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Consumer Finance State Roundup

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The pace of legislative activity from this year’s current session can make it hard to stay abreast of new laws.  The Consumer Finance ABstract’s “Consumer Finance State Roundup” is intended to provide a brief overview of recently enacted measures of potential interest.  

During this current legislative session, the following three states have enacted measures of potential interest to Consumer Finance ABstract readers:

  • Colorado:  Effective August 8, 2023, Senate Bill 248 (2023 Colo. Sess. Laws 360) amends collection agency licensure requirements under the Colorado Fair Debt Collection Practices Act.  First, the measure amends Section 5-16-119 of the Colorado Revised Statutes to allow licensees to work from remote locations under certain conditions.  Specifically, the licensee must: (a) ensure that no in-person customer interactions are conducted at the remote location; (b) not designate the remote location as a business location to the consumer; (c) maintain appropriate safeguards for licensee data and consumer data, information, and records, including utilizing a secure VPN for secure access; (d) employ appropriate risk-based monitoring and oversight processes of work performed from a remote location that includes maintaining records of the monitoring and oversight processes; (e) ensure that consumer information and records are not maintained at a remote location; (f) provide appropriate employee training to ensure employees keep conversations confidential about and with consumers that are conducted from a remote location, and ensure that employees work in an environment that is conducive to ensure privacy and confidential conversations; and (g) ensure that consumer and licensee information and records are available for regulatory oversight and examination.  Second, the measure defines “remote location” as “a private residence of an employee of a licensee or another location selected by the employee and approved by the licensee.”
  • Colorado:  Effective June 7, 2023, House Bill 1266 (2023 Colo. Sess. Laws 440) amends the reverse mortgages provisions of the Colorado Revised Statutes to address an exception to repayment requirements of reverse mortgage transactions when a subject property is uninhabitable.  First, the measure defines the term “force majeure” in Section 11-38-102, describing certain criteria that would designate a subject property as uninhabitable as a principal residence of the reverse mortgage borrower.  Second, the measure amends Section 11-38-107 to create exceptions to repayment requirements of a reverse mortgage transaction when a home is not occupied due to a “force majeure”.   When the home is temporarily uninhabitable, the measure establishes that the reverse mortgage will not become due and payable to the lender (to the extent allowable by HUD’s regulations and policies), provided that all of the following conditions are met:  (a) the borrower must be engaged in repairing the home with the intent to reoccupy the home as a principal residence, or must sell the home; (b) the borrower must stay in communication with the lender while the home is being repaired and must reasonably respond to any lender inquiries; (c) the borrower must comply with all other terms and conditions of the reverse mortgage; and (d) the repairing or rebuilding of the home must not reduce the lender’s security.  Further, the amended section requires the lender to disclose these requirements to the borrower at closing.
  • Nebraska:  Effective June 7, 2023, Legislative Bill 92 amends various provisions of the Nebraska Revised Statutes, including the Nebraska Residential Mortgage Licensing Act (the “Mortgage Act”) and the Nebraska Installment Loan Act (the “Installment Act”).  First, the measure amends Section 45-735 under the Mortgage Act, to authorize the Department of Banking and Finance (“Department”) to adopt and promulgate rules, regulations, and orders to regarding the use of remote work arrangements conducted outside of a main office location or branch office by employees or agents, including mortgage loan originators, of licensed mortgage bankers, registrants, or installment loan companies.  (Current law prohibits a mortgage loan originator from conducting mortgage loan origination activities at any location that is not the main office of a licensed mortgage banker, registrant, or installment loan company, or a branch office of a licensed mortgage banker or registrant.)  Second, the measure amends the Installment Act by: (a) in Section 45-1002, adding definitions for the terms “consumer” and “loan”; (b)in Section 45-1003, adding a licensure requirement  for persons that are not financial institutions; and (c) in in Section 45-1006, permitting the Director of the Department to waive hearing requirements for any applicant that does not originate loans under the statute.
  • Texas:  Effective September 1, 2023, House Bill 219 adds provisions relating to lien release to Chapter 343 of the Texas Finance Code.  First, this measure requires that no later than the 60th day after receiving the correct payoff amount for a home loan from a mortgagor, a mortgage servicer or mortgagee must: (a) deliver to the mortgagor a release of lien for the home loan; or (b) file the release of lien with the appropriate county clerk’s office for recording in the real property records of the county.  Second, the measure requires a mortgage servicer or mortgagee to deliver or file the release of lien not later than the 30th day after receipt of the written request from the mortgagor, if on or before the 20th day after the date of the home loan payoff, the mortgagor delivers a written request to the mortgage servicer or mortgagee for the release of lien to be delivered to the mortgagor or filed with the county clerk.  Third, the measure requires a mortgage servicer or mortgagee to comply with these new requirements only if the entity has the authority to deliver or file a release of lien for the home loan. Fourth, in the event of a conflict between the new requirements and a home loan agreement entered prior to the measure’s effective date, the provisions of the home loan agreement would prevail.  Fifth, the measure provides relevant definitions, namely:  (a) that the terms “mortgage servicer”, “mortgagee” and “mortgagor” have the same meaning as under  Section 51.0001 of the Texas Property Code; and (b) the term “release of lien” means “a release of a deed of trust or other lien securing a home loan”.

