Troutman Pepper

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 are closely tracking 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:

Federal Activities

State Activities

Privacy and Cybersecurity Activities

Federal Activities:

  • On April 22, the Consumer Financial Protection Bureau (CFPB) and New York Attorney General Letitia James filed a complaint in federal court to seize a $1.6 million home that alleged a fraudulent transfer by the operator of a debt-collection scheme. The complaint asks the court to declare the transfer void and order the seizure and sale of the property to partially repay the debt-collector’s outstanding debt to the federal and state governments. For more information, click here.
  • On April 22, the U.S. Department of the Treasury, the Internal Revenue Service, and the Bureau of the Fiscal Service announced they are disbursing nearly two million payments in the sixth batch of American Rescue Plan Economic Impact Payments. For more information, click here.
  • On April 22, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency invited comment on a proposed rule that updates and codifies existing guidance on income tax allocation agreements involving depository institutions and their affiliates. Under the proposed rule, banks that file tax returns as part of a consolidated tax filing group would be required to enter into tax allocation agreements with their holding companies and other members of their consolidated group. The proposed rule also describes the provisions required in those agreements and specifies regulatory reporting treatment. For more information, click here.
  • On April 22, the U.S. House of Representatives passed seven bipartisan bills introduced by House Financial Services Committee members. For more information, click here.
  • On April 21, the Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac will extend some temporary loan origination flexibilities — originally set to expire on April 30 — until May 31, including alternative appraisals on purchase and rate-term refinance loans. Temporary flexibilities related to employment verification, condominium project reviews, and expanded power of attorney will expire as scheduled on April 30. For more information, click here.
  • On April 21, the Fair Debt Collection Practices for Servicemembers Act passed the House of Representatives under suspension of the rules. No floor amendments occurred, and the bill now will be referred to the Senate Banking Committee. For more information, click here.
  • On April 20, U.S. Representative Tony Cardenas introduced the Consumer Protection and Relief Act. Cosponsored by all 13 House Democrats on the subcommittee, the bill seeks to amend Section 13(b) of the Federal Trade Commission (FTC) Act to make the FTC’s authority “explicit” to obtain injunctive and equitable relief, including monetary redress for consumers. For more information, click here.
  • On April 20, consumer advocacy groups wrote a letter to Acting Comptroller of the Office of the Comptroller of the Currency Blake Paulson, asking him to investigate a Virginia bank’s involvement in a student lending product it claims skirts consumer protection laws. For more information, click here.
  • On April 20, the U.S. House of Representatives passed a bill that would give state-authorized marijuana businesses easier access to banking services. The SAFE Banking Act would prohibit federal banking regulators from penalizing banks and other depository institutions for providing banking services to cannabis businesses. For more information, click here.
  • On April 19, the CFPB issued an interim final rule in support of the Centers for Disease Control and Prevention’s (CDC) eviction moratorium. The CFPB’s rule requires debt collectors to provide written notice to tenants of their rights under the eviction moratorium and prohibits debt collectors from misrepresenting tenants’ eligibility for protection from eviction under the moratorium. The CDC established the eviction moratorium to protect the public health and reduce the spread of the virus. Debt collectors who evict tenants with rights under the moratorium without providing notice of the moratorium, or who misrepresent tenants’ rights under the moratorium, can be prosecuted by federal agencies and state attorneys general for violations of the Fair Debt Collection Practices Act, as well as be subject to private lawsuits by tenants. The comment period expires on May 3. For more information, click here.
  • On April 14, Senators Sherrod Brown (D-OH) and Marco Rubio (R-FL) reintroduced the Small Business Lending Fairness Act. The bill would prohibit the use of confessions of judgment in contracts with businesses and would codify existing FTC policy banning such provisions in consumer loan contracts. The senators introduced this bill in 2018 and 2019. For more information, click here.
  • On April 13, U.S. Representatives David E. Price, Greg Murphy, and Haley Stevens, in addition to Senators Mark Warner, Marco Rubio, and John Cornyn, reintroduced the Joint Consolidation Loan Separation Act to help those borrowers. This bill would allow both borrowers to submit a joint application to the Department of Education to split their joint consolidated loan into two separate federal direct loans. Also, it would allow one borrower to submit a separate application if they experience domestic or economic abuse or cannot reasonably reach the other borrower. The remainder of the joint consolidated loan will be split proportionally, and borrowers can transfer eligible past payments toward income-based repayment programs or the Public Service Loan Forgiveness Program. For more information, click here.

