Debt buyers beware: SCOTUS will decide if the FDCPA applies to you

On Friday, January 13, 2017, the U.S. Supreme Court granted certiorari in Henson v. Santander Consumer USA, Inc. This case raises the question whether a debt buyer is a “creditor” or a “debt collector” under the Fair Debt Collection Practices Act (FDCPA). The answer to this question, it turns out, is far from clear since debt buyers fit plausibly into either category. Read more >>

Consumer Lending and Services, Federal Regulatory

Remember to update the Ohio Homebuyers’ Protection Act form for 2017

Residential Mortgage lenders should be mindful to not forget to update their Ohio Homebuyers’ Protection Act Informational Document with the 2017 prepayment penalty adjustment. Beginning January 1, 2017, no mortgage broker, loan officer or nonbank mortgage lender may charge a penalty for the prepayment or refinancing of a residential mortgage obligation secured by a first lien if the loan amount is less than $88,503. See Ohio Revised Code 1343.011(C)(2).

The Ohio Homebuyers’ Protection Act Informational Document is required by Ohio Revised Code 1345.05(G). An acknowledgement of the consumer’s receipt must be retained by the lender, mortgage broker and loan officer, as applicable. The Ohio Attorney General and the Department of Commerce may examine your records to ensure that you are providing the most current version of this document to consumers with the 2017 adjusted amount. The updated form can be found here. The rule regarding distribution and receipt of the Informational Document can be found here.

Also, don’t forget that Nationwide Multistate Licensing System & Registry (NMLS) renewal season started November 1.  If you have any NMLS or state-licensing questions or issues, please contact us.

  

Consumer Lending and Services, Fair Lending, Legal Developments, State Regulatory

Texas OCCC issues advisory bulletin regarding amended MLA rule

Starting today, October 3, 2016, pawnshops nationwide will be obligated to follow the recently updated Military Lending Act (MLA) rule. In response to the release of the amended MLA and updated exam procedures by the Consumer Financial Protection Bureau, the Texas Office of Consumer Credit Commissioner (OCCC) issued an advisory bulletin summarizing the MLA’s requirements for Texas pawnbrokers. The guidance contains 20 questions and answers regarding the new regulations on loans involving military personnel.

Two noteworthy points for Texas pawnbrokers are addressed in the bulletin. First, Texas pawnshops are now required to have a written policy detailing how a person’s covered borrower status is determined. Additionally, an existing pawn loan that is extended in accordance with Texas law by having the borrower sign a memorandum of extension will not be considered to be a new loan or renewal that triggers the disclosure requirements of the MLA. However, the OCCC may modify its guidance if the Department of Defense decides otherwise.

Pawnbrokers make up a segment of the financial services industry that will be affected by these new rules under the Military Lending Act. Attorney, Jackie Mallett recently hosted a webinar discussing the amended rules and how they will affect the pawn industry. View the webinar in its entirety here

Consumer Lending and Services, Fair Lending, Federal Regulatory, Non-Depository Institutions

Amended Military Lending Act goes into effect on October 3; CFPB releases updated exam procedures

Today, September 30, 2016, the Consumer Financial Protection Bureau (CFPB) identified the updated exam procedures it will use to audit lenders who do business with military personnel. According to CFPB Director Richard Cordray, “[t]he updated exam procedures…will help ensure that servicemembers and their families are dealt with in a fair and safe manner when attempting to access credit.” Specifically, the requirements prohibit interest rates above 36 percent MAPR, mandatory waivers of consumer protection laws and mandatory allotments.

In its press release, the CFPB vows to strictly monitor financial institutions, their compliance programs and their “overall efforts to follow the rule’s requirements.” Evaluating everything from staff training to loan implementation, the CFPB will use the new rules to prevent substantial consumer harm. The updated Military Lending Act rules go into effect on October 3 for creditors. Credit card companies must be prepared to comply with the new rules by October 3, 2017.

