The Federal Deposit Insurance Corporation (FDIC) issued a final rule on June 25 that reaffirms the enforceability of the interest rate terms of loans made by state-chartered banks and insured branches of foreign banks (collectively, state banks) following the sale, assignment, or transfer of the loan. The rule also provides that whether interest on a loan is permissible is determined at the time the loan is made, and is not affected by a change in state law, a change in the relevant commercial paper rate, or the sale, assignment, or other transfer of the loan. The final rule follows the FDIC’s proposed rule on this topic, and will take effect 30 days after publication in the Federal Register.

The Office of the Comptroller of the Currency (OCC) issued a similar final rule on May 25 that reaffirms the enforceability of the interest rate terms of national banks’ loans following their sale, assignment, or transfer. The OCC’s rule (on which we previously reported) takes effect 60 days after its June 2 publication in the Federal Register, or August 3.

The Consumer Financial Protection Bureau (CFPB or Bureau) issued an interim final rule (IFR) on June 23, 2020 that temporarily permits mortgage servicers to offer to borrowers impacted by the coronavirus (COVID-19) pandemic certain loss mitigation options based on the evaluation of an incomplete loss mitigation application.

On June 18, 2020, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a procedural rule to launch a new pilot advisory opinion (AO) program to publicly address regulatory uncertainty in the Bureau’s existing regulations. The pilot AO program will allow entities seeking to comply with regulatory requirements to submit a request where uncertainty exists, and the Bureau will then select topics based on the program’s priorities and make the responses available to the public. The Bureau states that it is establishing the pilot AO program in response to feedback received from external stakeholders encouraging the Bureau to provide written guidance in cases of regulatory uncertainty. For the pilot AO program, requestors will be limited to covered persons or service providers that are subject to the Bureau’s supervisory or enforcement authority.

The Federal Housing Finance Agency (FHFA) announced on June 17 that Fannie Mae and Freddie Mac (the GSEs) are once again extending their moratorium on foreclosures and evictions until at least August 31, 2020. We had discussed the previous extension on the moratorium, which was set to expire on June 30, in a previous blog post. The foreclosure moratorium applies to GSE-backed, single-family mortgages only.

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.

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).

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.

In an effort to promote compliance and certainty, the Consumer Financial Protection Bureau (CFPB or Bureau) on January 24 issued an often promised and much anticipated policy statement regarding how it intends to apply the “abusiveness” standard in supervision and enforcement matters. The Dodd-Frank Act (Act) is the first federal law to broadly prohibit “abusive” acts or practices in connection with the provision of consumer financial products or services. The Act deems an act or practice to be abusive when it “(1) materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or (2) takes unreasonable advantage of (A) a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service; (B) the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or (C) the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.”

California Governor Gavin Newsom submitted his $222 billion budget proposal for the 2020-2021 fiscal year on January 10. Among other priorities identified, the budget earmarks tens of millions of dollars for the creation and administration of the California Consumer Protection Law (CCPL). The governor’s budget proposal specifically notes the need for this expanded consumer protection law as arising from “[t]he federal government’s rollback of the CFPB [which] leaves Californians vulnerable to predatory businesses and leaves companies without the clarity they need to innovate.” Under the proposal, California’s Department of Business Oversight (DBO) would dramatically expand its consumer protection role to define the contours of, and to administer, the CCPL. The stated aim of this move is to enhance consumer protection in California and “foster the responsible development of new financial products.”

Should California’s lawmakers adopt this proposal, the DBO would be renamed the Department of Financial Protection and Innovation (DFPI). In an expansion of the DBO’s current role, which includes consumer protection in financial transactions and oversight of state-licensed financial institutions, the renamed agency would gain greater authority to “pursue unlicensed financial service providers not currently subject to regulatory oversight such as debt collectors, credit reporting agencies, and financial technology (fintech) companies, among others.”

In a recent post, we discussed the increasing focus by state attorneys general on the use of their enforcement authority against payment processing applications platforms that were not licensed under state money transmitter laws. As we pointed out, one of the challenges raised by these state laws is the fact that they are not uniform in either their language or how they are interpreted or applied.

In the spirit of looking at the glass-half-full aspects of these developments, it is worth pointing out that the Conference of State Bank Supervisors (CSBS) is undertaking an initiative to develop model payments legislation with the goal of increasing uniformity of state legislation in this area. The multistate licensing initiative is part of Vision 2020, a set of initiatives that CSBS and state regulators are implementing to harmonize the multistate licensing and supervisory experience for nonbank financial services providers, including fintechs. One primary area of focus for the CSBS is state money transmitter legislation. To this end, a committee of state financial institution supervisors, under the auspices of the CSBS, has developed model language for money services businesses, and recently published this model language for public comment. The model language focuses on areas such as core definitions of money transmission–related activities, money transmitter exemptions, control and changes in control of money transmission businesses, financial condition issues, and interstate parity and coordination activities.