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  • California reinstates provisions of Homeowner Bill of Rights

    State Issues

    On September 14, the California governor signed SB 818, which permanently reinstates and amends certain provisions of California’s Homeowner Bill of Rights (HBOR), which expired on January 1, 2018. The revised and restored provisions of the HBOR, among other things, require entities that foreclosed on more than 175 first lien mortgages and deeds of trust on owner-occupied residences during the prior reporting year to: (i) stop foreclosure proceedings if a complete loan modification application is submitted and pending, a homeowner is in compliance with a foreclosure prevention alternative, or an appeal of a loan modification denial is pending; (ii) include in the notice of default a specified declaration regarding contact with a borrower; (iii) send a written notice of a loan modification denial, specifying the reasons for the denial and providing foreclosure prevention alternatives; (iv) assign a single point of contact to any borrower who requests foreclosure prevention assistance; (v) not charge fees in conjunction with applications for foreclosure prevention alternatives; and (vi) honor loss mitigation alternatives following servicing transfers. The legislation also adds a legislative intent clause that emphasizes that any amendment, addition, or repeal of an HBOR section will not have the effect to release, extinguish, or change any liability under a previous section that was in effect at the time of an action.

    State Issues State Legislation Mortgages Consumer Protection Mortgage Servicing Mortgage Modification

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  • California governor approves revisions to Student Loan Servicing Act

    State Issues

    On September 14, the California governor approved AB 38 amending the state’s Student Loan Servicing Act (Act). The Act provides for the licensure, regulation, and oversight of student loan servicers by the California Department of Business Oversight (CDBO). Among other things, the amendments: (i) clarify the circumstances under which the Commissioner of the CDBO may deny a student loan servicer’s application; (ii) remove debt collectors of defaulted student loans from the definition of a “student loan servicer”; (iii) authorize the Commissioner to require license applicants and licensees to submit required filings with, and pay assessments to, the Commissioner through the Nationwide Multistate Licensing System and Registry; (iv) require the Commissioner to report violations of the Act “as well as other enforcement actions and information to the licensing system and registry to the extent that the information is a public record”; and (v) extend to 10 business days the time for a licensee to acknowledge receipt of a qualified written request from a borrower. The amendments also grant the Commissioner the authority to prescribe circumstances under which electronic records, including applications, financial statements, and reports, may be accepted.

    State Issues State Legislation Student Lending Student Loan Servicer Licensing NMLS

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  • California updates foreign language disclosure requirements for mortgage modifications

    State Issues

    On September 11, the California governor approved SB 1201, which amends the state civil code to, among other things, require any supervised financial institution that negotiates a mortgage loan modification with a borrower primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean and offers the borrower a final loan modification in writing, to deliver to the borrower at the same time, a specified form summarizing the modified terms in the same language as the negotiation. The amendments require the California Department of Business Oversight (CDBO) to make available—using CFPB and Fannie Mae forms as guidance—certain disclosures and forms in those specified languages.

    The amendments are generally effective on January 1, 2019, with the amendments relating to the new written disclosures to become operative 90 days following the issuance of forms by the CDBO, but not before January 1, 2019.

    State Issues State Legislation Mortgage Lenders Mortgages Loss Mitigation Mortgage Modification Language Access CFPB Fannie Mae

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  • California governor signs amendments requiring the furnishing of customer account information associated with certain crime reports

    State Issues

    On September 6, the governor of California signed amendments to the California Right to Financial Privacy Act to provide various state and local agencies—including the police, sheriff’s department, or district attorney in the state—the authorization to request information from financial institutions in certain circumstances associated with crime reports involving the alleged fraudulent use of drafts, checks, access cards, or other orders. Specifically, AB 3229 states that banks, credit unions, and savings associations must furnish a statement with the requested customer account information for a period of 30 days prior, and up to 30 days following, the date of the alleged illegal act’s occurrence. AB 3229 further states that financial institutions will be required to furnish account information—subject to the outlined procedures—to a DOJ special agent upon request.

    State Issues State Legislation Privacy/Cyber Risk & Data Security

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  • California updates notice requirements on time-barred debt collection efforts

    State Issues

    On September 5, the California governor signed AB 1526, which, among other things, amends state debt collection law to require certain written notices to be included in the first written communications provided to the debtor after the debt became time-barred and after the date for obsolescence under the FCRA. If the debt is not past the date of obsolescence, the debt collector is required to include specific language in the first written communication to the debtor after the debt has become time-barred that indicates the debtor will not be sued for the debt, but the debt may be reported as unpaid to credit reporting agencies as allowed by law. If the debt is past the date of obsolescence, the debt collector is required to include specific language in the first written communication to the debtor after the date for obsolescence indicating the debtor will not be sued for the debt and the debt will not be reported to credit reporting agencies. The law also incorporates a four-year statute of limitations on the collection of debt by specifically prohibiting a debt collector from initiating a lawsuit, an arbitration, or other legal proceeding to collect the debt after the four-year period in which the action must have been commenced has ended.

