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Iowa House Bill 260

AN ACT RELATING TO PERMISSIBLE INTEREST RATES AND CHARGES FOR CERTAIN LOANS. BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

Section 1. Section 536.13, subsection 7, paragraph a, Code 2019, is amended to read as follows:

a. The superintendent may establish the maximum rate of interest or charges as permitted under this chapter for those loans with an unpaid principal balance of thirty thousand dollars or less. For those loans with an unpaid principal balance of over thirty thousand dollars, the maximum rate of interest or charges which a licensee may charge shall be the greater of the rate permitted by chapter 535 or the rate authorized for supervised financial organizations by chapter 537.

Sec. 2. Section 537.2501, subsection 1, Code 2019, is amended by adding the following new paragraph:

NEW PARAGRAPH. I. For an interest-bearing consumer credit transaction, a service charge in an amount not to exceed the lesser of ten percent of the amount financed or thirty dollars . 

Sec. 3. Section 537.2510, subsection 3, paragraph a, Code 2019, is amended to read as follows: 

a. If the prepayment is in full, the creditor may collect or retain a minimum charge not exceeding five dollars in a transaction which had an amount financed of seventy-five dollars or less, or not exceeding seven dollars and fifty cents in a transaction on which had an amount financed of more than seventy-five dollars, if the minimum charge was contracted for, and the finance charge earned at the time of prepayment is less than the minimum charge contracted for. If, however, a creditor has collected a service charge in association with an interest-bearing consumer credit transaction pursuant to section 537.2501, subsection 1, paragraph "l", the creditor shall not collect or retain a minimum charge upon prepayment pursuant to this subsection. 

Sec. 4. Section 537.2510, Code 2019, is amended by adding the following new subsection: 

NEW SUBSECTION. 9. This section does not apply to a service charge collected pursuant to section 537.2501, subsection 1, paragraph “I”.

CLA Blogs--Zachary Pearlstein

The Oklahoma Department of Consumer Credit has published its annual changes in dollar amounts for 2019.  The revised dollar amounts are effective on July 1, 2019, unless otherwise noted in the chart referenced below.

In the state of Oklahoma, various dollar amounts set forth in the Uniform Consumer Credit Code change effective July 1 of each “qualifying year.” A qualifying year is any year in which the percentage of change (calculated according to the nearest whole percentage point) between the Index at the end of the preceding year and the Reference Base Index is ten percent or more. The calculations for dollar amount changes use figures from the Consumer Price Index Indicators, Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), issued each December by the Bureau of Labor Statistics.

In a year when statutory dollar amounts are going to change in July, the Department must mail a chart with the designated statute sections and the corresponding dollar amounts to all licensed supervised lenders and persons who have made a timely written request for notice of dollar amount changes. These charts must be mailed no later than April 30th of each year.

The Department must mail the dollar amount changes chart to the Secretary of State as well, no later than April 30 of each year. The charts must also be published in the Oklahoma Administrative Code in an appendix to the Department’s rules. The annual changes in dollar amounts for 2019 are available via the following link: https://www.ok.gov/okdocc/documents/2019%20dollar%20changes%20FINAL.pdf

Arizona Senate Bill 1030 enacts provisions relating to procedures for remote online notarization.

These provisions are effective on June 30, 2020.

Buckley Sandler, LLP--InfoBytes Blog

On March 31, the New York governor announced the passage of the state’s FY 2020 Budget, which includes an amendment (known as “Article 14-A” or “the Act”) to the state’s banking law with respect to the licensing of private student loan servicers. Article 14-A requires student loan servicers to be licensed by the New York Department of Financial Services (NYDFS) in order to service student loans owned by residents of New York. The licensing provisions do not apply to the servicers of federal student loans—defined as, “(a) any student loan issued pursuant William D. Ford Federal Direct Loan Program; (b) any student loan issued pursuant to the Federal Family Education Loan Program, which was purchased by the government of the United States pursuant to the federal Ensuring Continued Access to Student Loans Act and is presently owned by government of the United States; and (c) any other student loan issued pursuant to a federal program that is identified by the superintendent as a ‘federal student loan’ in a regulation”—as the Act treats federal servicers as though they are a licensed student loan servicer. Banking organizations, foreign banking organizations, national banks, federal savings associations, federal credit unions, or any bank or credit union organized under the laws of any other state, are also considered exempt from the new state licensing requirements.

