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

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

What you need to be doing NOW about cybersecurity

Spotlighting the importance of cybersecurity risk management, Bricker & Eckler attorney Greg Krabacher presents “What you need to know NOW about cybersecurity” at today's 2016 Ohio Mortgage Bankers Association Annual Convention. The event is currently taking place in Columbus, Ohio. 

With recent threats on personal information, financial services providers, especially, are vulnerable to cyber-attacks. While the sensitivity of the information they hold puts lenders at immense risk, those that establish a comprehensive plan and make use of industry tools and resources may avoid a catastrophic outcome should a data breach occur. Krabacher offers the following first steps:

  1. Establish a plan and incident response team
  2. Assess data breach risk and inventory personally identifiable information or confidential client information
  3. Become familiar with applicable laws and regulations
  4. Educate and train employees

For more information regarding the OMBA Annual Convention, click here

Consumer Lending and Services

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
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