    State Issues Debt Collection State Legislation FCRA

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  • Ohio governor enacts legislation recognizing blockchain transactions as enforceable electronic transactions

    State Issues

    On August 3, the governor of Ohio signed into law SB 220, which codifies that records or contracts and signatures secured through blockchain technology are enforceable electronic transactions. Specifically, SB 220 amends Ohio’s Uniform Electronic Transactions Act to state that “a record or contract that is secured through blockchain technology is considered to be in an electronic form and to be an electronic signature” and that a “signature that is secured through blockchain technology is considered to be in an electronic form and to be an electronic signature.” The amendments also create an affirmative defense or “safe harbor” to tort actions against businesses alleged to have failed to implement reasonable information security controls leading to a data breach of personal or restricted information. To qualify for the safe harbor, a business must implement and comply with a written cybersecurity program that contains specific safeguards for either the protection of personal information or the protection of both personal and restricted information.

    State Issues State Legislation Blockchain Bitcoin Virtual Currency Electronic Signatures

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  • Ohio Governor signs bill limiting payday lending

    State Issues

    On July 30, Ohio’s Governor signed into law HB 123, which “modifies the Short-Term Loan Act, specifies a minimum loan amount and duration for loans made under the Small Loan Law and General Loan Law, and limits the authority of credit services organizations to broker extensions of credit for buyers.” Under these amendments, payday lenders in the state will now be restricted to short-term loans of $1,000 or less, with terms for a single short-term loan set at a 91-day minimum and a one year maximum. Exemptions provided under the legislation will allow short-term loans with a minimum term of less than 91 days if the total monthly payments do not exceed an amount greater than six percent of the borrower’s verified gross monthly income or seven percent of the borrower’s verified net monthly income. Moreover, lenders are: (i) prohibited from demanding collateral for short-term loans; (ii) restricted to a small-dollar loan cap—including both fees and interest—set at 60 percent of the original principal; and (iii) required to grant borrowers three business days to rescind loans without interest. HB 123 further prohibits credit service organizations from extending credit in amounts of $5,000 or less, with repayment terms of one year or less, or with annual percentage rates exceeding 28 percent. The amendments, which take effect 90 days after the governor’s signature, will “apply only to loans that are made, or extensions of credit that are obtained, on or after the date that is [180] days after the effective date of this act.”

    State Issues Payday Lending State Legislation

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  • Illinois amends law to clarify that debt collection law firms are not student loan servicers

    State Issues

    On July 27, Illinois’s Governor signed HB 4397, which amends the state’s Student Loan Servicing Rights Act to specify that the definition of “student loan servicer” does not include a law firm or a licensed attorney that is collecting a post-default debt. The amended law is effective December 31.

    State Issues Student Lending State Legislation Student Loan Servicer Consumer Finance

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  • California governor signs bill amending reservist requirement for deferring financial obligations when called to active duty

    State Issues

    On July 9, the governor of California signed into law amendments to Section 800 of the state’s Military and Veterans Code to eliminate the requirement that a reservist called to active duty provide a letter signed under penalty of perjury to an obligor for deferment of certain financial obligations. Specifically, AB 2521 states that a reservist, or his or her designee, is now required instead to deliver a written request—which includes electronic communications— to an obligor for a deferment of financial obligations, including mortgages, credit cards, retail installment accounts and contracts, and vehicle leases. The amendments take effect January 1, 2019.

    State Issues State Legislation Military Lending

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  • Connecticut governor signs amendments to state banking statutes

    State Issues

    On June 14, the governor of Connecticut signed HB 5490, which makes various amendments to the state’s banking statutes, including standardizing various requirements across several mortgage and nonmortgage licensing types. Among other things, the law (i) extends the commissioner’s authority over certain mortgage-related licensees (mortgage lenders, brokers, and originators; correspondent lenders, and processors or underwriters) to include small loan lenders, sales finance companies, sales finance companies, mortgage servicers, money transmitters, check cashers, debt adjustors, debt negotiators, consumer collection agencies, student loan servicers, and lead generators; (ii) outlines provisions concerning the commissioner’s authority to conduct investigations and examinations; (iii) establishes that for loans under $5,000, the maximum annual percentage rate (APR) shall not exceed the lesser of 36 percent or the maximum APR for interest “permitted with respect to the consumer credit extended under the Military Lending Act”; and (iv) requires sales finance companies to acquire, maintain, and report to the commissioner certain demographic information on ethnicity, race, and sex for any retail installment contract or application for such contract covering the sale of a motor vehicle. The law is effective October 1, with the exception of specified provisions.

    State Issues State Legislation Mortgages Licensing NMLS

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