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Arizona establishes mortgage broker provisions
On April 22, the Arizona governor signed SB 1204, which amends state provisions regarding mortgage broker and banker licensing. Among other things, the bill: (i) provides that “a parent company may apply for and be granted a certificate of exemption on behalf of an entity that allows a responsible individual to reside out of state,” as long as certain criteria is met; (ii) establishes qualifications, application, bond, fees, and renewal requirements for licensing of mortgage brokers; and (iii) states that “[a] person shall APPLY for a license or for a renewal of a license in writing on the forms, in the manner and accompanied by the information prescribed by the deputy director.”
OCC revises Comptroller’s Licensing Manual
On April 7, the OCC announced an updated version of the “General Policies and Procedures,” “Management Interlocks,” and “Public Notice and Comments” booklets of the Comptroller’s Licensing Manual. According to Bulletin 2022-11, the revised booklets replace booklets of the same title issued between January 2017 and October 2019. Additionally, the revised booklets, among other things: (i) reflect recent updates to 12 CFR 5 and other regulations; (ii) update guidance and references; and (iii) make other minor modifications and corrections throughout.
Kentucky enacts student loan servicer licensing provisions
On April 7, the Kentucky governor signed HB 494 to establish the Student Education Loan Servicing, Licensing, and Protection Act of 2022. The act outlines licensing provisions for student loan servicers and implements consumer protections for borrowers. Among other things, the act requires, subject to certain exemptions, persons servicing student loans in the state to obtain a license from the commissioner. Under the act, the commissioner may require that the application and any supporting documentation be submitted to other agencies or authorities as part of a nationwide licensing system, “which may act as an agent for receiving, requesting, and distributing information to and from any source directed by the commissioner.” The commissioner may also conduct examinations and investigations, deny, suspend, or revoke a license, and enter an emergency order to suspend, limit, or restrict a license without notice or hearing if an investigation reveals that a “licensee has engaged, or is about to engage, in unsafe, unsound, or illegal practices that pose and imminent threat or harm to the public interest.” Additionally, the commissioner may impose civil penalties of up to $25,000 per violation for violations of the act’s provisions, and may order restitution, refunds, or expenses as deemed necessary. The act also prohibits student loan servicers from engaging in unfair, deceptive, predatory practices, or omitting material information connected with the servicing of a student education loan. Additional provisions related to licensing renewals and reinstatements, assessment fees, and reporting and net worth requirements are also provided. The act takes effect 90 days after the official adjournment of the session.
Kentucky enacts mortgage loan industry regulation bill
On April 8, the Kentucky governor signed HB 643, which relates to regulating mortgage lenders. Among other things, the bill: (i) permits employees of a licensee to engage in the mortgage lending process from an alternate location if certain conditions are met; (ii) requires supervision and control of employees acting as mortgage loan originators; (iii) establishes requirements for licensees that allow employees to engage in the mortgage lending process from alternate work locations; (iv) prohibits records from being maintained at an alternate work location; and (v) permits mortgage loan companies and mortgage loan brokers to utilize third-party secure storage facilities if certain conditions are met.
Kansas amends mortgage licensing provisions
On April 7, the Kansas governor signed HB 2568, which updates the Kansas Mortgage Business Act by amending certain mortgage licensing provisions. Among other things, the bill: (i) authorizes certain mortgage business to be conducted at remote locations; (ii) establishes procedures and requirements for license and registration renewal or reinstatement; (iii) adjusts surety bond requirements; (iv) provides for evidence of solvency and net worth; and (v) requires notice to the Commissioner when adding or closing any branch office. Additionally, the bill replaces the current requirements for licenses and renewal applications and also sets the expiration date for licenses and registration on December 31 of each year. A license or registration will be renewed without assessment of a late fee by filing a complete renewal application and nonrefundable renewal fee with the Commissioner by December 1 of each year. The bill is effective July 1.
Idaho updates licensing provisions for debt collection agencies
On March 31, the Idaho governor signed HB 610, which amends existing law to revise certain requirements for collection agencies and applicants for licensure. The amendments remove the prior requirement that applicants and licensees must designate an experienced individual to serve as in charge of the licensee’s collection agency business. Additionally, the bill now permits collection agencies to collect incidental charges if they are included in the contract between the creditor and the debtor, with some exceptions. The bill also establishes licensing efficiencies by requiring the use of an “electronic system of licensing as prescribed by the director” and permitting the reinstatement of an expired license. The bill is effective July 1.
