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 June 18, the Federal Housing Administration (FHA) announced updates to its student loan monthly payment calculations to help provide greater access to affordable single-family FHA-insured mortgage financing for creditworthy individuals with student loan debt, which has a disproportionate impact on people of color. According to the FHA release, the updated policy more closely aligns student loan debt calculation policies with other housing agencies, helping to streamline and simplify originations for borrowers with student loan debt obligations. For more information, click here.
- On June 17, the Federal Financial Institutions Examination Council (FFIEC) announced the availability of data on 2020 mortgage lending transactions at 4,475 U.S. financial institutions reported under the Home Mortgage Disclosure Act (HMDA). Covered institutions include banks, savings associations, credit unions, and mortgage companies. The data products released by the FFIEC provide comprehensive information on mortgage market activity used by industry, consumer groups, regulators, and others to assess potential fair lending risks and for other purposes. For more information, click here.
- On June 16, the Consumer Financial Protection Bureau (CFPB) issued an interpretive rule, setting forth the basis for its authority to examine supervised financial institutions for risks to active duty servicemembers and their dependents from conduct that violates the Military Lending Act (MLA). For more information, click here.
- On June 16, the U.S. Department of Education announced the approval of 18,000 borrower defense to repayment (borrower defense) claims for individuals who attended ITT Technical Institute. These borrowers will receive 100% loan discharges, resulting in approximately $500 million in relief. This brings total loan cancellation under the Biden-Harris administration borrower defense to $1.5 billion for approximately 90,000 borrowers. For more information, click here.
- On June 16, the CFPB updated a report it first released last year that detailed the delinquency rates on major types of credit to illustrate the financial effect of the COVID-19 pandemic on consumers. Now looking at data through the end of April 2021, the CFPB’s data indicates that delinquency rates on auto loans, student loans, credit cards, and mortgages are still below pre-pandemic levels, but “time will tell whether delinquencies begin to rise again through the summer and fall of 2021.” For more information, click here.
- On June 15, the Federal Communications Commission (FCC) announced that its reassigned numbers database (RND) will undergo a beta test from July 1 through September 30, during which callers and caller agents may use the database without charge. The FCC has worked on the RND — which is intended to be used by callers to determine if a cell phone number has been reassigned to someone other than the individual seeking to be contacted — for over three years. Knowing that a phone number has been reassigned can tell a company not to contact that number. For more information on the RND and participating in the FCC’s beta testing, click here.
- On June 14, the CFPB released a report analyzing the differences in lending patterns for lenders below and above the 100-loan, closed-end threshold set by the 2020 Home Mortgage Disclosure Act (HDMA). While the CFPB’s analysis is preliminary, the report shows some differences in lending patterns for lenders above and below the threshold. For more information on the report and the background on HDMA data collection, reporting, and disclosure processes, click here.
- On June 14, the CFPB issued consumer guidance on what to do ahead of the Centers for Disease Control’s (CDC) eviction moratorium June 31 expiration. According to a recent housing study published by Harvard University, more than two million homeowners are behind on their mortgages and risk being forced out of their homes. For more information, click here.
- On June 11, the CFPB published the Spring 2021 Agenda as part of its 2021 Unified Agenda of Federal Regulatory and Deregulatory Actions, which is coordinated by the Office of Management and Budget under Executive Order 12866. The Spring 2021 Agenda lists the regulatory matters currently pursued by CFPB interim leadership, pending appointment and confirmation of a permanent director. The Fall 2021 Unified Agenda will reflect the permanent director’s changes to the CFPB regulatory agenda. For more information, click here.
- On June 10, a Wisconsin federal judge ordered a temporary halt to a $4 billion federal loan relief program intended to address longstanding inequities for farmers of color after a legal challenge by white farmers, who argued the policy discriminates against them. The plaintiffs in the case — 12 farmers from nine states — filed suit against the U.S. Department of Agriculture (USDA) over the roughly $4 billion set aside for loan forgiveness for socially disadvantaged farmers and ranchers in the $1.9 trillion American Rescue Plan. For more information, click here.
- On June 16, the New Jersey Assembly Community and Development and Affairs Committee advanced Senate Bill 3584, which establishes immunity related to the COVID-19 spread in planned real estate developments. S.B. 3584 would “prohibit any causes of action for damages arising from a COVID-19 exposure or transmission on the premises of a planned real estate development,” but it “would not apply to acts or omissions constituting a crime, actual fraud, actual malice, gross negligence, recklessness, or willful misconduct.” For more information, click here.
- On June 15, New York Attorney General Letitia James issued an alert to New Yorkers to remain vigilant against a surge in telephone scams seeking to take advantage of consumers. As part of the fraud, scammers put pressure on customers to pay immediately or else have their services cut off instantly. “As New Yorkers continue to suffer the economic impacts of the COVID-19 public health crisis, scammers have seen this as an opportunity to take advantage of the economic anxiety that many New Yorkers feel and the additional time some have needed to pay their bills,” said Attorney General James. For more information, click here.
- On June 15, the Supreme Court of Virginia issued its twenty-third order, extending the declaration of judicial emergency for the COVID-19 pandemic through July 11. Under the terms of the order, courts continue to have authorization to accept electronically signed pleadings, orders, and other documents. For more information, click here.
