In the Strangest Year Ever, We’re Very Thankful and Wish You a Happy Thanksgiving

Bradley Arant Boult Cummings LLP

As everyone steps away from their (home) office to celebrate Thanksgiving, we wanted to count our blessings as we review this truly remarkable and unusual year. In addition to frontline healthcare workers, good WI-FI, food delivery services, and finally finding a mask that is comfortable, we are also thankful for the following:

1. The CARES Act Provided Millions of Americans with Mortgage Forbearances and Other Relief.

On March 27, 2020, President Trump signed the Coronavirus Economic Stabilization Act of 2020 (CARES Act). The legislation directed more than $2 trillion into fighting the COVID-19 pandemic and stimulating America’s economy for the duration of the pandemic, which is ongoing. The CARES Act has had significant impact on the mortgage industry, including a foreclosure and eviction moratorium on all federally backed mortgage loans, which is currently scheduled to expire December 31, 2020.

While we worry about what will happen when that moratorium ends, we are thankful that millions of Americans with federally backed mortgage loans could take advantage of up to 360 days of forbearances because they were in financial distress due to the pandemic. Many private lenders also offered forbearances to their customers, and a handful of states enacted state laws requiring forbearances. Did this also create confusion? Yes! But everyone’s goal was to help consumers.

The GSE also created a COVID-19 payment deferral program to resolve those forbearances – so we’re thankful for the CFPB’s Interim Final Rule creating an exception allowing servicers to offer such deferrals based upon an incomplete application.

We’re glad that many Americans benefited from the CARES Act’s credit reporting requirements, but we still wish the CFPB’s FAQ were clearer about post-accommodation reporting (FAQ10, we’re looking at you).

We are especially grateful for our bank and mortgage clients and proud of the way the industry has risen to the occasion to help borrowers in these difficult times. Bradley hosted a weekly COVID-19 Compliance Roundtable over the course of 2020, which spanned 27 weeks and included over 70 separate companies. It has been a wonderful opportunity to collaborate with our friends and clients and to stay in touch while social distancing. If you’d like to join our Roundtable, please contact us at COVID-FS@bradley.com.

2. We’re Thankful for Clarity, Guidance, and a Few Tools from the CFPB to Help Debt Collectors.

It may still be 2020, but one thing that isn’t entirely terrible is the CFPB’s new Debt Collection Rule. Sure, it’s not perfect, but we can all be thankful for some of the helpful tools and guidance provided by the CFPB in its October final rule. For instance, while we all wish the agency had expanded the use of limited content messages to email and text messages, debt collectors can be grateful for the ability to leave certain voicemails without worrying too much about the FDCPA’s third-party disclosure prohibitions. And while we didn’t get a much-needed bright-line rule for call frequency, the CFPB’s rebuttable presumption that seven phone calls in a seven-day period is not harassment is, like boxed stuffing, fair-to-middling. In addition, the CFPB’s guidance on electronic communications also helps clear up some of the ambiguity that comes with applying a 1977 statute to modern technology. Don’t get too excited though – the rule’s time, place, and medium restrictions, while clearing up some issues related to mobile phone communications, could pose some significant challenges for organizations coming into compliance. It is 2020 after all.

3. Remote Online Notarization (RON) Finally Became Widespread Due to the Pandemic.

We are grateful for practical improvements in 2020! Many states (finally) authorized remote e-notarization allowing our clients to close new loans and continue other business operations in 2020. In the earliest days of the COVID-19 pandemic, mortgage loan originators were naturally concerned about how new loans could be originated and closed without in-person closings. Thankfully, practical alternatives were available and were approved nationwide. The American Land Title Association reports that “48 states and the District of Columbia have either passed a RON law or issued an executive order” directed at the ability to utilize remote notaries to notarize documents.

4. Borrowers in Chapter 13 Bankruptcy Can Get Extra Help When Impacted by COVID-19.

We’re thankful that Americans already struggling with their finances can get another two years to complete their bankruptcy plan. The CARES Act amended 11 U.S.C. § 1329 to allow for a Chapter 13 plan confirmed before March 27, 2020, to be modified to extend payments up to seven years if the debtor is experiencing a material financial hardship due to COVID-19. While not clearly stated under the CARES Act, bankruptcy judges have recently found that the debtor need not be current on their plan payments as of March 27 to take advantage of the plan modifications.

