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CFPB issues final remittance rule extending safe harbor and providing compliance exceptions
On May 11, the CFPB issued final amendments to the Remittance Transfer Rule (Final Rule), which implements the Electronic Fund Transfer Act and imposes requirements on insured institutions that handle international money transfers—also known as remittance transfers—on behalf of consumers. The Final Rule follows a notice of proposed rulemaking issued last December (covered by InfoBytes here). Among other things, the Final Rule grants a permanent safe harbor from exact remittance cost disclosures to insured institutions that do fewer than 500 remittances annually in the current and prior calendar years.
The Final Rule also addresses anticipated compliance challenges following the July 21 expiration of an existing exemption that allows certain insured institutions to disclose estimated exchange rates and third-party money transfer fees. Specifically, the Final Rule adopts a new, permanent exception that permits insured institutions to estimate the exchange rate for a remittance transfer to a particular country if, among other things, the remittance payment is made in the local currency of the designated recipient’s country and the insured institution processing the transaction made 1,000 or fewer remittance payments to that country in the previous calendar year. A second permanent exception will allow insured institutions to estimate covered third-party fees for remittance transfers to a recipient’s institution provided, among other things, the insured institution made 500 or fewer remittance transfers to the recipient’s institution in the prior calendar year. While the adopted final amendments will take effect July 21, the Bureau is adopting a transition period for both exceptions that will allow insured institutions that exceed the 1000-transfer or 500-transfer thresholds to “provide estimates for a reasonable period of time while they come into compliance with the requirement to provide exact amounts.”
The Bureau also reminded institutions of its April 10 policy statement (covered by InfoBytes here), which established a temporary exception allowing institutions providing remittance transfers to estimate these fees to consumers in light of the Covid-19 pandemic. From July 1 until January 21, 2021, the Bureau will not cite supervisory violations or initiate enforcement actions against certain institutions for disclosing estimated fees and exchange rates.
District court grants debt collector’s arbitration request
On May 11, the U.S. District Court for the District of New Jersey granted a debt collector’s renewed motion to compel arbitration, concluding that the previously-ordered discovery demonstrated that the plaintiff’s FDCPA claim fell within the bounds of the arbitration clause in the underlying credit card agreement. As previously covered by InfoBytes, the plaintiffs filed a proposed class action alleging that the debt collection company’s collection letters violated the FDCPA because they did not “properly identify the name of the current creditor to whom the debt is owed.” The debt collectors filed an initial motion to compel arbitration, arguing that the debts described in the plaintiffs’ amended complaint arose pursuant to credit card agreements that include an arbitration clause. In February 2019, the court denied the motion concluding that discovery was needed in order to determine whether an arbitration clause applied to the plaintiffs’ claims regarding FDCPA violations. After the parties engaged in discovery, the plaintiff argued that only the card issuer has a right to compel arbitration under the agreement. The court rejected this argument, concluding that the collection agency was an agent of the creditor and as an agent, the collector may enforce the arbitration agreement. Moreover, the court determined that the debt collection letter relates to the consumer’s credit account as the debt is a result of the credit card use and the FDCPA claim “is statuary, as explicitly provided for in the card agreement.”
$550 million preliminary settlement reached in biometric privacy class action
On May 8, plaintiffs in a biometric privacy class action in the U.S. District Court for the Northern District of California filed a motion requesting preliminary approval of a $550 million settlement deal. The preliminary settlement, reached between a global social media company and a class of Illinois users, would resolve consolidated class claims that alleged the social media company’s face scanning practices violated the Illinois Biometric Information Privacy Act (BIPA). As previously covered by InfoBytes, last August the U.S. Court of Appeals for the 9th Circuit affirmed class certification and held that the class’s claims met the standing requirement described in Spokeo, Inc. v. Robins because the social media company’s alleged development of a face template that used facial-recognition technology without users’ consent constituted an invasion of an individual’s private affairs and concrete interests. According to the motion for preliminary approval, the settlement would be the largest BIPA class action settlement ever and would provide “cash relief that far outstrips what class members typically receive in privacy settlements, even in cases in which substantial statutory damages are involved.” If approved, the social media company must also provide “forward-looking relief” to ensure it secures users’ informed, written consent as required under BIPA.