State Activities:

  • On April 21, the Colorado Senate Finance Committee held a virtual hearing, during which the Colorado Student Equity Act came up for review. The act would expand the Colorado Student Loan Servicers Act and add a “new part 2 covering private lenders, creditors, and collection agencies in connection with those student education loans that are not made, insured, or guaranteed under federal law and that are used for postsecondary education.” For more information, click here.
  • On April 21, New York Attorney General Letitia James sent a letter to Congress requesting legislators use the Congressional Review Act to rescind the Office of the Comptroller of the Currency’s true lender rule. AG James stated, “Rent-a-bank schemes make a mockery of federal law and, simply, prolong the tide of exploitative and predatory loans that trap vulnerable consumers in cycles of debt.” For more information, click here.
  • On April 19, the Washington legislature passed the Consumer Protection Improvement Act, which increases maximum civil penalties for violations from $2,000 to $7,500. The bill also increases penalties for antitrust violations and creates a penalty for consumer protection violations that target vulnerable communities and protected classes. For more information, click here.
  • On April 14, the California Department of Financial Protection and Innovation issued a press release reminding “future debt collector licensees and existing mortgage lenders and servicers about protections for California renters and homeowners experiencing economic hardship under the COVID-19 pandemic.” Under the COVID-19 Tenant Relief Act, “‘unpaid rent or other unpaid financial obligation of a tenant’ that came due between March 1, 2020, and June 30, 2021 may qualify as COVID-19 rental debt and be subject to certain protections.” For more information, click here.
  • The North Carolina Department of Insurance is changing its license or permit numbers for all licensees. The state is implementing a new tracking system, which will issue new numbers to licensees. For more information, click here.

Privacy and Cybersecurity Activities:

  • On April 25, The New York Timesreported that the European Union is set to let vaccinated U.S. tourists visit this summer. European Commission President Ursula von der Leyen said, “[t]he Americans, as far as I can see, use European Medicines Agency-approved vaccines […] [t]his will enable free movement and the travel to the European Union.” The report describes this is likely due to the “fast pace of vaccination in the United States, and advanced talks between authorities [in the U.S. and EU] over how to make vaccine certificates acceptable as proof of immunity for visitors[.]” While there is no set timeline, Ms. Von der Leyen’s comments offer insight into the EU’s plans for the summer. For those interested in learning more about vaccine certificates and the potential implications of using them when traveling, check out Troutman Pepper’s Law360 article by clicking here.
  • On April 21, the U.S. Equal Employment Opportunity Commission (EEOC) announced it would hold a virtual hearing to consider the pandemic’s impact on workers and difficulties employers face. The hearing will likely discuss issues relating to the exclusion of employees who refuse vaccination and how companies may need to verify vaccination status. The hearing is scheduled for April 28 at 10:30 a.m. ET. For those interested in attending the hearing, click here. To learn more about data compliance issues for companies making and using vaccine verification applications, check out Troutman Pepper’s Law360 article by clicking here.
  • On April 20, the FTC testified before Congress on its efforts in protecting consumers from COVID-19 scams. The FTC highlighted its work at dispelling COVID-19 misinformation and its efforts warning consumers of COVID-19-related scams. The FTC also shared that it prioritized privacy enforcement actions by “addressing the types of conduct that have been exacerbated in the transformation to digital work and schooling, including videoconferencing, ed-tech and health-tech.” The FTC released a report highlighting additional information about its COVID-19 efforts, which can be viewed by clicking here.
  • On April 20, the FTC reminded consumers that COVID-19 vaccinations are free. The FTC said that scammers are “doubling down on their efforts to scam people out of their money and personal information.” The FTC also shared tips on ways to avoid vaccine-related scams. The FTC reminds consumers to:
    • Ignore online ads from individuals offering to sell COVID-19 vaccinations;
    • Refuse to make any out of pocket payments for a vaccine, either “before, during, or after your appointment[;]” and
    • Never share personal information with unknown individuals, reminding consumers that legitimate vaccination providers will not call, text, or email consumers for their credit card or bank account information.

To read the full announcement, click here.

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