 

Consumer Finance State Roundup

By

The pace of legislative activity from this year’s current session can make it hard to stay abreast of new laws.  The Consumer Finance ABStract’s “Consumer Finance State Roundup” is intended to provide a brief overview of recently enacted measures of potential interest.  For this first installation, we are including additional measures enacted during the current legislative session that will take effect in short order:

During this current legislative session, the following five states have enacted measures of potential interest to Consumer Finance ABstract readers:

  • Arkansas:  Effective July 31, 2023, House Bill 1439 (2023 Ark. Acts 325) amends the Fair Mortgage Lending Act to clarify the sponsorship process and amend licensing requirements.  First, the measure defines the term “[s]ponsor” to mean “a mortgage broker or mortgage banker licensed under [the Act] that has assumed the responsibility for and agrees to supervise the actions of a loan officer or transitional loan officer.”  Second, the measure clarifies that the termination of a sponsorship of a loan officer or transitional loan officer license under the Act extinguishes the right of that individual to engage in any mortgage loan activity.  Finally, the measure amends provisions related to renewal of a loan officer license to change a license status from “approved-inactive” to “approved” so long as, prior to the loan officer license termination, a licensed mortgage broker or mortgage banker meets certain requirements.

 

  • Arkansas:  Effective July 31, 2023, Senate Bill 321 (2023 Ark. Acts 360) amends provisions of the Arkansas Code relating to collection agencies.  Among other provisions, the measure amends Section 17-24-101 to clarify that the term “collection agency” means any person or entity that “(1) Engages in the collection of delinquent accounts, bills, or other forms of indebtedness owed or due or asserted to be owed or due to another; (2) Uses a fictitious name or any name other than its own to collect their own accounts receivable; (3) Solicits claims for collection; or (4) Purchases and attempts to collect delinquent accounts or bills.”

 

  • Montana:  Effective July 1, 2023, House Bill 30 (2023 Mont. Laws 4) amends the Montana Mortgage Act (“Act”) to adopt prudential standards for non-bank mortgage servicers and allow remote work for mortgage loan originators (“MLOs”), among other provisions.  First, the measure establishes capital and liquidity requirements for servicers. Second, the measure requires certain entities (that are “covered institutions”) to establish and maintain corporate governance standards, including for internal and external audits and risk management.  Third, the measure amends the definition of “mortgage servicer” to add the servicing of forward mortgages and home equity conversion mortgages or reverse mortgages for receiving payments. Fourth, the measure requires a licensee under the Act to have one MLO serve as a designated manager responsible for mortgage origination activity across the entire entity;.  Finally, the measure requires a licensee under the Act to file a written report with the Department of Administration within 15 business days after learning of a cybersecurity incident affecting business operations or potentially exposing personal information of customers.  For a detailed summary analysis on the measure’s provisions addressing remote work by MLOs, please see our previous post.

 

  • North Dakota:  Effective August 1, 2023, Senate Bill 2090 amends the North Dakota Code with respect to the licensing of residential mortgage lenders and money brokers.  First, the measure enacts a new Chapter 13-12 of the North Dakota Century Code to address the licensing of residential mortgage lenders.  Under current law, mortgage lender licensing falls within the scope of the money broker statutes in Chapter 13-04 of the Code.  Second, the measure provides that any residential mortgage lender that holds a valid North Dakota money broker license as of August 1, 2023, will not be required to obtain a residential mortgage lender license under new Section 13-12-03 until December 31, 2023.

 

  • Ohio:  Effective December 29, 2023, Senate Bill 131 (2022 Ohio Laws 156) amends mortgage (and other industry) licensing standards to address license reciprocity requirements.  Under the Ohio Residential Mortgage Lending Act (Ohio. Rev. Code § 1322.01 et seq.), the measure provides for an applicant to obtain a registration for a mortgage lender or broker or a license for a mortgage loan originator (“MLO”) by reciprocity under Section 1322.10 or Section 1322.21, respectively, of the Ohio Revised Code if the applicant: (i) holds a license or certificate of registration in another state; or (ii) has satisfactory work experience, a government certification, or a private certification (as described in that chapter) as a mortgage broker, mortgage lender, or MLO in a state that does not issue that license or certificate of registration.

 

  • Virginia:  Effective July 1, 2023, House Bill 2389 (2023 Va. Acts 573) amends provisions of the Mortgage Lenders and Mortgage Brokers Act (Va. Code Ann. § 6.2-1600 et seq.) to permit licensed mortgage lenders and mortgage brokers to allow employees and exclusive agents to work from a remote location provided that certain criteria are met.   Specifically, the measure adds to Section 6.2-1607 a list of conditions that must be met in order for a licensee’s employees to work from a remote location, including that: (a) the licensee has written policies and procedures for the supervision of employees or exclusive agents working from a remote location; (b) access to the licensee’s platforms and customer information through a VPN or comparable system, and is in accordance with the licensee’s comprehensive written information security plan; (b) no in-person customer interaction occurs at an employee’s or exclusive agent’s residence, unless such residence is an approved office; and (d) the licensee employs appropriate risk-based monitoring and oversight processes, and any employee or exclusive agent who works from a remote location must comply with the licensee’s established practice.