All Things FinReg

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Charles M. Horn

FHFA Announces Extension on Moratorium on Foreclosures and Evictions; Provides New COVID-19 Forbearance Payment Deferral Repayment Option

By David I. Monteiro , Charles A. Sweet , Eamonn K. Moran , and Martin Hirschprung

// May 18, 2020

The Federal Housing Finance Agency (FHFA) announced on May 14 that Fannie Mae and Freddie Mac (the GSEs) are extending their moratorium on foreclosures and evictions until at least June 30, 2020. We had discussed the original moratorium, which was set to expire on May 17, in a previous blog post. The foreclosure moratorium applies to GSE-backed, single-family mortgages only.

Separately, the day before, the FHFA announced a new payment deferral option for borrowers with a financial hardship that have been able to receive forbearance due to the coronavirus (COVID-19) pandemic. Specifically, such borrowers who are able to return to making their normal monthly mortgage payment will be provided the ability to repay their missed payments at the time the home is sold, refinanced, or upon loan maturity. The borrower's monthly mortgage payment will not change. Mortgages that exercise the payment deferral option will remain in GSE mortgage-backed securities (MBS), subject to the terms of the trust agreements. Mortgage servicers will begin offering the payment deferral repayment option starting July 1, 2020.

Tags: Banking, Consumer Financial Services, FHFA, Mortgage Servicing, Regulation

Bitcoin 101: Halves, Halving, and ‘the Halvening’

By William J. Kraus , Steven Lightstone , and Andrew M. Ray

// May 11, 2020

The virtual currency Bitcoin has been a hot topic in FinReg for some time, but in recent weeks mainstream interest in Bitcoin has grown in light of the approaching “halving” or “halvening.” So what is the “halvening” and why does it matter from a regulatory perspective?

What Is Bitcoin?

First, a bit of background. Bitcoin is based on technology known as “blockchain.” As it relates to Bitcoin, blockchain is a publically available ledger that provides a permanent record of Bitcoin transactions. Each “block” constitutes a series of transaction records, which builds on the block before it. Taken together, these blocks form a permanent “chain” showing the entire history of Bitcoin.

Tags: Cryptocurrency, FinTech, International Supervision, SEC, Technology

FHFA Announces Four-Month Limit to Servicer Advances for CARES Act Forbearance; Fannie Mae and Freddie Mac Will Purchase Qualified Loans in Forbearance

By Eamonn K. Moran , Charles A. Sweet , David I. Monteiro , and Martin Hirschprung

// April 24, 2020

The Federal Housing Finance Agency (FHFA) announced on April 21 that servicers’ obligation to advance scheduled monthly payments for Fannie Mae and Freddie Mac (the Enterprises) backed single-family mortgage loans in forbearance will be limited to four months. After the four-month period, the Enterprises will stand ready to take over advancing payments to investors in mortgage-backed securities (MBS).

Tags: Banking, CFPB, Consumer Financial Services, FHFA, Mortgage Servicing

FTC Settlement May Raise the Compliance Bar for Fintechs

By Michael A. Cumming , Nicholas M. Gess , David I. Monteiro , Eamonn K. Moran , Andrew M. Ray , and Daniel B. Tehrani

// April 23, 2020

The Federal Trade Commission (FTC) announced a settled action on April 22 with Canadian company RevenueWire (the Company) and its CEO to resolve allegations that the Company assisted and facilitated two tech-support scams that the FTC had previously targeted. Under the alleged scheme, consumers were marketed tech support services to “fix” nonexistent computer problems, leading to hundreds of millions of dollars of consumer injury. The FTC’s complaint and consent judgment maintain that, in addition to serving as a lead generator for the alleged fraudsters, the Company processed consumer credit card charges on their behalf.

Tags: Enforcement, Federal Trade Commission, FinTech, FTC, Innovation, Payment Processing, Regulation, Regulatory, States, Supervision and Examination, UDAP, Unfairness

Fintechs: PPP Lending Comes with Opportunities and Risks

By Daniel B. Tehrani , Andrew T. Budreika , Andrew M. Ray , and Benjamin W. Stango

// April 22, 2020

The US Senate approved an additional $310 billion in funds for the Paycheck Protection Program (PPP) on April 20, and the House of Representatives is expected to approve these additional funds within days. As fintech companies accelerate their participation in the re-funded program, it is important to remain aware of the liability risks of doing so.

