the FTC Act, the Fair Debt Collection Practices Act, and New York state laws prohibiting deceptive acts and practices by using abusive language and making false threats that consumers would be arrested or sued in order to collect the supposed debts. The stipulated final orders impose combined judgments of over $48.7 million to be partially suspended upon the surrender of certain assets, including more than $1 million in corporate and individual assets. In addition to barring the operators from the debt collection business and from buying or selling debt, the orders further prohibit them from misrepresenting financial products and services or benefiting from consumers’ personal information collected in connection with the challenged practices.
Indiana amends financial services legislation, adds allowable charges
On March 13, the Indiana governor signed HB 1397 and SB 377, which make a variety of changes to various Indiana banking, consumer, and financial services laws administered by the state’s Department of Financial Institutions (DFI). Among other things, HB 1397 amends Indiana’s Universal Commercial Credit Code (UCCC) to codify current DFI practice, which allows for additional charges in connection with a consumer credit sale or loan, including charges for a skip-a-payment service ($25 maximum), an expedited payment service ($10 maximum), and a guaranteed asset protection agreement. The legislation also adds electronic funds transfers to the list of return payments that may be assessed a $25 charge. For payday loans, the legislation clarifies that a borrower, during the third consecutive loan or any subsequent consecutive loan, may request an extended payment plan if the rescission period has expired and the borrower has not previously defaulted on the outstanding loan. Indiana’s SB 377 allows for the director of DFI to use certain technology solutions to oversee compliance with and enforce state laws associated with the regulation of payday loans.
Both pieces of legislation are effective July 1.
CFPB releases FAQs on bankruptcy issues under the 2016 Mortgage Servicing Final Rule
On March 20, the CFPB released updated FAQs to support the implementation of the 2016 Mortgage Servicing Final Rule. Specifically, the updated FAQs pertain to the mortgage-servicing provisions regarding bankruptcy, which are effective April 19. The CFPB released ten bankruptcy-related question and answers. The bankruptcy topics include periodic statements, coupon books, reaffirmation, successors in interest, and timing of compliance.
As previously covered by InfoBytes, the CFPB recently issued a final rule updating technical aspects of the upcoming periodic statement requirements for borrowers in bankruptcy under Regulation Z.
Senate passes bipartisan financial regulatory reform bill
On March 14, by a vote of 67-31, the Senate passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) (the bill)—a bipartisan regulatory reform bill crafted by Senate Banking, Housing, and Urban Affairs Committee Chairman Mike Crapo, R-Idaho—that would repeal or modify provisions of Dodd-Frank and ease regulations on all but the biggest banks. (See previous InfoBytes coverage here.) The bill’s highlights include:
- Improving consumer access to mortgage credit. The bill’s provisions state, among other things, that: (i) banks with less than $10 billion in assets are exempt from ability-to-repay requirements for certain qualified residential mortgage loans; (ii) appraisals will not be required for certain transactions valued at less than $400,000 in rural areas; (iii) banks and credit unions that originate fewer than 500 open-end and 500 closed-end mortgages are exempt from HMDA’s expanded data disclosures (the provision would not apply to nonbanks and would not exempt institutions from HMDA reporting altogether); (iv) amendments to the S.A.F.E. Mortgage Licensing Act will provide registered mortgage loan originators in good standing with 120 days of transitional authority to originate loans when moving from a federal depository institution to a non-depository institution or across state lines; and (v) the CFPB must clarify how TRID applies to mortgage assumption transactions and construction-to-permanent home loans, as well as outline certain liabilities related to model disclosure use.
- Regulatory relief for certain institutions. Among other things, the bill simplifies capital calculations and exempts community banks from Section 13 of the Bank Holding Company Act if they have less than $10 billion in total consolidated assets. The bill also states that banks with less than $10 billion in assets, and total trading assets and liabilities not exceeding more than five percent of their total assets, are exempt from Volcker Rule restrictions on trading with their own capital.
- Protections for consumers. Included in the bill are protections for veterans and active-duty military personnel such as: (i) permanently extending the protection that shields military personnel from foreclosure proceedings after they leave active military service from nine months to one year; and (ii) adding a requirement that credit reporting agencies provide free credit monitoring services and credit freezes to active-duty military personnel. The bill also addresses general consumer protection options such as expanded credit freezes and the creation of an identity theft protection database. Additionally, the bill instructs the CFPB to draft federal rules for the underwriting of Property Assessed Clean Energy loans (PACE loans), which would be subject to TILA consumer protections.
- Changes for bank holding companies. Among other things, the bill raises the threshold for automatic designation as a systemically important financial institution from $50 billion in assets to $250 billion. The bill also subjects banks with $100 billion to $250 billion in total consolidated assets to periodic stress tests and exempts from stress test requirements entirely banks with under $100 billion in assets. Additionally, certain banks would be allowed to exclude assets they hold in custody for others—provided the assets are held at a central bank—when computing the amount such banks must hold in reserves.
- Protections for student borrowers. The bill’s provisions include measures to prevent creditors from declaring an automatic default or accelerating the debt against a borrower on the sole basis of bankruptcy or cosigner death, and would require the removal of private student loans on credit reports after a default if the borrower completes a loan rehabilitation program and brings payments current.
The bill now advances to the House where both Democrats and Republicans think it is unlikely to pass in its current form.
FDIC fines Delaware-based bank for unfair and deceptive practices
On March 7, the FDIC announced that a Delaware-based bank agreed to settle allegations of unfair and deceptive practices in violation of Section 5 of the Federal Trade Commission Act for assessing transaction fees in excess of what the bank previously had disclosed. The FDIC also found that the bank’s practices violated the Electronic Funds Transfer Act, the Truth in Savings Act, and the Electronic Signatures in Global and National Commerce Act. According to the FDIC, from December 2010 through November 2014, the bank overcharged transaction fees to consumers who used prepaid and certain reloadable debit cards to make point-of-sale, signature-based transactions that did not require the use of a personal identification number. The transaction fees allegedly exceeded what the bank had disclosed to consumers. Under the terms of the settlement order, the bank will, among other things, (i) establish a $1.3 million restitution fund for eligible consumers; (ii) prepare a comprehensive restitution plan and retain an independent auditor to determine compliance with that plan; and (iii) provide the FDIC with quarterly written progress reports detailing its compliance with the settlement order. The settlement also requires the bank to pay a civil money penalty of $2 million.
CFPB releases 2018 lists of rural, underserved counties
On March 6, the CFPB released its annual list of rural counties and rural or underserved counties for lenders to use when determining qualified exemptions under certain TILA regulatory requirements. In addition to these lists, the Bureau also directed lenders to use its web-based Rural or Underserved Areas Tool to assess whether a rural or underserved property qualifies for safe harbor for purposes of Regulation Z.
CFPB issues final rule on periodic statements during bankruptcy
On March 8, the CFPB issued a final rule updating technical aspects of the upcoming periodic statement requirements for borrowers in bankruptcy under Regulation Z. The Bureau adopted the proposed rule, released in October 2017, without revision (previously covered by InfoBytes here). Specifically, the final rule changes the transition rules for borrowers who enter or leave bankruptcy by replacing the previous single-billing-cycle exemption with a single-statement exemption for the next periodic statement or coupon book that a servicer would otherwise have to provide, regardless of when in the billing cycle the triggering event occurs. The Bureau also added new commentary to clarify the operation of the single-statement exemption. The rule is effective April 19.