Vermont governor signs act imposing moratorium on ejectment and foreclosure actions during Covid-19
On May 14, the Vermont governor signed S.B. 333, which imposes a moratorium on ejectment and foreclosure actions until 30 days after the governor terminates the Covid-19 state of emergency. While a residential mortgage lender may commence a foreclosure action, the court must stay the action as of the date of filing until the end of the emergency period. The act also places limitations on writs of possession not yet issued as well as writs of possession already issued. The act took effect immediately upon passage.
VA extends foreclosure moratorium for borrowers affected by Covid-19
On May 14, the Department of Veterans Affairs issued Circular 26-20-18, which extends the foreclosure moratorium for borrowers affected by Covid-19 through June 30. Properties secured by VA-guaranteed loans are subject to a moratorium on the initiation of foreclosures, and the completion of foreclosures in process.
Ginnie Mae issues APM on treatment of mortgage delinquency ratios for issuers
On May 14, Ginnie Mae issued APM 20-06 on the treatment of mortgage delinquency ratios for users affected by Covid-19. Under the Mortgage Backed Securities Guide, an issuer that fails to maintain delinquency rates below certain specified threshold levels may be subject to sanctions. Recognizing that Covid-19 related hardships may cause issuers to experience delinquency rates that exceed the maximum thresholds, effective immediately, Ginnie Mae will exclude any new issuer delinquencies occurring on or after April 2020 when calculating the delinquency ratios. This exclusion will automatically apply to issuers that had delinquency rates below the applicable thresholds as reflected by their April 2020 investor accounting report, reflecting March 2020 servicing data. Issuers that were not compliant with these provisions as of their April 2020 report must contact their Account Executive to determine their eligibility for this exclusion. The exemptions and delinquent loan exclusions automatically expire on December 31, 2020, unless rescinded earlier or extended by Ginnie Mae, or the end of the national emergency, whichever comes earlier.
New York regulator updates Covid-19 resource page for consumers and small businesses
The New York Department of Financial Services has updated its resource page providing information for consumers and small businesses relating to Covid-19. The resource page provides information on, among other things, deferrals of insurance premium payments, the federal CARES Act legislation, and essential businesses guidance and FAQs.
Michigan prohibits removal or exclusion of tenant or mobile home owner from their home
On May 14, the Michigan governor issued an executive order temporarily prohibiting the entry to premises to remove or exclude a tenant or mobile home owner from their home, except for certain limited reasons. While the executive order does not prohibit a landlord or vendor from receiving payment or making a demand for rent or executory contract payment, such a demand may not include a threat of possession or forfeiture based on nonpayment. Officers also may not serve process requiring forfeiture of leased residential premises or residential premises held under a forfeited executory contract. The prohibitions are effective immediately and will continue until June 11, 2020, at 11:59 p.m. Further, until 30 days after any restrictions on eviction in the executive order expire, any statutory limits on the Michigan courts to adjourn proceedings, toll redemption periods or limitations periods, or extend any deadlines, are suspended.
Small Business Administration requires lenders to review loans in CAFS for accuracy and completeness
On May 14, the Small Business Administration announced that it had launched a new search functionality within the E-Tran Servicing section of the Capital Access Financial System (CAFS) to assist Paycheck Protection Program lenders with reviewing loans in their portfolios. Lenders are required to review all fields in these files for accuracy and completeness by no later than 5:00pm EDT on May 15, 2020. The SBA also provided updated instructions on how to access CAFS and update records in “Research” status.
FHA issues mortgagee letter extending guidance on employment reverification and appraisals
On May 14, the FHA issued Mortgage Letter 2020-14, which extends the effective period of the guidance in Mortgagee Letter 2020-05 allowing for flexibility relating to employment reverification and appraisal protocols for FHA single family programs affected by Covid-19 until June 30.