Tags: FinTech

Foreclosures and Evictions Temporarily Suspended for Fannie and Freddie Mortgages

By David I. Monteiro , Eamonn K. Moran , Michael A. Cumming , and Martin Hirschprung

// March 19, 2020

The Federal Housing Finance Agency (FHFA) and the US Department of Housing and Urban Development (HUD) announced on March 18 that they have directed Fannie Mae and Freddie Mac, the government sponsored enterprises (GSEs), to suspend foreclosures and evictions for at least 60 days due to the coronavirus (COVID-19) national emergency. The foreclosure and eviction moratorium provides relief to homeowners with a GSE-backed single-family mortgage.

Tags: Banking, CFPB, Consumer Financial Services, FHFA, HUD, Mortgage Servicing

CFPB Announces New Steps to Prevent Consumer Harm

By Eamonn K. Moran , Nicholas M. Gess , David I. Monteiro , and Michael A. Cumming

// March 12, 2020

The Consumer Financial Protection Bureau (CFPB or Bureau) announced on March 6 three steps designed to advance its strategy on one of its key priorities: preventing consumer harm. The CFPB is (i) implementing an advisory opinion program to provide additional guidance to assist companies in better understanding their legal and regulatory obligations; (ii) amending and reissuing its responsible business conduct bulletin; and (iii) engaging with Congress to advance proposed legislation that would authorize the CFPB to establish a whistleblower program with respect to reporting violations of federal consumer financial law.

Taken together, the first and second of these steps further the Bureau’s stated goal of clarifying in a meaningful way the regulatory requirements applicable to covered businesses. At the same time, the proposed whistleblower program would bring the Bureau in line with other federal enforcement agencies, e.g., the US Securities and Exchange Commission, that have launched similar programs in part to enhance the detection of violations in an era of leaner agency staffing.

Tags: BCFP, Bureau of Consumer Financial Protection, CFPB, Change in Washington, Consumer Financial Protection Bureau, Dodd-Frank Act, FinTech, Innovation, Regulation, Supervision and Examination

Will Regulatory Rollback in the Nation’s Capital Work?

By Nicholas M. Gess , Charles M. Horn , Eamonn K. Moran , David I. Monteiro , and Michael A. Cumming

// March 06, 2020

At a meeting with a group of state attorneys general in Washington, DC, earlier this week, Consumer Financial Protection Bureau (CFPB or Bureau) Director Kathy Kraninger expressed her strong desire to provide more consistent interpretation of statutes and rules enforced by the Bureau and to further work with state counterparts to make that consistency even broader.

Tags: CFPB, Consumer Financial Protection Bureau, FinTech, Innovation, Regulation, State AGs

Watch Out for California – State Stepping Up Fintech and Lending Regulatory Enforcement

By Nicholas M. Gess , David I. Monteiro , Eamonn K. Moran , and Michael A. Cumming

// March 05, 2020

A recent legal conference in Washington, DC, highlighted newly proposed and ongoing regulatory changes in California concerning consumer and commercial lending. In short, one of the conference’s messages was that lending enforcement is increasing and the California Department of Business Oversight (DBO) is becoming much more aggressive in its enforcement posture (including with respect to treating retail installment sales contracts and merchant cash-advance products as loans).

The DBO Commissioner, Manuel Alvarez, was installed last spring and is a former Consumer Financial Protection Bureau (CFPB) enforcement attorney. He has already made some noticeable changes in the DBO’s enforcement posture, and we expect to see more enforcement actions brought in the months and years to come under his leadership.

Tags: Banking, Enforcement, FinTech, Innovation, Marketplace Lending, Regulation, Regulatory, States, Supervision and Examination

Volcker Rule Proposal: The Covered Funds Shoe Starts to Drop

By Charles M. Horn and Donald S. Waack

// February 04, 2020

On January 30, the five federal financial agencies (Agencies) responsible for the administration of the Volcker Rule—the federal prohibitions on proprietary trading and private fund (covered funds) investments and sponsorship by banking organizations—released a notice of proposed rulemaking (NPR) that, if adopted, would liberalize the ability of US and foreign banking organizations that are subject to the Volcker Rule (banking entities) to sponsor and invest in various additional types of private funds that previously were subject to the Volcker Rule prohibitions. The NPR also would liberalize and simplify the conditions applicable to various categories of funds already exempt or excluded from the Volcker Rule. The NPR is the second major initiative to ameliorate and reduce the compliance burdens associated with the Volcker Rule prohibitions.

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