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Financial Services Law Insights and Observations

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  • Oregon Enacts Law Regulating Residential Mortgage Loan Servicers

    State Issues

    On August 2, Oregon Governor Kate Brown signed into law the Mortgage Loan Servicer Practices Act (SB 98), which places certain residential mortgage loan servicers under the supervision of the state’s Department of Consumer and Business Services (DCBS) and requires them to comply with a range of requirements. Among other things, the law gives licensing, examination, investigation, and enforcement authority to the DCBS, and requires applicable residential mortgage loan servicers to: (i) obtain and renew a license through the DCBS if they “directly or indirectly service a residential mortgage loan” in Oregon; (ii) maintain “sufficient liquidity, operating reserves and tangible net worth”; (iii) notify the DCBS in writing before certain operational changes occur; and (iv) comply with a range of consumer protection, antifraud, and recordkeeping requirements, including those related to borrower communications, payment processing, and fee assessments. The law becomes operative on January 1, 2018, and applies “to service transactions for residential mortgage loans that occur on or after” that date.

    State Issues State Legislation Reverse Mortgages Lending Mortgage Servicing

  • Money Transmitter Licensing Changes in New Hampshire and Washington for Virtual Currencies

    State Issues

    On August 1, New Hampshire HB 436 went into effect, “exempting persons using virtual currency from registering as money transmitters” under the state’s money transmitter licensing laws. The new exemption applies to persons who “engage in the business of selling or issuing payment instruments or stored value solely in the form of convertible virtual currency” or “receive convertible virtual currency for transmission to another location.” However, the exemption provides that such persons are “subject to” certain state consumer protection laws.

    Separately, Washington SB 5031 took effect on July 23, amending the state’s Uniform Money Services Act as it relates to money transmitters and currency exchanges. With respect to virtual currencies, the amendments, among other things: (i) define “virtual currency”; (ii) subject virtual currencies to the state’s money transmitter licensing laws (the definition of “money transmission” now includes virtual currency transmissions); (iii) require businesses that “store virtual currency on behalf of others” to provide the state with “a third-party security audit of all electronic information and data systems” when applying for a money transmitter license; (iv) require virtual currency licensees to “hold like-kind virtual currencies of the same volume . . . obligated to consumers”; and (v) require virtual currency licensees to provide certain disclosures “to any person seeking to use the licensee’s products or services,” including a schedule of fees and charges, and whether the product or services are insured.

    State Issues State Legislation Fintech Digital Commerce Virtual Currency Money Service / Money Transmitters

  • Oregon Governor Enacts Law Regarding Compliance Requirements for Debt Collection Licensees

    State Issues

    On August 2, Oregon Governor Kate Brown signed into law House Bill 2356 (HB 2356), which establishes provisions relating to debt collection practices in the state. Among other things, the law (i) details the practices a debt buyer, or debt collector acting on behalf of a debt buyer, is required to follow to legally collect debt; (ii) specifies the type of notice and documents that a debt buyer must provide to a debtor; (iii) requires persons engaged in debt buying to obtain or renew their licenses through the Department of Consumer and Business Services; and (iv) specifies duties of licensees, outlines prohibited conduct, and identifies unlawful collection practices. The law takes effect January 1, 2018.

    State Issues State Legislation Debt Collection Debt Buyer Compliance

  • North Carolina Amends Collection Agency Definition

    State Issues

    On July 20, North Carolina Governor Roy Cooper signed into law Senate Bill 415 (S.L. 149), which amends the state’s collection agency law to exclude persons engaged in routine billing services from the definition of a “collection agency.” Specifically, a “collection agency” does not include “corporations or associations engaged in accounting, bookkeeping, or data processing services where a primary component of such services is the rendering of statements of accounts and bookkeeping services for creditors.” The law went into effect July 20, 2017.

    State Issues Debt Collection State Legislation

  • Connecticut Governor Enacts Law Regarding Compliance Requirements for Mortgage Licensees

    State Issues

    On July 11, Connecticut Governor Dannel Malloy signed into law Public Act No. 17-233 (H.B. 7141), which makes various revisions to the state’s banking laws. Among other things, the law (i) applies certain mortgage servicers’ and student loan servicers’ prohibited acts to other licensees; (ii) requires non-depository licensees to maintain and enforce compliance policies and procedures; (iii) allows the banking commissioner to require the use of electronic bonds for licensed or registered individuals to participate in the Nationwide Mortgage Licensing System;  (iv) reduces pre-licensing education requirements for mortgage loan originators, loan processors, and underwriters; and (v) sets limits for money transmitters regarding virtual currency transactions and timeframes for transmitting money. The law takes effect October 1, 2017, with provisions relating to compliance policies and procedures taking effect July 1, 2018, and pre-licensing education requirements taking effect January 1, 2019.

