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  • Virginia outlines student loan servicer requirements

    State Issues

    On April 22, the Virginia legislature enacted SB 77, which requires entities servicing student loans in the Commonwealth to be licensed by the State Corporation Commission (SCC). Notably, banks, savings institutions, credit unions, and financial institutions regulated under 12 U.S.C. § 2002 are exempt from the licensing requirements. In addition to outlining specific licensing requirements, SB 77 states that non-exempt student loan servicers must also refrain from, among other things, (i) engaging in any unfair or deceptive act or practice in connection with the servicing of a qualified education loan by misrepresenting the amount, nature, or terms of any loan fees or payments, the terms and conditions of the loan agreement, or the borrower’s loan obligations; (ii) misapplying loan payments to an outstanding balance; (iii) failing to report both the favorable and unfavorable payment history of a borrower to a nationally recognized consumer credit bureau at least once a year provided the loan servicer regularly reports such information; (iv) failing to communicate with a borrower’s authorized representative; and (v) making false statements or omitting material facts in connection with information provided to the SCC or another government authority. Student loan servicers must also comply with other requirements, such as evaluating qualified borrowers for income-driven repayment programs, and responding to borrowers’ written inquiries within 30 days.

    Additionally, SB 77 creates a private cause of action available to “[a]ny person who suffers damage as a result of the failure of a qualified education loan servicer to comply” with the bill’s requirements or with applicable federal student loan servicing laws and regulations. The bill further provides that violations are subject to a civil penalty not exceeding $2,500 and are considered prohibited practices under the Virginia Consumer Protection Act. SB 77 has a delayed effective date of July 1, 2021; however, the SCC will begin accepting applications starting on or before March 1, 2021.

    State Issues State Legislation Debt Settlement Licensing Consumer Finance Student Loan Servicer Student Lending

  • Virginia caps interest and fees charged under short-term loans

    State Issues

    On April 22, the Virginia legislature enacted HB 789, which amends certain provisions of the Virginia Consumer Protection Act (VCPA) related to consumer lending. Specifically, the provisions increase the maximum short-term loan from $500 to $2,500, and sets the duration of these loans to a minimum of four months and a maximum of 24 months, subject to exceptions. Interest and fees that may be charged on a short-term loan are capped at an annual rate of 36 percent, plus a maintenance fee. In addition, licensed lenders are required to make a reasonable attempt to verify a borrower’s eligibility and may not collect fees and charges that exceed 50 percent of the original loan amount if such amount is $1,500 or less, or 60 percent of the original loan amount if the original amount is greater than $1,500. Additional amendments include provisions that (i) update the requirements for motor vehicle title loans, including prohibiting loans to borrowers with outstanding title loans, and prohibiting licensees from collecting or receiving credit insurance premiums and charges for ancillary products, among other things; (ii) make a violation of the bill’s provisions a prohibited practice subject to enforcement under the VCPA; (iii) allow licensed lenders to use the services of access partners, subject to certain conditions; (iv) provide that installment loans must be between $300 and $35,000 to be paid in substantially equal installment payments, with terms of no fewer than six and no more than 120 months; and (iv) outline short-term loan advertising requirements. Persons required to be licensed under these provisions must apply for a license on or before October 1, 2020. Licenses will take effect January 1, 2021 for those issued by the State Corporation Commission prior to this date.

    State Issues State Legislation Consumer Lending Consumer Finance Interest Rate Auto Finance

  • FDIC, Fed extend comment period on proposed living will guidance

    Agency Rule-Making & Guidance

    On April 27, the FDIC and the Federal Reserve Board announced a 30-day extension to the comment period for the agencies’ proposal to update resolution plan guidance for certain large foreign banking organizations (FBOs). As previously covered by InfoBytes, FBOs are required to submit resolution plans—also known as “living wills”—which detail the strategic plans for their U.S. operations and subsidiaries for rapid and orderly resolution in bankruptcy in the event that the banks fail or fall under material financial distress. The proposed guidance, issued in March, focuses on the FBOs’ derivatives and trading activities and payment, clearing, and settlement activities, and provides additional resolution plan expectations. Comments will now be accepted through June 4. Due to the Covid-19 pandemic, the agencies also state that other upcoming deadlines associated with the resolution planning process may be adjusted.