West Virginia updates money transmitter licensing law
Recently, the West Virginia governor signed SB 505, which updates laws regarding licensure and regulation of money transmitters. Among other things, the bill (i) enhances and expands defined terms, including the definition of “control”; (ii) removes the provisional licensing option for check sellers; (iii) gives West Virginia the authority to participate in multistate examinations; (iv) increases the net worth requirement for licensees; (v) sets forth prior approval requirements for a change in control of a licensee; and (vi) requires licensees to maintain specified “permissible investments” at all times. The bill is effective June 7.
DFPI concludes MTA licensure not required for digital asset trading platform
On March 23, the California Department of Financial Protection and Innovation (DFPI) released a new opinion letter covering aspects of the California Money Transmission Act (MTA) related to a digital asset trading platform. The redacted opinion letter examines whether the inquiring Company (a registered money services business) requires licensure under the MTA. The Company requesting an interpretive opinion operates a software platform that allows retail and institutional investors to buy and sell digital assets, including cryptocurrency, and access related services, within the platform. The letter explains that U.S. customers must fund an account on the Company’s platform prior to purchasing cryptocurrency with either fiat currency (U.S. dollars) or cryptocurrency. The letter also describes, among other things, how customers can buy from and sell to the Company cryptocurrencies on one or more cryptocurrency exchanges using the platform. In these transactions, the Company would sell or buy cryptocurrency from the customer at the selected price and settle the trade using fiat or cryptocurrency held in its own accounts. Simultaneously, the Company would execute a trade for its own benefit on the exchange offering the price selected by the customer. Customer funds would not be used to buy or sell cryptocurrency from or to the exchange. After executing a transaction, a customer may choose to withdraw all or part of the customer’s fiat or cryptocurrency from the platform, or may choose to maintain a balance to execute future transactions.
The DFPI stated that it “has not concluded whether a wallet storing cryptocurrency constitutes a form of monetary value representing a claim against the issuer and accepted for use as a means of redemption for money or monetary value or payment for goods or services.” As such, the DFPI will not require the Company to be licensed under the MTA to provide customers with an account via a proprietary software platform to transfer and store cryptocurrency in order to execute trades directly with the Company.
Arizona and Utah modify various licensing provisions
On March 24, the Arizona governor signed HB 2612, which eliminates requirements for there to be a finding on whether an applicant is law abiding, honest, trustworthy, and of good moral character in order to be eligible for a license, permit, or certification. This applies to bank or in-state financial institution acquisitions, banking, consumer lenders, trust companies, escrow agents, mortgage brokers, mortgage bankers, commercial mortgage brokers, loan originators, financial institution holding companies, premium finance companies, real estate appraisers and appraisal management companies, among others. The bill also makes other technical and conforming changes and takes effect 90 days after adjournment of the legislature.
Earlier, on March 23, the Utah governor signed HB 69, which modifies various licensing provisions under the state’s Residential Mortgage Practices and Licensing Act. The bill also makes various amendments under the Real Estate Licensing and Practices Act related to licensing, fees, and disciplinary actions. Among other things, the bill amends the general qualifications of licensure to make residential mortgage loans, including provisions related to mandatory education requirements for both state applicants and applicants licensed in other states and criminal background checks. Specifically, the bill removes a provision that states a “license is immediately and automatically revoked if the criminal background check discloses the applicant fails to accurately disclose a criminal history involving: (A) the real estate industry; or (B) a felony conviction on the basis of an allegation of fraud, misrepresentation, or deceit.” Additional amendments authorize the commission to impose sanctions against licensees and unregistered persons that were found to be in violation of a provision of the act; discuss the process for filing a written request for the vacation of a license revocation; address pending transactions should the death of a principal broker occur; and remove provisions regarding the payment of certain expenses and costs. The bill takes effect 60 days after adjournment of the legislature.
Mississippi passes debt management provisions
Recently, the Mississippi governor signed HB 687, which establishes debt management services and licensing requirements. According to the bill, debt management service is defined as “[t]he receiving of money from a consumer for the purpose of distributing one or more payments to or among one or more creditors of the consumer in full or partial payment of the consumer's obligation,” among other things. A debt management service provider is “a person that provides or offers to provide to a consumer in this state any debt management services, in return for a fee or other consideration.” A debt management service provider does not include “[a]ny institution that is regulated, supervised or licensed by the department or any out-of-state institution that is insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration,” among other things. Additionally, one cannot operate as a debt management service provider with respect to consumers who are residents of this state without a license. The bill is effective July 1.