- On June 15, Vermont ended its state of emergency. As a result, Vermont’s eviction moratorium for nonpayment of rent or no-cause evictions can proceed on July 15 under S. 333 — Vermont’s eviction moratorium. For more information, click here.
- On June 17, the Richmond Times Dispatch reported that Virginia Governor Ralph Northam will not exercise executive authority to extend eviction protections imposed during the COVID-19 pandemic. Absent any action by the governor and starting July 1, landlords will no longer be required to notify tenants about how to apply for rent relief through a state program or abate from proceeding from eviction for 45 days while waiting for a relief application approval. For more information, click here.
- On June 14 Texas Governor Greg Abbott signed HB 3510. Effective September 1, the new law will allow employees of companies licensed by the Texas Finance Commission — which include vehicle finance companies, traditional installment lenders, and mortgage lenders — to work remotely from licensed locations, provided certain requirements are met. For more information, click here.
- On June 11, Illinois Governor J.B. Pritzker issued an order to rescind Executive Order 2020-25 on June 25. Executive Order 2020-25 suspended the “provisions of the Illinois Code of Civil Procedure that permit the service of a garnishment summons, wage deduction summons, and a citation to discover assets on a consumer debtor or consumer garnishee.” For more information, click here.
- The Appellate Court of Illinois, First District recently ruled that the Illinois Rent Control Preemption Act (IRCPA) preempted the tenant’s claims against the lender under Chicago’s Keep Chicago Renting Ordinance (KCRO). Specifically, the court found that the KCRO requirement to “offer qualified tenants either a $10,600 relocation fee or extend the tenant’s lease with an annual rental rate that does not exceed 102% of their current rental rate” is preempted and this provision is not severable from the remainder of the ordinance. For more information, click here.
- On June 14, the Eleventh Circuit Court of Appeals issued an order withholding issuance of a mandate in the Hunstein v. Preferred Collection and Management Services, Inc. For more information, click here.
- On June 16, CNBC reported that eight states — Alabama, Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West Virginia, and Wyoming — are opting out of federal unemployment benefit programs. This brings the total to 25 states turning down federal funds prior to the program’s official expiration on September 6. Further, Indiana residents are suing Governor Eric Holcomb in state court to maintain aid programs, arguing the decision to stop benefits violates the state’s unemployment statute. For more information, click here.
Privacy and Cybersecurity Activities:
- On June 17, U.S. Senator Kirsten Gillibrand announced the revival of the Data Protection Act of 2021, which seeks to create a Data Protection Agency that would “protect Americans’ data, safeguard their privacy, and ensure data practices are fair and transparent.” Due to the COVID-19 pandemic, more and more people are providing their personal information to companies and “companies are free to sell individuals’ data to the highest bidder without fear of real consequences, posing a severe threat to modern-day privacy and civil rights,” Senator Gillibrand said. This new legislation would include:
- Supervision of Data Aggregators
- Office of Civil Rights
- Enforcement Powers
- Penalties and Fines
- Defines Key Terms for Transparency
To read more about this new legislation, click here.
- On June 16, CyberScoop reported that “health passes, sometimes known as vaccine passports [may be used] as a means to securely reopen businesses and borders as COVID-19 cases drop and vaccination rates rise.” In addition, businesses or airports can utilize scannable codes to access patient health data instead of relying on physical records. Data protection experts anticipate that health passes and digital IDs are here to stay. Digital IDs offers a convenient way to authenticate and verify individuals. For example, IBM is working on a digital ID with New York state that would collect vaccine status, driver’s licenses, and other personal records. More on IBM’s move can be read here. However, privacy experts warn that tech companies embracing this new technology should consider assessing risks to data. Both the Biden administration and the Department of Homeland Security are beginning to provide guidelines on privacy best practices as they relate to digital IDs. To read CyberScoop’s report, click here. For those interested in learning more about vaccine certificates and the potential implications of using them, check out Troutman Pepper’s Law360 article by clicking here.
- On June 15, the Federal Trade Commission (FTC) warned companies of the danger of various business-to-business (B2B) scams as employees begin to return to the workplace. “[C]on artists were already using the coronavirus as a hook for swindlers and scams … . Now that many companies are returning to an in-person workplace, some fraudsters will try to take advantage of the transition.” As a result, the FTC urges companies to keep their guard up against various forms of B2B deception by:
- Spotting the signs of an imposter scam;
- Sticking with suppliers they know or recommended by people they trust; and
- Alerting their staff to unemployment benefits fraud.
To read the FTC’s complete list of tips to protect against workplace B2B scams, click here.
- On June 14, the FTC stressed to companies the importance of staying in control of sensitive information as many corporations shift back to an in-person workplace following over a year of remote work due to the COVID-19 pandemic. In an effort to ease the transition back to the office and “reduce the risk that COVID-19 scammers, data thieves, and financial fraudsters will follow [companies] there,” the FTC reminds companies they should:
- Update their data inventory;
- Double check security on new platforms and software;
- Consider an in-house security refresher; and
- Evaluate and adjust their practices in light of their COVID-19 experience.
To read the FTC’s full list of tips on maintaining appropriate data security standards, click here.