In addition to the licensing requirements, Article 14-A also prohibits any student loan servicer—including those exempt from licensing requirements or deemed automatically licensed—from, among other things, (i) engaging in any unfair, deceptive, or predatory act or practice with regard to the servicing of student loans, including making any material misrepresentations about loan terms; (ii) misapplying payments to the balance of any student loan; (iii) providing inaccurate information to a consumer credit reporting agency; and (iv) making false representations or failing to respond to communications from NYDFS within fifteen calendar days. Article 14-A requires student loan servicers (not including exempt organizations) to accurately report a borrower’s payment performance to at least one credit reporting agency if the organization regularly reports information to a credit reporting agency. Additionally, the Act specifies that a student loan servicer shall inquire on how a borrower would like nonconforming payments to be applied and continue that application until the borrower provides different directions. Article 14-A also outlines examination and recordkeeping requirements and allows for the NYDFS Superintendent to penalize servicers the greater of (i) up to $10,000 for each offense; (ii) a multiple of two times the violation’s aggregate damages; or (iii) a multiple of two times the violation’s aggregate economic gain. Article 14-A takes effect 180 days after becoming law.

Buckley Sandler, LLP--InfoBytes Blog

On April 3, the New Mexico governor signed HB 150, which amends the New Mexico Bank Installment Loan Act of 1959 and the New Mexico Small Loan Act of 1955 to, among other things, change provisions relating to financial institutions and (i) clarify that unfair or deceptive trade practices, or unconscionable trade practices, are considered violations of the Unfair Practices Act; (ii) expand annual lender reporting requirements, including identifying secured and unsecured loan products, fees and interests paid by the borrowers, loan terms, and default rates; (iii) clarify allowable loan insurance, including provisions related to licensing requirements for lenders; and (iv) expand state and federal disclosure requirements. The amendments also limit interest and other charges (permitted finance charges cannot exceed the lesser of $200 or 10 percent of the principal with outlined exceptions); grant rights of rescission within specified time frames to allow borrowers to return the full amount of funds advanced by the lender without being charged fees; and provide for penalties for lenders who willfully violate any of the provisions. Specifically, the act applies to installment loans covered by the Installment Loan Act and the Small Loan Act, and does not apply to federally insured depository institutions. The act takes effect January 1, 2020, and is applicable to loans subject to the aforementioned acts that are executed on or after the effective date.

Buckley Sandler, LLP--InfoBytes Blog

On April 3, the Virginia governor signed SB 1737, which provides a 30-day stay of eviction and foreclosure proceedings for furloughed federal employees and contractors during a partial closure of the federal government. The law grants a tenant or homeowner who defaults on a housing payment after December 22, 2018, a 30-day stay on eviction or foreclosure proceedings. The tenant or homeowner must provide “written proof” that they were subject to a furlough, or were not otherwise receiving wages, as a result of the partial government shutdown that began on December 22, 2018. The tenant or homeowner must be an (i) employee of the federal government; (ii) a federal government contractor; or (iii) an employee of a contractor for the federal government. The law is effective immediately and expires on September 30.

Ballard Sparh, LLP--Justin A. Shiroff & Joel E. Tasca 

Recently, legislators in Texas introduced two bills relating to consumer privacy and data protection: H.B. No. 4518, the Texas Consumer Privacy Act (“Texas CPA”) and H.B. No. 4390, the Texas Privacy Protection Act (“TPPA”). These bills bear a strong resemblance to the California Consumer Privacy Act (the “California CPA”), and would lay the groundwork for extensive administrative schemes protecting consumers’ rights to their personal information.

Texas CPA

The Texas CPA bears strong similarity to California CPA. The Texas CPA, which, if adopted, would take effect September 1, 2020, applies to companies that do business and collect consumer data and:

• Derive at least 50% of their annual revenue selling consumers’ personal information; or
• Exceed $25 million in gross annual revenue (with that amount subject to adjustment by the Texas Attorney General every two years); or
• Buy, sell, or receive the personal information of at least 50,000 consumers, households, or devices for commercial purposes
• The Texas CPA would also apply to entities owned by companies that would be subject to the law. Similar to the California CPA, the Texas CPA contains express provisions governing rulemaking, implementation, and enforcement of the law. Notably, the legislation highlights various consumer rights, including (but not limited to):
• A consumer’s right to disclosure, from the business, of the personal information the business collected.
• A consumer’s right to deletion of the personal information that the business collected (with some limited, specific exceptions).
• A consumer’s right to opt out of the sale of his or her personal information.

TPPA

The TPPA, which (if passed) would go into effect September 1, 2019, proposes regulations on how a business processes and retains (or destroys) personal identifying information. It covers nearly identical businesses as the Texas CPA, provides the Texas Attorney General with similar rulemaking and enforcement powers, and it requires a similar disclosure of the type of personal information a business collects/processes, as well as how that information is used. Notably, this disclosure must be made before the business collects the information.

Other notable aspects of the proposed legislation include:

• The Texas CPA would punish violations of the law with civil penalties of $2,500 per violation ($7,500 for intentional violations).
• The bill applies only to information collected electronically (including over the internet or another network) or through a computing device associated with or routinely used by a customer/user and linked (or reasonably linked) to a specific customer/user.
• The business must obtain the customer’s explicit consent for processing that customer’s personal identifying information.
• The bill requires a business to develop and implement a data security program and accountability program to ensure compliance with the TPPA.
• The bill also only allows a business to process a customer’s personal identifying information if it is required to do so by law.