5. We Will Not Run Out of Privacy Guidance to Read Over the Winter.

2020 has been a cornucopia of privacy regulation. The California Consumer Privacy Act (CCPA) (finally) gave us final regulations, and the California Privacy Rights Act (CPRA) passed as well. We received updated guidance on adtech from the likes of Facebook and got the first peek at a “global privacy control,” as well as a bunch of new litigation. Not to mention that the CJEU effectively eliminated the privacy shield as a viable cross-border data transfer mechanism to the U.S.! We are grateful for having more than enough emerging privacy issues to get us through those long winter nights.

6. We’re Thankful That the End of the LIBOR Transition Is in Sight.

In a few short years, we’ve moved from “Can LIBOR be fixed?” to “What on earth will we replace it with?” to final timelines and transition plans. The risk of disruption was similar to the risk of that awkward Thanksgiving political argument: high. But thanks to strong leadership in the financial services industry, GSEs, and central banks, the markets that rely on stable sources of liquidity and coupon rates have a framework, deadline, and plan for transition to a new benchmark rate at the end of 2021.

7. We’re Thankful the Student Loan Industry Is Far from Boring!

This Thanksgiving, federal student loan borrowers (and many private student borrowers) can be thankful that the CARES Act and executive orders provide for the deferral of required payments through December 31, 2020. However, the deferral period is coming to an end (at some point) and student loan borrowers will have to resume payments. Yet, with the new administration coming aboard, proposed legislation in the House to allow bankruptcy discharges for student loans, and new student servicing laws in several states, 2021 promises to be an active year in the student loan arena – especially if the Biden administration seeks to cancel some amount of federally held debt.

8. We’re Even Thankful for Recent Flood Guidance.

In June, nine long years after the last interagency Q&As, the OCC, FDIC, NUCA, Fed, and FCA released proposed Flood Q&As. Thankfully, the agencies put in extra work in the kitchen overhauling the organization of the Q&As into subject matter categories and also added new questions and answers addressing force placement of flood insurance, escrow of flood insurance premiums, and the detached structure exemption to the mandatory flood insurance purchase requirement. In November, HUD published a proposed revision to its Single Family Handbook that would allow lenders to accept certain private flood insurance policies on FHA-insured loans. We are always grateful for the opportunity to discuss the Q&As and proposed FHA rule changes with trade groups and flood insurance stakeholders across the industry in 2021, and we promise not to drone on like that one peculiar uncle.

9. The Consumer Lending Industry Is Very Thankful for Needed Regulatory Guidance in 2020.

This year the small dollar and unsecured consumer lending industry, including both banks and non-depository banks, saw some much-needed guidance from federal regulators. In a joint statement issued by the OCC, CFPB, Federal Reserve, FDIC, and NCUA, the federal financial institution regulatory agencies published a joint statement on March 26, 2020, “to specifically encourage financial institutions to offer responsible small-dollar loans to both consumers and small businesses.” The CFPB also issued guidance on COVID-19-related issues and compliance obligations for financial institutions, issued two sets of FAQs to address the new proposed Payday Lending Rule and rescinded part of the proposed rule, offered a common-sense approach to the definition of “abusive” under UDAAP, and issued several No Action Letters signaling a solid attempt at working with the industry on innovative ideas. The OCC, with the help of acting Comptroller of the Currency Brian Brooks, has been phenomenal in its forward thinking attempt to bring the traditional banking industry into the modern day fintech era by defining key terms that have tied many banking institutions and related partners up in unnecessary litigation, including the Madden Fix (aka Valid When Made and True Lender). Most recently, the OCC last week proposed a rule to ensure fair access to banking services provided by banks providing some much-needed relief from the prior administration’s Operation Chokepoint. Clear regulatory guidance helps our clients and the industry avoid pitfalls and establish solid compliance programs, a win-win for both sides. Overall there is much to be thankful for!

10. We Are Thankful for You!

Of all the things we are grateful for this year, we are especially thankful for you – our friends and clients. While we’ve missed seeing and connecting with you in person over the last several months, we look forward to more joyful days ahead. From the Bradley family to yours, we wish you a safe and healthy holiday season!

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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