    State Issues State Legislation Mortgages Mortgage Origination Compliance

  • Hawaii Enacts Law to Prohibit Release of Credit Information of Children, Others

    State Issues

    On July 5, Hawaii Governor David Y. Igge signed into law H.B. 651, which was devised to protect children and certain other individuals from identity theft and credit fraud. The law applies to “protected consumers,” defined as minors under the age of 16 years, incapacitated persons, and individuals with appointed guardians or conservators.

    Based on research suggesting that minors may be targeted for identity theft due to their clean credit reports, the legislation permits representatives of protected consumers to place and remove security freezes on protected consumers’ credit files. Because one impediment to requesting such a freeze is the lack of an existing credit file, the legislation also requires consumer credit reporting agencies (CRAs) to create records for the protected consumers. A CRA may not release the protected person’s file when it is in a security freeze until the representative requests a removal of the freeze. In order to request a security freeze or a freeze removal, a protected person’s representative must provide proper identification and evidence of authority to the CRA. Additionally, with a few exceptions, the CRA may charge a fee not to exceed five dollars for each freeze or removal of a freeze to a protected person’s credit file.

    The law will go into effect on January 1, 2018.

    State Issues Debt Collection Fraud Privacy/Cyber Risk & Data Security State Legislation Credit Reporting Agency

  • Maine Passes Law to Notify Secretary of State About Abandoned Motor Vehicles

    State Issues

    On June 21, LD 1251, “An Act Regarding Certain Abandoned Vehicles and Notice to the Secretary of State Regarding Those Vehicles” became law in Maine. The law applies to a vehicle left at a business after authorized repairs were made at the request of the vehicle owner, and to a vehicle left in storage when the vehicle owner has not paid the storage fee. The law requires the owner of a repair or storage facility or the owner’s agent to notify the Secretary of State within 14 days after the earliest date that the vehicle owner becomes responsible for unpaid repair or storage and towing fees. After notice is provided by the facility (or facility’s agent), the Secretary of State must notify the vehicle’s owner and lienholder that the vehicle is being claimed unless the charges against the vehicle are paid. If the Secretary of State is not notified within 14 days using the prescribed form, the owner of the auto repair business or storage facility cannot charge the vehicle owner more than 14 days of storage fees. The law will take effect 90 days following the adjournment of the legislative session.

    State Issues State Legislation Auto Finance Debt Collection

  • North Carolina Changes Retail Installment Sales Act Default Fee

    State Issues

    On June 12, the General Assembly of North Carolina ratified Senate Bill 577, which amends the North Carolina Retail Installment Sales Act. Specifically, Senate Bill 577 modifies the late charge on an installment sale contract to be a flat fee of fifteen dollars, which is an increase from the prior limit of the lesser of five percent of the installment payment amount or six dollars. The amendment became effective on June 26 and applies to defaults from that day forward.

    State Issues CFPB State Legislation Consumer Finance Lending Consumer Lending

  • Texas Passes Law Repealing Vehicle Protection Product Regulatory Act

    State Issues

    On June 15, Texas Governor Greg Abbott signed SB 2065. The law modifies a number of motor vehicle-related regulations and licensing requirements. Specifically, the law:

    • eliminates the Vehicle Protection Product Act;
    • abolishes the Vehicle Protection Product Warrantor Advisory Board;
    • requires the warrantor of a vehicle protection product to pay expenses to the person who purchases the product or system if loss or damage occurs due to failure of the product or system;
    • prohibits a retail seller from requiring a vehicle buyer—“as a condition of a retail installment transaction or the cash sale of a commercial vehicle”—to buy a vehicle protection product that is not installed on the vehicle at the time of the transaction, classifying this violation as a “false, misleading, or deceptive act or practice” actionable under the Deceptive Trade Practices-Consumer Protection Act; and
    • eliminates the licensing requirements for boot operators and boot companies, but requires a booting company to remove a boot within an hour of being contacted by the owner or forfeit all removal fees.

    The law takes effect September 1.

    State Issues State Legislation Consumer Finance Lending Consumer Lending Licensing Auto Finance

  • Florida Adds Virtual Currency to Anti-Money Laundering Law

    Fintech

    On June 23, Florida Governor Rick Scott signed H.B. 1379, which will incorporate virtual currency into the Florida Money Laundering Act. Specifically, the Bill adds virtual currency to the list of currency and negotiable instruments classified as “monetary instruments” under the Act. In addition, virtual currency will be included in the definitions section as a “medium of exchange in electronic or digital format that is not a coin or currency of the United States or any other country.” The law goes into effect on July 1.

    Fintech State Issues State Legislation Bitcoin Anti-Money Laundering Virtual Currency

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