TCPA: Not all leads are created equal

This year, more than 5,000 lawsuits alleging violations of the Telephone Consumer Protection Act (TCPA) have been filed. Many of these suits are destined for class action status.

The TCPA, in its present state, is almost unworkable for most modern businesses, most of which now drive business through technology and automation. If your company is engaging in any form of phone sales based on leads created through the internet or smart phone applications, it is particularly at risk. Read more >>

Federal Regulatory, State 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

Proposed Ohio bill could impact nonbank lenders and credit services organizations

The Ohio General Assembly is considering a major overhaul of Ohio’s banking laws, and hidden within the 443-page legislation are two changes that will likely impact nonbank lenders, lead generators and credit services organizations. Senate Bill 317 was introduced on April 20, 2016, and proposes to do the following:

  1. In the current version of the bill, Section 1103.18 of the Ohio Revised Code would be amended to allow a state-chartered bank to sue and obtain a temporary restraining order, an injunction and damages, including punitive damages, from any person who uses a state bank’s name in an advertisement in a manner that misleads a person into believing that the person issuing the advertisement is associated or affiliated with the state bank.

Thus, mailers showing a consumer’s current bank lender on the envelope, in the envelope window or anywhere in the advertisement could subject the nonbank lender to civil litigation and punitive damages.

  1. The bill also proposes to grant the deputy superintendent for consumer finance authority to examine credit services organizations licensed under Chapter 4712 of the Ohio Revised Code. The amendment, however, is not being made to Chapter 4712. Instead, the amendment has been placed in Ohio Revised Code Section 1181.21(C).

Track the progress of the bill here.

Consumer Lending and Services, Legal Developments, State Regulatory

Ohio DFI issues data security guidelines

In response to increased financial fraud issues, the Ohio Division of Financial Institutions (DFI) recently issued data security guidelines. While the DFI specifically addressed debit card issues, its language indicates expectations for all institutions, requiring active steps to implement data security measures.

The DFI emphasized the following obligations:

  • Daily review of security-related issues
  • Email security and encryption
  • Timely review of security and activity reports
  • Suspicious activity report (SAR) training
  • Standardized security controls
  • After hours mechanisms to control suspicious activity

At its Ohio Banker’s Day on March 31, 2016, the DFI spent considerable time discussing financial fraud. It is apparent that further guidelines and bulletins will be forthcoming and will apply to all consumer-related activity, including lending. In light of its supervisory bulletin, verbal statements and the Consumer Financial Protection Bureau’s recent order in Dwolla, it is expected that data security will be a priority item in any future Ohio financial institution examinations.

Compliance Management, Consumer Lending and Services, State Regulatory

Announcing our Cybersecurity Law blog

Readers of the Financial Services Law blog are invited to visit our newly-launched Cybersecurity Law blog, an online resource featuring news, information and legal analysis on current cybersecurity and data breach issues. Articles and posts, authored by Bricker & Eckler attorneys, share in-depth insights and legal implications on topics that have both local and global significance.  

We encourage you to subscribe to the blog via FeedBurner to have frequent updates sent directly to your inbox. Additionally, be sure to visit the blog and bookmark the site for easy reference. 

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

Ohio prepayment penalty adjustment for 2016

Don’t forget to update your Ohio Homebuyers’ Protection Act Informational Document with the 2016 prepayment penalty adjustment. Beginning January 1, 2016, 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 $87,410. 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 2016 adjusted amount. The updated form can be found here. The rule regarding distribution and receipt of the Informational Document can be found here.

We hope you have a happy, healthy and prosperous New Year.

Ohio Division of Financial Institutions, State Regulatory

What are you doing to build relationships with state regulators?

For today’s mortgage providers, seeking meaningful interaction with state regulators, beyond the licensing process, is essential. In her recently published Mortgage Compliance magazine article, “In Your Face – Seeking Meaningful Interaction With Your Regulators,” Bricker & Eckler attorney Jackie Mallett urges business leaders to be aware and take advantage of opportunities to network with regulators. Specifically, Jackie gives tips on communicating face-to-face with regulators at two national events: the Nationwide Mortgage Licensing System (NMLS) and the American Association of Residential Mortgage Regulators (AARMR) annual conferences.

