Like most industries today, Consumer Finance Services businesses are being significantly impacted by the novel coronavirus (COVID-19). Troutman Pepper has developed a dedicated COVID-19 Resource Center to guide clients through this unprecedented global health challenge. We regularly update this site with COVID-19 news and developments, recommendations from leading health organizations, and tools that businesses can use free of charge.
Our bank and loan servicing clients also face novel challenges affecting their industry due to COVID-19, particularly the ever-changing rules and regulations concerning evictions and foreclosures. We closely track these updates and have assembled an interactive tracker containing state orders and guidance documents regarding residential foreclosure and eviction moratoriums. You may access this interactive tool at https://covid19.troutman.com/.
To help you keep abreast of relevant activities, below find a breakdown of some of the biggest COVID-19 driven events at the federal and state levels to impact the Consumer Finance Services industry this past week:
Privacy and Cybersecurity Activities
- On August 5, the Federal Reserve Board announced the individual capital requirements for all large banks, effective on October 1. These capital requirements ensure that the large banks tested will hold roughly $1 trillion in high-quality capital — enough to survive a severe recession and still be able to lend to households and businesses. For more information, click here.
- On August 5, the Consumer Financial Protection Bureau released an interpretive rule to assist the mortgage industry in determining whether to treat June 19, 2021, as a federal holiday or a business day for purposes of compliance with certain time-sensitive borrower protections. For more information, click here.
- On August 5, the Department of Education announced that it is extending the moratorium on federal student loan payments through January 31, 2022. For more information, click here.
- On August 3, Federal Reserve Board announced that it will extend the comment period for its proposal to govern funds transfers over the Federal Reserve Banks’ FedNow Service until September 9. The FedNow Service is a new 24x7x365 service that will support instant payments in the United States and is expected to be available in 2023. For more information, click here.
- On August 3, the Centers for Disease Control and Prevention issued a new order regarding the eviction moratorium, effective through October 3. The CFPB updated the “Help for Renters” webage to include information on the new order and the steps renters can take to avoid eviction under the order. For more information, click here.
- On July 30, the Small Business Administration (SBA) issued an interim rule on loan forgiveness under the Paycheck Protection Program (PPP), originally established under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This interim final rule further streamlines the forgiveness process for PPP loans of $150,000 or less by allowing lenders to use a COVID-19 Revenue Reduction Score at the time of forgiveness to document the required revenue reduction for Second Draw PPP Loans, and by establishing a direct borrower forgiveness process for lenders choosing to opt in as an alternative method of processing loan forgiveness applications. This interim final rule also extends the loan deferment period for those PPP loans, where the borrower timely files an appeal of a final SBA loan review decision with the SBA Office of Hearings and Appeals. For more information, click here.
- On August 5, the California Department of Financial Protection and Innovation announced that it entered into an agreement with a company providing alternative student loans to increase oversight on income-share agreements. Income-share agreements are a type of student loan, where the borrower receives a loan and then pays a percentage of his/her income after graduation. For more information, click here.
- On August 3, the Washington, D.C. City Council unanimously approved amendments to Bill 24-348 — D.C.’s emergency debt collection bill. Among other changes, the amended bill now no longer requires debt collectors to provide debt documentation within five days of the initial communication (such materials now only need be provided upon request from consumer) and removes the allowance of damages per violation. For more information, click here.
- On August 2, the Supreme Court of the State of New Mexico ordered the gradual lifting of the stay of writs of garnishment and execution in consumer debt collection cases. Effective September 1, 2021 through January 31, 2022, the order also adopted new rules to assist renters facing foreclosures as the federal moratorium expired. Under civil case procedures established by the rules, a foreclosing creditor cannot obtain a judgment against a homeowner until certifying that loan modification and “loss mitigation” negotiations were attempted with the borrower. Before filing a foreclosure case, the rules require that homeowners receive information about their loan and possible ways to avoid losing their house. The rules and related court forms become effective for cases filed on or after September 7. For more information, click here and here.
- On July 30, DeKalb County Georgia Superior Judge Asha Jackson signed a new emergency order banning evictions in Dekalb County for another 60 days. Judge Jackson issued this order, in part, after a cybersecurity attack on a tenant-landlord assistance provider kept tenants from timely receiving federal aid. For more information, click here.
Privacy and Cybersecurity Activities:
- On August 4, the Federal Trade Commission (FTC) warned consumers that identity thieves “are targeting millions of people nationwide with scam phishing texts aimed at stealing personal information, unemployment benefits, or both.” With many continuing to struggle with pandemic-induced unemployment, scammers are trying to dupe recipients by having them click on malicious links to “make necessary corrections” to their unemployment insurance, “verify” personal information in their claims, or “reactive” their benefits. The FTC reminds consumers that state agencies do not send text messages asking for personal information. If individuals are unsure about certain communications, they should contact their state agency directly. To read the full announcement, click here.
- On August 3, it was reported that an audit revealed Western Australia’s SafeWA COVID-19 contact tracing app showed that police used “check-in information for purposes other than [COVID]-19 contact tracing, with six requests being made by the police despite government messaging that the information would only be used to support contact tracing.” In addition, the audit revealed that the app contained security flaws upon its release. For organizations interested in learning more about privacy issues relating to COVID-19 contact tracing for app makers, check out Troutman Pepper’s Law360 article by clicking here.
- On August 3, The Washington Post reported on its review of the privacy and security aspects of digital proof of vaccination options. The report recognizes that COVID-19 passports may only reveal certain required information, but their use could also raise concerns about access and potential privacy violations. For those interested in learning more about the privacy implications of vaccine certificates, check out Troutman Pepper’s Law360 article by clicking here.