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CFPB states commitment to protecting consumers through continued examination and supervisory work
On April 1, the CFPB published a statement which assured that the Bureau will continue to perform examinations and other supervisory work during the Covid-19 pandemic, reinforcing the Bureau’s mission to protect consumers. The statement explains that the Bureau is taking advantage of technology to fulfill its examination duties and to stay in communication with supervised entities. Additionally, the statement suggests that the Bureau will consider individual circumstances and good faith efforts to comply when performing examination and supervisory work.
CFPB plans credit reporting supervisory flexibility during Covid-19 pandemic, contingent on accurate reporting
On April 1, the CFPB issued a policy statement directed at consumer reporting agencies (CRAs) and furnishers. Taking into consideration the Covid-19 pandemic, the statement explains that the Bureau will take a “flexible supervisory and enforcement approach during this pandemic regarding compliance with the Fair Credit Reporting Act [(FCRA)] and Regulation V.” The Bureau states that it will be flexible with CRAs and furnishers by refraining from taking enforcement actions and citing during exams in certain situations. Two examples of when the Bureau will be flexible include: (i) furnishers that continue to furnish accurate data to CRAs, including regarding payment relief arrangements (the Bureau notes that the CARES Act obliges furnishers to report consumer accounts as current when furnishers grant payment accommodations requested by consumers impacted by Covid-19); and (ii) CRAs and furnishers that make good faith efforts to investigate consumer disputes but take longer than the FCRA-prescribed 30 days. The statement notes that “the continued operation of the consumer reporting system…will enable consumers, as well as lenders, insurers, employers and other consumer report users, to maintain confidence in the consumer reporting system.”
Financial institution regulators provide Covid-19 mortgage servicer guidance
On April 3, the Federal Reserve (Fed), CSBS, CFPB, FDIC, NCUA, and the OCC (agencies) jointly announced an interagency statement (Joint Statement) to clarify the agencies’ supervisory and enforcement approach “regarding certain consumer communications required by the mortgage servicing rules” under Regulation X during the Covid-19 pandemic. Along with the Joint Statement, the CFPB released FAQs on the mortgage servicing rules during the pandemic. The agencies advised mortgage servicers to consider both the Joint Statement and the FAQs “when developing approaches to work with borrowers.”
The Joint Statement, among other things, gives mortgage servicers greater flexibility to provide CARES Act forbearance of up to 180 days and other short-term options upon the request of borrowers with federally backed mortgages without having to adhere to otherwise applicable compliance rules. In addition, the Joint Statement provides that no supervisory or enforcement action will be taken for delays in: (i) “sending the written early intervention notice to delinquent borrowers”; (ii) “establishing or making good faith efforts to establish live contact with delinquent borrowers”; or (iii) “sending the loss mitigation-related notices.”
Florida Office of Financial Regulation encourages small businesses to take advantage of CARES relief
On April 2, the Florida Office of Financial Regulation promoted the economic relief available for small businesses in the federal CARES Act signed into law by President Trump on March 27. The Florida Chief Financial Officer Jimmy Patronis and OFR Commissioner Russell Weigel, III were both quoted in support of the bill and encouraged small businesses to take advantage of the relief offered.
Wisconsin Department of Financial Institutions announces remote notarization
The Wisconsin Department of Financial Institutions announced remote notarization as a result of Covid-19 emergency measures. DFI has currently approved five remote notarization providers: Notarize.com, NotaryCam, Pavaso, DocVerify, and Nexsys. Additional approvals will be forthcoming.
Texas Joint Financial Regulators issue HELOC guidance
The State of Texas Joint Financial Regulatory Agencies issued guidance pertaining to HELOCs as part of the state’s broader Covid-19 emergency measures pursuant to the governor’s declaration of a state of disaster for Texas on March 13. The agencies’ statement anticipates that lenders may adjust or extend terms on HELOCs and offer new loans during the crisis period, but also clarified that all such modifications and newly-issued loans must comply with Article XVI, Section 50 of the Texas Constitution. The guidance confirmed that modifications that lower the interest rate or amount of installment payments, but that do not satisfy or replace the original note, advance new funds, or increase obligations created by the original note, would not be a new extension of credit under Section 50(a)(6) of the constitution. The State of Texas Joint Financial Regulatory Agencies is comprised of the Texas Department of Banking, Texas Department of Savings and Mortgage Lending, Texas Office of Consumer Credit Commissioner, and Texas Credit Union Department.
Special Alert: Fannie Mae and Freddie Mac ease RON requirements
On March 31, Fannie Mae and Freddie Mac issued bulletins updating and clarifying their respective requirements for remote online notarizations as they seek to reduce in-person notarizations during the Covid-19 pandemic. Remote online notarization allows a notary to use electronic tools — typically video conferencing — to notarize documents while the signatory is physically located somewhere else. About half the states authorize the use of remote online notarizations, while several additional states have taken emergency actions to allow them in response to the pandemic.
Fannie and Freddie previously had electronic notarization guidance in their Selling Guide and Seller/Servicer Guide, respectively, that limited the use of RONs, as they are called.[1] The March 31 updates ease those requirements and clarify the conditions under which Fannie and Freddie will accept RONs of loans sold to them. Among other things, the bulletins establish:
- Minimum requirements for authentication of signatories
- Security and document integrity requirements
- Restrictions on the physical location of the notary performing the notarial act
- Requirements to comply with certain aspects of the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA)
- Specific representations and warranties of the lender
- A list of states (below) in which lenders may sell loans to the GSEs with remote online notarization
- Clarification that they will accept remotely notarized documents meeting the new requirements in any state that, subsequent to the publication of the bulletins, adopts a law that permits the use of RONs or accepts out-of-state RONs.
Montana Department of Administration provides relief to banks and credit unions regarding annual meetings
On April 2, the Montana Department of Administration adopted a temporary emergency rule regarding annual meetings held by banks and credit unions during the Covid-19 pandemic. The rule permits a bank or credit union to hold its annual meeting in the form of a virtual meeting during the Covid-19 pandemic. Such virtual meeting must be live, allow electronic or telephonic participation in the meeting in real-time, and provide simultaneous audio transmission of the meeting.
Hawaii regulator permits licensees to reduce office hours, temporarily close
The Hawaii Division of Financial Institutions issued guidance indicating that it will temporarily permit licensees with locations in Hawaii to reduce hours or close offices during Hawaii’s Covid-19 Emergency Period. The guidance clarifies that financial institutions and escrow depositories are required to provide notice of closures or reductions in hours to the Division and to customers as soon as practicable. While mortgage loan originators, mortgage servicers, and money transmitters are not required to provide notice, the Division requests a courtesy notification of any closure or reduction in hours, and mortgage loan originator branch managers must post signage at the branch office.
California secretary of state issues FAQs on notarizations, business entity filings
The secretary of state issued FAQs summarizing the impact of Governor Newsome’s Shelter in Place order on notarizations and business filings. The FAQs clarify that the Secretary of State’s Office remains operational, although it is only accepting business entity filings and notary oath filings by mail or electronically. The FAQs also provide that while California law does not permit California notaries to perform remote online notarizations, California citizens may utilize remote online notarization services provided by an out-of-state notary, if those services are performed in accordance with local state law. California citizens may also utilize the services of a “mobile notary,” that will travel to a customer’s location and perform notarizations.