Federal News, Non-Depository Institutions, State Regulatory

Are you ready? Here come the new Ohio Mortgage Broker Act rules

Lenders of all sizes should take notice: Ohio’s rules are about to change. The Ohio Division of Financial Institutions (DFI) filed the final version of the Ohio Mortgage Broker Act (OMBA) rules on July 20, 2015. The new rules will become effective on January 4, 2016.

This should give mortgage brokers, mortgage bankers, credit union service organizations, loan originators and third-party processors and underwriters adequate time to make the operational changes necessary for compliance. Many of the changes were made in order to meet the minimum standards set by the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. Here are just a few of the highlights:

  • Third-party processing and underwriting companies and nonprofit organizations will be able to apply for a letter of exemption beginning around November 1.
  • Mortgage bankers will be able to originate USDA loans and Federal Home Loan Bank of Cincinnati loans under the authority of their letters of exemption.
  • Registrants and licensees will be allowed to place their NMLS numbers on advertisements in lieu of their Ohio numbers.
  • There will be no separate test to become an operations manager.
  • DFI will be able to accept some federal forms in lieu of similar state forms.
  • No fines or make-up courses will be required for continuing education violations that occurred before 2010.
  • New objective and specific criteria will be used to evaluate an individual’s financial responsibility to be a loan originator.

Deputy Superintendent Bob Niemi and members of DFI will entertain questions about the new rules during a panel discussion at the Midwest Financial Services Regulatory and Compliance Conference on August 20, 2015, in Columbus, Ohio. A booklet containing the new OMBA rules will be available at the conference. This event will feature many engaging speakers on a variety of hot topics, including Richard Cordray, director of the Consumer Financial Protection Bureau. For more information or to register, click here.

For more information, please contact Jackie Mallett at 614.227.4816.

Depository Institutions, Ohio Division of Financial Institutions, State Regulatory

Columbus libraries and others “astonish” Cordray with success of test financial-education program

Columbus Metropolitan Library is seeing “better-than-expected results” in a test program launched 18 months ago by the Consumer Financial Protection Bureau (CFPB) in an effort to improve Americans’ financial literacy, Columbus Business First reports. The project aims to turn “public libraries into centers for financial education.” CFPB Bureau Director Richard Cordray said the program “has expanded across the country and dramatically exceeded my expectations . . . [w]e thought that we might, within two years, expand to 50 library systems,” but the program “now counts 370 systems in 48 states.” Cordray’s vision is to have librarians helping consumers find “unbiased information on mortgages, managing credit card debt and saving money during tax season.” He said that Columbus’ library program success stands as a “splendid example” of the hopes for the program nationwide. For more, read the full article.

 

 

Consumer Financial Protection Bureau, Federal Regulatory, State Regulatory

Sixteen state AGs ask CFPB to regulate mandatory arbitration clauses in consumer financial contracts

Attorneys General from sixteen states, including California, New York, Kentucky, and Maryland, have jointly sent a letter to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray asking the CFPB to protect consumers’ rights to seek redress from financial service providers. The letter voices the need for regulation of “the use of pre-dispute mandatory arbitration clauses in consumer agreements for financial products or services.” Such clauses in financial contracts have become more common, and often require consumers “to waive their right to seek judicial resolution of future disputes (and appeal thereof) in federal or state court,” as well as prohibiting consumers from participating in any class-action lawsuits relating to the financial services or products. The high cost of arbitration and the inability to join a class-action suit that would reduce those costs often prevent consumers from pursuing a claim at all. The Attorneys General state that the result is not only unfair to harmed customers, but it also eliminates or lessens the opportunity to hold companies accountable and “develop judicial precedents that can set preventive standards for corporate conduct.” The letter urges the CFPB to use its authority to protect the public interest through prohibitions, conditions, or limitations on such clauses. To read the complete letter, click here.

Consumer Financial Protection Bureau, Depository Institutions, State Regulatory