Alston & Bird Consumer Finance Blog

Archives for July 18, 2023

Consumer Finance State Roundup

The pace of legislative activity can make it hard to stay abreast of new laws.  The Consumer Finance State Roundup is intended to provide a brief overview of recently enacted measures of potential interest.

Since our last update, the following eight states have enacted measures of potential interest to Consumer Finance ABstract readers:

  • Connecticut:  Effective October 1, 2023, Senate Bill 1033 (2023 Conn. Pub. Acts 126) makes various revisions to the Connecticut General Statutes, including mortgage licensing and mortgage servicing statutes.  First, the measure amends licensing requirements under Section 36a-486 (b)(1) to add provisions to prohibit licensed mortgage lenders, mortgage correspondent lenders, mortgage brokers, or mortgage loan originators from using services of a lead generator, unless the lead generator is: (a) licensed under Section 36a-489, or (b) exempt from licensure pursuant to Section 36a-486(5).  (The measure makes corresponding amendments to Section 36a-498e, which addresses prohibited acts.) Second, the measure amends Section 36a-719, which relates to mortgage servicer licensure, to remove requirements relating to in-person (full-time) operations and the geographic location of a qualified individual or branch manager of a mortgage servicer.
  • Connecticut:  Effective October 1, 2023, House Bill 6688 (2023 Conn. Acts 45) (Reg. Sess.)) amends foreclosure mediation and mortgage release provisions of the Connecticut General Statutes.  First, the measure amends Section 49-31o to require a mortgagee that agrees to modify a mortgage pursuant to the Ezequiel Santiago Foreclosure Mediation Program to send the modification of mortgage to the mortgagor for execution at least 15 business days prior to the first modified payment due date under the modification.  The mortgagee (or mortgagee’s attorney) may satisfy this requirement by delivering the modification to: (a) the mortgagor, or (b), if the mortgagor is represented by an attorney, to both the mortgagor and that attorney. Second, the measure amends Section 49-8 to require the mortgagee or a person authorized by law to release the mortgage, to executive and deliver, or cause to be delivered, to the town clerk of the town in which the real estate is situated or, if so requested in writing by the mortgagor or designated representative of the mortgagor, to the mortgagor or the designated representative of the mortgagor.  Third, the measure amends Section 49-8a to require a mortgagee to accept, as payment tendered for satisfaction or partial satisfaction of a mortgage loan, either one of the following forms of payment:  i) a bank check; ii) a certified check; iii) an attorney’s clients’ funds account check; iv) title insurance company check, v) wire transfer; or vi) any other form of payment authorized under federal law.
  • Illinois:  Effective January 1, 2024, House Bill 2325 (Public Act 103-0156) amends the Residential Mortgage License Act of 1987 (“RMLA”) to permit remote work by mortgage loan originators (MLOs), provided that:
    • The RMLA licensee must have in place written policies and procedures for the supervision of MLOs working from a remote location.
    • The licensee must provide MLOs working remotely with access to company platforms and customer information, which access must be in accordance with licensee’s comprehensive written information security plan.
    • An MLO working remotely may not have any in-person customer interaction at their residence, unless that residence is a licensed location.
    • An MLO working remotely must not maintain any physical records at the remote location.
    • An MLO working remotely must keep customer interactions and conversations with consumers confidential and must comply with all federal and state privacy and security requirements (including applicable provisions of the Gramm-Leach Bliley Act and the FTC’s Safeguards Rule).
    • An MLO working remotely must have secure access to the licensee’s system when working from a remote location, such as accessing by utilizing a cloud-base system, vpn, or other compatible system to ensure secure connectivity.
    • The RMLA licensee must ensure that security updates, patches or alterations to security of all devices used at a remote location are installed and maintained.
    • The licensee must be able to remotely lock or erase company-related contents from any device or can otherwise remotely limit all access to a company’s secure systems.
    • The NMLSR record of an MLO working remotely must designate the principal place of business as the mortgage loan originator’s registered location, unless the MLO chooses another licensed branch office as a registered location.

