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Fannie Mae updates Lender Letter 2020-07 on Covid-19 payment deferrals
On July 15, Fannie Mae updated Lender Letter 2020-07. The additions (i) update requirements for repayment of escrow shortage amounts identified in connection with a Covid-19 payment deferral or as part of the next annual analysis, (ii) clarify how certain applicable fees (e.g., servicing, guaranty, and excess servicing fees) will be reimbursed for mortgage loans that receive a disaster payment deferral, and (iii) clarify that the servicer must evaluate the borrower for a Flex Modification in accordance with the reduced eligibility criteria when the borrower becomes 60 days delinquent within six months of the Covid-19 related payment deferral’s effective date and the servicer is unable to achieve quality right party contact.
Fannie Mae updates Lender Letter 2020-02 to address impact of Covid-19 on disbursing insurance loss proceeds and HAMP incentives.
On July 15, Fannie Mae updated Lender Letter 2020-02 to include information on servicer requirements related to disbursing insurance loss proceeds for borrowers impacted by Covid-19 as well as Home Affordable Modification Program (HAMP) “Pay for Performance” incentives. For purposes of disbursing insurance loss proceeds, the servicer must consider a loan to be current or less than 31 days delinquent if the borrower has experienced a Covid-19 related hardship and certain criteria are met. Separately, the guidance clarifies the impact of Covid-19 on HAMP “Pay for Performance” incentives. Specifically, the mortgage loan does not lose good standing and the borrower will not lose any “pay for performance” incentives if the borrower (i) immediately reinstates the mortgage loan upon expiration of the Covid-19 related forbearance plan or (ii) transitions directly from a Covid-19 related forbearance plan to a repayment plan.
Washington Division of Consumer Services continues waiver and reduction of certain Consumer Loan Act fees
On July 15, the Washington Department of Financial Services, Division of Consumer Services, announced that it will continue to temporarily waive or reduce certain fees under the Consumer Loan Act. For activities conducted during 2020, the department will: (i) temporarily waive hourly fees charged on consumer loan company examinations between July 1, 2020, and June 30, 2021; (ii) for calendar year 2020 activity, temporarily waive assessments on residential mortgage loans in portfolio on December 31, 2019; and (iii) reduce mortgage loan originator renewal fees for the 2021 calendar year from $155 to $75. The division will continue to evaluate the possibility of additional fee waivers in the future.
Maryland Commissioner of Financial Regulation issues advisories on customer identification for depository and non-depository institutions
On July 15, the Maryland Commissioner of Financial Regulation issued industry advisories to depository and non-depository institutions on identification requirements for customers. In light of an executive order extending the expiration date for certain licenses, permits, and registrations, depository and non-depository institutions may continue to accept driver’s licenses and/or identification cards that expired or are eligible for renewal after March 12, 2020.
OFAC sanctions persons for human rights violations in China’s Xinjiang region
On July 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 against a Chinese government entity and four current or former government officials for alleged corruption violations of the Global Magnitsky Human Rights Accountability Act. According to OFAC, the sanctioned persons are connected to serious human rights abuse against ethnic monitories in the Xinjiang region. The sanctions follow an advisory issued by the U.S. Departments of State, Treasury, Commerce, and Homeland Security advising “[b]usinesses with potential exposure in their supply chain to entities that engage in human rights abuses in Xinjiang or to facilities outside Xianjiang. . .[to consider] the reputational, economic, and legal risks of involvement with such entities.” As a result of the sanctions, all property and interests in property of the designated persons within U.S. jurisdiction must be blocked and reported to OFAC. OFAC notes that its regulations “generally prohibit” U.S. persons from participating in transactions with these individuals and entities. The prohibitions also “include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods or services from any such person.”
Missouri amends mortgage broker licensing requirements
On July 6, the Missouri governor signed SB 599, which, among other things, modifies the state’s mortgage broker licensing requirements. Specifically, the legislation (i) provides that a prelicensing education course that is completed by an applicant will not satisfy the state’s education requirement if the course precedes an application “by a certain period” as established by the Nationwide Multi-State Licensing System and Registry (NMLSR); (ii) requires persons with various financial relationships with a business applicant for a residential mortgage loan broker license to furnish fingerprints to the NMLSR for submission to the FBI and any other authorized government entity for a background check; and (iii) allows the Director of the Division of Finance to waive the requirement that residential mortgage loan brokers maintain at least one full-service office in the state of Missouri for persons “exclusively engaged in the business of loan processing or underwriting,” or providing mortgage loan servicing. The legislation is effective August 28.
Louisiana requires licensing for virtual currency businesses
On June 13, the Louisiana governor signed HB 701, which provides for the licensing and regulation of virtual currency businesses in the state. Subject to certain exceptions, the bill establishes licensing and registration requirements, and, among other things, (i) authorizes reciprocity of licensure with other states; (ii) specifies that licensee applications must be submitted through the Nationwide Multi-State Licensing System; (iii) adds provisions related to licensee examinations; (iv) outlines licensee surety bond requirements “based on the nature and extent of risks in the applicant’s virtual currency business model”; (v) provides the state’s office of financial institutions with enforcement authority; and (vi) prohibits licensees from engaging in unfair, deceptive, or fraudulent practices. The act is effective August 1.
District court allows data breach claim to proceed against national credit reporting agency
On July 8, the U.S. District Court for the Eastern District of New York allowed a consumer’s claim under New York’s consumer protection law (N.Y. G.B.L. § 349) to proceed against a national credit reporting agency (CRA) for grievances stemming from a 2017 data breach that compromised the consumer’s personal information. According to the opinion, the consumer alleged that the CRA, among other things, failed to “implement security and privacy measures to safeguard plaintiff’s sensitive information and misrepresented to him that his personal data would be protected from outside threats.” The CRA had previously entered into a class action settlement concerning the data breach and resolved hundreds of data breach cases brought against the company; however, the consumer opted out of that nationwide class action. The CRA moved to dismiss the consumer’s action, arguing, among other things, that data breach claims are not actionable under N.Y. G.B.L. § 349. While the court granted the CRA’s motion as to the consumer’s FCRA claim, the court denied the CRA’s request to dismiss the consumer’s claim under N.Y. G.B.L. § 349. Specifically, the court concluded that the consumer plausibly alleged the CRA misrepresented its ability to protect the consumer’s personal information, which “resulted in actual and pecuniary harm after [the consumer]’s identity was stolen and numerous unauthorized accounts were opened under his name.” The court distinguished this claim from the consumer’s FCRA claim, which asserted the CRA failed to “shield” the consumer’s information from the hackers, whereas the N.Y. G.B.L. § 349 claim rests on the CRA’s representations of protection.
OCC launches Project REACh to help underserved populations access capital and credit
On July 10, the OCC launched an initiative to promote greater financial inclusion of underserved populations. Project REACh (Roundtable for Economic Access and Change) brings together leaders from the banking industry, national civil rights organizations, and various businesses and technology organizations who will identify and reduce barriers to accessing capital and credit. REACh program participants will focus on “inherent policy and structural issues at the national and local levels” to expand financial inclusion, and convened on July 10 to discuss which financial inclusion projects to address.
New York governor announces new Covid-19 rental assistance program
On July 14, the New York governor announced an emergency rental assistance program that will provide direct aid to tenants who have lost income due to the Covid-19 pandemic. The program is funded through the CARES Act’s Coronavirus Relief Fund and will be administered by the New York State Homes and Community Renewal, which will begin accepting applications for assistance on July 16. To qualify for the program, applicants must meet certain eligibility requirements, including loss of income and residency requirements.