Pawnbrokers make up a segment of the financial services industry that will be affected by these new rules under the Military Lending Act. Attorney, Jackie Mallett recently hosted a webinar discussing the amended rules and how they will affect the pawn industry. View the webinar in its entirety here

Compliance Management, Consumer Lending and Services, Depository Institutions, Fair Lending, Federal Regulatory, Non-Depository Institutions

David Stein authors MBA’s social media and digital advertising compliance guide

David Stein, of counsel and chair of Bricker & Eckler's Banking & Financial Services group, authored the “Social Media and Digital Advertising Resource Guide,” which was recently published by the Mortgage Bankers Association (MBA).

The resource advises financial institutions “how to manage the challenges posed by digital marketing and advertising of residential mortgage products and services,” according to the MBA. The guide examines the statutory and regulatory background related to mobile and digital marketing, and provides draft policies and procedures.

The online resource guide is available for purchase on the MBA’s website here

Compliance Management, Consumer Lending and Services

Mallett to speak on military lending at NACCA event in Tulsa

Spotlighting the importance of compliance with the Military Lending Act and other unique regulations associated with lending to members of the armed forces, Bricker & Eckler attorney Jackie Mallett will be presenting “Military Lending Boot Camp” at the National Association of Consumer Credit Administrators (NACCA) 29th Annual Consumer Services and Examiners’ School. The event takes place September 26-30, 2016, in Tulsa, Oklahoma. For information, visit the event webpage.

Consumer Lending and Services, Fair Lending

When at first you don’t succeed, seek post-verdict decertification: Lessons learned from Mazzei v. The Money Store

What do you do when a court certifies a class over your objection and denies your motion for directed verdict on the critical class certification issue at trial, and a jury awards $32 million ($54 million if you count pre-judgment interest) on an individual claim worth $133.80? This was the situation the defendants faced in Mazzei v. The Money Store. What happened defied all odds. Read more >> 

Consumer Lending and Services

Public and private sectors agree: Investment needed in banks’ cybersecurity

The Federal Reserve (the Fed) recently announced that it will participate in a study to determine how effective the central bank is at overseeing cybersecurity practices in the financial industry. The Fed’s Office of Inspector General (OIG) will be conducting the internal audit and plans to release the findings in the fourth quarter of this year.

The announcement comes on the heels of congressional inquiry into the Fed’s security practices in light of the attempted theft of $951 million from a Federal Reserve Bank of New York account held by Bangladesh Bank, the South Asian country’s central bank. While the N.Y. Fed successfully blocked 30 transactions that would have totaled an $850 million withdrawal, five transactions totaling $101 million were successful.

The OIG study will be the first public report to detail how strictly the central bank holds the financial industry to the regulations that are in place to protect from hackers and other criminals. “The growing sophistication and volume of cybersecurity threats presents a serious risk to all financial institutions,” according to the OIG. Mary Jo White, Chair of the Securities and Exchange Commission, described attacks like the one against the N.Y. Fed as the biggest risk currently facing the financial industry.

This sentiment seems to be echoed by the private sector as well. An international survey conducted by Kaspersky Lab and B2B International found that among businesses around the globe, protection from cyberattacks ranked amongst their highest priorities. Of the 5,500 businesses surveyed, 41 percent have invested in an in-house solution for protecting their financial transactions and 45 percent use a bank-provided solution.

While the investment rate is prolific, firms’ confidence in their ability to thwart an attacker is not so widespread. The most confident sector — the telecommunications industry — reported confidence with their fraud security at a 70 percent rate.  Only 67 percent of financial institutions reported their confidence in the same. Forty-seven percent of the firms surveyed indicated that their protections needed improvement.

Looking at the financial industry specifically, 48 percent of the respondents “admitted what they do to address the problem can be described as ‘mitigation’ rather than ‘prevention.’”  One of the largest concerns for banks – (38 percent of the organizations surveyed agreed it’s a problem for them) is distinguishing an attack from normal customer activity.  

Depository Institutions, Federal Regulatory, Non-Depository Institutions