Illinois:  Effective June 9, 2023, Senate Bill 201 (Public Act 103-0061) amends the Mortgage Foreclosure Article of the Code of Civil Procedure (735 Ill. Comp. Stat. 5/1 et seq.).  First, the measure amends provisions related to the delivery of notice of foreclosure and publication of the notice on the county or municipality’s website.  Second, effective until June 1, 2025, the measure adds Section 5/15-1515 to: (a) address the COVID-19 emergency sealing of court file when a foreclosure action is filed with the court; and (b) clarify what actions occurred within the “COVID-19 emergency and economic recovery period.”  The new section applies to any foreclosure action relating to: (a) “residential real estate” (as defined in Section 15-1219); or (b) real estate improved with a one- to six-unit dwelling, for “families living independently of each other in which the mortgagor is a natural person landlord renting the dwelling units, even if the mortgagor does not occupy any of the dwelling units as the mortgagor’s personal residence.”

  •  Maine:  Effective September 28, 2023, Senate Paper 449/Legislative Document 1080 (2023 Me. Laws 258) requires supervised lenders or mortgage loan servicers to notify mortgagors of their right to cancel or terminate private mortgage insurance (“PMI”) under the federal Homeowners Protection Act of 1998 (“HOPA”).  Specifically, this measure adds new Section 9-315 to Title 9-A of the Maine Revised Statutes (under the Maine Consumer Credit Code), which:
    • Requires a supervised lender, or a mortgage loan servicer acting on behalf of a supervised lender, must provide an annual written statement to the mortgagor that discloses: (a) the mortgagor’s rights under HOPA to cancel or terminate their PMI; and (b) the address and telephone number that the mortgagor may use to contact the supervised lender or mortgage loan servicer to determine whether the mortgagor may cancel the PMI;
    • Defines the terms “private mortgage insurance” and “residential mortgage transaction”;
    • Incorporates by reference HOPA’s annual notice requirement for a residential mortgage transaction; and
    • Applies to PMI created or renewed, and to residential mortgage transactions entered into, on or after the measure’s effective date.
  • Missouri:  Effective August 28, 2023, Senate Bill 101 amends the Missouri Revised Statutes to add provisions related to lender-placed insurance.  First, the measure’s provisions apply to any insurer or any insurance producer involved in lender-placed insurance, who must comply with all requirements set forth under new Section 379.1859.  Second, the measure requires that lender-placed insurance coverage amounts and premium amounts be based on the replacement cost value of the property, as calculated under new Section 379.1855.  Further, the measure requires that if any replacement cost coverage provided by the insurer is in excess of the unpaid principal balance on the mortgage loan, that excess must be paid to the mortgagor.  Third, the measure adds new Section 379.1857, which prohibits an insurer or an insurance producer from engaging in conduct including: (a) issuing lender-placed insurance if the entity or an affiliate thereof owns, performs servicing for, or owns the servicing right to, the mortgage property; or (b) compensating a lender, insurer, investor, or servicer, including through the payment of commissions, for lender-placed insurance policies issued by the insurer. Fourth, the measure adds new Section 379.1861 to require: (a) lender-placed insurance to be set forth in an individual policy or certificate of insurance; and (b) proof of coverage to be delivered by mail to the mortgagor’s last known address, or delivered in person.
  • New Hampshire:  Effective June 20, 2023, House Bill 520 (2023 N. H. Laws 89) amends provisions related to escrow accounts maintained by licensed nondepository mortgage bankers, brokers, and servicers.  First, the measure amends Section 397-A:9, IV of the New Hampshire Revised Statutes to provide that nondepository licensees that require the maintenance of a mortgagor’s escrow account for loans on single family homes secured by real estate mortgages on property located in New Hampshire must pay interest on moneys held in such account, so as to be consistent with interest rates credited by depository entities.   Second, the measure makes the same amendment to the Depository Bank ACt.  Both types of entities must pay interest on escrow accounts at six-month intervals (beginning April 1 and October 1) “at a rate of not less than the National Deposit Rate for Savings Accounts as published … by the Federal Deposit Insurance Corporation” in January (for the April adjustment) or July (for the October adjustment).
  • Nevada:  Effective October 1, 2023, Senate Bill 276 (2023 Nev. Stat. 534) amends the collection agencies provisions in Chapter 559 of the Nevada Revised Statutes.  First, the measure requires a collection agency to display certain information on its website.  Second, the measure requires a collection agency to maintain: (a) its license number issued by the Commissioner pursuant to Section 649.135; and (b) the certificate identification number of the certificate issued to the entity’s compliance manager under Section 649.225.  Third, the measure sets forth the conditions collections agents must satisfy in order to conduct activity from a remote location.  Specifically, a collection agent engaging in remote work must sign a written agreement that it will:
    • maintain data concerning debtors in a confidential manner, and refrain from printing or otherwise reproducing such data into a physical record while working from the remote location;
    • read and comply with (a) the entity’s security policy, and (b) any policy to ensure the safety of the equipment of the collection agency that the collection agent is authorized to use;
    • review a description of the work that the collection agent is authorized to perform from the remote location and only perform work included in that description;
    • refrain from disclosing to a debtor that the collection agent is working from a remote location or that the remote location is a place of business of the collection agency;
    • authorize the employer to monitor the collection agent’s remote activities (including without limitation, by recording any calls to and from the remote location relating to collection activities); and
    • refrain from conducting any activities related to his or her work with the collection agency with a debtor or customer in person at the remote location.