    Agency Rule-Making & Guidance Federal Reserve FDIC Living Wills Of Interest to Non-US Persons

  • FTC releases 2019 Annual Highlights

    Federal Issues

    On April 23, the FTC released its 2019 Annual Highlights, which outlines the Commission’s efforts over the past year to protect consumers and promote competition. The report discusses various enforcement actions, policy and advocacy initiatives, and education and outreach programs, and notes that FTC actions in 2019 have led to more than $232 million in refunds to consumers. The report covers a range of consumer protection enforcement actions related to, among other things, unfair and deceptive marketing as well as privacy and data security issues. The report also discusses joint consumer protection enforcement-related efforts with foreign agencies and multilateral organizations, as well as information-sharing and enforcement cooperation measures intended to streamline and facilitate joint law enforcement investigations. In addition, the report highlights recent policy actions, such as advocacy comments, amicus briefs, and Congressional testimony, and discusses education efforts undertaken in 2019 including: (i) a series of public hearings on Competition and Consumer Protection in the 21st Century; (ii) workshops with state regulators and law enforcers; (iii) workshops on consumer protection issues such as small business financing, consumer reporting accuracy, and privacy matters; and (iv) education outreach programs. According to the stats and data section of the report, the FTC received more than 3.2 million consumer reports in 2019, in which identity theft and imposter scam complaints represented over 40 percent of the total reports received.

    Federal Issues FTC Consumer Protection Enforcement Consumer Complaints

  • SEC’s Investor Advisory Committee to hold remote meeting

    Federal Issues

    The Investor Advisory Committee of the Securities and Exchange Commission will hold a remote public meeting on May 4 via a live webcast. The meeting will focus on public company disclosures in light of the Covid-19 outbreak and on public company shareholder engagement and meetings by virtual means.

    Federal Issues Covid-19 SEC

  • Nebraska Department of Banking and Finance issues a notice updating its examination activity

    State Issues

    On April 27, the Nebraska Department of Banking and Finance issued another notice providing updates to its March 25th notice (previously discussed here), which temporarily ceased all regular examinations until April 24. The notice extends the department’s posture to May 15, 2020. The department will continue certain critical examinations related to safety and soundness, consumer protections, or when there is an urgent or immediate need. The department will resume offsite examinations on June 1, predominately using remote access resources.

    State Issues Covid-19 Nebraska Examination Consumer Protection

  • Texas regulator discusses emergency measures for credit access businesses

    State Issues

    On April 27, the Texas Office of Consumer Credit Commissioner issued an advisory bulletin encouraging credit access businesses to consider certain emergency measures in light of the Covid-19 pandemic. The bulletin encouraged credit access businesses to work with consumers by increasing communications, working out loan modifications that avoid delinquencies and negative credit reporting, waiving certain charges and fees, and suspending vehicle repossession and charge offs. The office also extended the deadline for required first quarter reporting from April 30 until May 31, 2020, and permitted credit access business activity to occur from otherwise unlicensed locations, so long as certain requirements are met.

    State Issues Covid-19 Texas Consumer Credit

  • CFPB eases filing deadlines for certain ILSA and Regulation J reports

    Federal Issues

    On April 27, the CFPB released guidance in order to provide “flexibility and reduce administrative burden” for land developers that are subject to the Interstate Land Sales Full Disclosure Act (ILSA). The Bureau explains that in light of the impacts of Covid-19, it will not take supervisory or enforcement action against land developers for delays in filing financial statements and annual reports of activity, as long as the developers make good faith efforts to submit filings “within a reasonable time.” The guidance notes that all other ILSA and Regulation J requirements must be timely met.

    Federal Issues Agency Rule-Making & Guidance CFPB ILSA Regulation J Covid-19

  • CFPB asks FCC to allow financial institutions to make certain Covid-19-related calls

    Federal Issues

    On April 27, the CFPB sent a letter to the FCC in support of a petition filed at the end of March by several financial trade associations, which seeks an expedited ruling to allow financial institutions to make certain automated calls concerning Covid-19 relief options without violating the TCPA. The CFPB specifically encouraged the FCC to allow a limited number of automated Covid-19-related calls from financial institutions that would alert customers of offers of forbearance, payment deferrals, fee waivers, extensions or relaxations of repayment terms, loan modifications, and other resources related to loans secured by homes or vehicles. “Allowing financial institutions to make automated calls is one more way to maximize the outreach to ensure consumers receive important and timely information,” CFPB Director Kathy Kraninger noted, cautioning, however, that financial institutions must still comply with other legal requirements with respect to their communications with customers, including the Bureau’s mortgage servicing rules and Dodd-Frank’s prohibition on unfair, deceptive, or abusive acts or practices.

    Federal Issues CFPB FCC TCPA Covid-19

  • Washington insurance commissioner issues order regarding reporting requirements for collecting withheld depreciation payments

    State Issues

    On April 27, the Washington insurance commissioner issued Executive Order 20-05 to insurers authorized to transact property and casualty insurance business and all entities regulated by the insurance commissioner. The order extends the deadline for policyholders of property and casualty insurance to report completed repairs in order to claim withheld depreciation payments until at least 60 days after June 26 or the expiration of the governor’s stay at home order, whichever is first.

    State Issues Covid-19 Washington Insurance Mortgages

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