Further, the measure requires a collection agent working remotely to complete a program of training regarding compliance with applicable laws and regulations, privacy, confidentiality, monitoring, security, and any other issue relevant to the work the collection agent will perform from the remote location.  A collection agent engaged in remote work must work for the collection agency under direct oversight and mentoring from a supervisor for at least seven days.  Finally, the measure requires a collection agent who works from a remote location to comply with any applicable federal or state laws (e.g., the Fair Debt Collection Practices Act).

  • Nevada:  Effective and January 1, 2024, Senate Bill 355 (2023 Nev. Stat. 527) amends the Mortgage Companies and Mortgage Loan Originators Law (Chapter 645B of the Nevada Revised Statutes) to permit remote operations, among other provisions.  Specifically, the measure adds a new section under which a mortgage company may authorize its employees to conduct mortgage business at a remote location, provided that the entity:
    • has adopted written policies and procedures for the supervision of its employees working at a remote location to ensure that each employee complies with all statutory and regulatory requirements applicable to remote operations;
    • exercises reasonable control and supervision over the activities of its mortgage loan originators; and
    • has adopted a comprehensive written plan for its security and information systems of the mortgage company and any information collected and maintained by the mortgage company regarding customer data, must contain specific provisions for cybersecurity and use of secure connection (i.e. VPN) that meets the criteria specified in the measure, while working from the remote location.

Second, the measure amends Section 645B.080 relating to require a mortgage company to keep and maintain complete and suitable records of all mortgage transactions made by its employee at a remote location in accordance with the requirements established by the Commissioner of Mortgage Lending by regulation.

  • North Carolina:  Effective October 1, 2023, Senate Bill 331 (2023 N. C. Sess. Laws 61) amends the North Carolina Consumer Finance Act (“CFA”).  First, the measure Section 53-165 of the General Statutes by removing the term “cash advance” and definitions for “amount financed” “electronic payment”, “loan amount”, and “servicing loans”.  Second, the measure amends Section 53-166 by increasing the amount that a licensee can lend to a borrower from $15,000 to $25,000.  Third, the measure amends Section 53-168 to:
    • increase application fees for consumer finance licensees from $250 to $500;
    • permit a licensee to post its license on its website; and
    • require at least 30 days’ notice to the Commissioner of Banks for any proposed transfer of a CFA license.

Fourth, the measure amends Section 53-173 to require that interest be computed on the unpaid portion of the amount financed (rather than the principal balance or principal amount).  Fifth, the measure amends Section 53-177 to:

    • increase late fees from $15 to $18;
    • permit a licensee to apply a borrower’s most recent payment to the oldest installment due;
    • prohibit a licensee from collecting more than one late fee per installment owed, whether a partial or full payment was made;
    • permit the collection of late fees on installment payment past due for 10 days or more if the licensee places the borrower in default;
    • permit a licensee to include late payment fees on installment payments past due 10 days or more of the amount of a loan that is refinanced;
    • permit a licensee to include late fees for installment payments past due for 10 or more days in the final balance when a loan reaches maturity; and
    • permit a licensee to assess a deferral charge for each moth of the remaining loan term on each installment owed after the date of deferral.

Sixth, the measure amends Section 53-184 by requiring licensees to:  (a) maintain separate loan ledgers and accounts related to the making and collecting of loans under the CFA; (b) allocate expenses monthly according to generally accepted accounting principles; and (c) retain all required books and records for a period of two years after the last transaction. The amended section also outlines the books and records (general ledger, loan documents, judgements, repossessions) that a licensee must keep.

Rhode Island:   Effective June 14, 2023, companion measures House Bill 5761 (2023 R. I. Pub. Laws 75) and Senate Bill 163 (2023 R. I. Pub. Laws 76) removed the July 1, 2023, sunset date for provisions of the Rhode Island General Statutes requiring a mediation conference coverage prior to mortgage foreclosure.