Like the Texas CPA, the TPPA would provide for civil penalties for violations. However, violations of the TPPA would be punishable by a fine of $10,000 per violation, up to a maximum amount of $1 million.

DS News--Krista Franks Brock

Foreclosure activity in New York City continued its 2018 trajectory with further declines in the first quarter of the year. Foreclosures dropped 5 percent in New York year-over-year in the first quarter, while pre-foreclosure activity dropped 13 percent, according to data released by PropertyShark.

Of the five boroughs, the largest increase in foreclosure activity in the first quarter took place in the Bronx, where foreclosures jumped 28 percent over the year.

The greatest decrease in foreclosure activity took place in Brooklyn, where foreclosures are down 22 percent over the year. Staten Island recorded a 19 percent drop in foreclosures.

Manhattan and Queens both recorded increases in foreclosures over the year, 6 percent and 4 percent, respectively.

In all, there were 870 first-time foreclosures recorded across New York in the first three months of the year. Queens claimed the largest share with 315, followed by Brooklyn with 214, Staten Island with 153, the Bronx with 150, and Manhattan with 38 properties in foreclosure.

While foreclosures in New York dropped over the year in the first quarter, they were up compared to the previous quarter. Staten Island was the only one of the five boroughs to experience a decline in foreclosures over the quarter, registering a 14 percent drop.

The Bronx registered a 67 percent increase in foreclosures over the quarter, followed closely by Manhattan with a 65 percent rise. In Queens, foreclosures increased 25 percent over the quarter, and in Brooklyn, foreclosures rose 20 percent.

Pre-foreclosure activity declined in all five boroughs year-over-year in the first quarter, falling 28 percent in the Bronx, 12 percent in Brooklyn and Staten Island, 10 percent in Queens, and 8 percent in Manhattan.

In terms of pure numbers, pre-foreclosure activity followed the same pattern as active foreclosures. Queens had the most pre-foreclosure filings in the first quarter with 898, and Manhattan had the fewest with 104 filings. Brooklyn (728), Staten Island (326), and the Bronx (279) fell in between.

Ballard Spahr LLP--Brian Slagle 

The California Department of Business Oversight has sent an email to servicers notifying them of the publication of its final student loan servicer regulations, which became effective March 28, 2019. The DBO published its initial rules on September 8, 2017 and modified the proposed rules three times. Servicers have been operating without final rules since the Student Loan Servicing Act became effective on July 1, 2018. The rules create seven new articles under a new chapter of the California Code of Regulations. The final rules contain no substantive changes to the DBO’s last round of proposed rules.

Additional compliance requirements for servicers, however, may be on the horizon. Assemblymember Chris Holden has introduced a bill, AB 796, which would amend the California Student Loan Servicing Act to require servicers to provide additional loan benefits information to borrowers. The bill modifies Section 28130 and proposes a new Section 28130.5. Currently, Section 28130 requires servicers to provide information “regarding repayment and loan forgiveness options that may be available to borrowers” free of charge on their websites and, additionally, in correspondence or email at least once per year.

The new Section 28130.5 would require that servicers provide, in correspondence or email at least once per year, “a detailed description of the terms and conditions under which a borrower may obtain full or partial forgiveness or discharge of principal and interest, defer repayment of principal or interest, or be granted forbearance on a federal Title IV loan, including forgiveness benefits or discharge benefits available to a Federal Family Education Loan (FFEL) borrower who consolidates their loan into the federal Direct Loan program.” More specifically, servicers would be required to provide:

• The difference between forgiveness, cancellation, and discharge.
• The different forgiveness, cancellation, and discharge programs available and how to qualify for them.
• The types of loans that can be forgiven or discharged.
• The impact of consolidation, enrollment status, and new loans on forgiveness.
• The forms required under federal law, including employment certification forms.

The modifications to Section 28130 would require that servicers post this detailed information on their websites along with the availability of benefits information currently being provided.

The state of Montana amended provisions relating to its Revised Uniform Law on Notarial Acts that include electronic records, remote notarization and the use of electronic notarization systems and communicating technology. These provisions are effective on October 1, 2019.

North Carolina Senate Bill 162 is an act to modernize the loan origination fee for North Carolina banks and to adjust the late payment charge for certain loans.

§ 24-1.1. Contract rates and fees

• (a) Technical changes
• (b) Technical changes
• (c) Technical changes
• (d) Technical changes
• (e) Amended to add: "(1) For a loan or extension of credit with a principal amount of one hundred thousand dollars ($100,000) or greater, the maximum origination fee is one quarter of one percent (1/4 of 1%) of the principal amount. 
• (e) Amended to add: (2) For a loan or extension of credit with a principal amount less than one hundred thousand dollars ($100,000), the origination fee shall not exceed the amounts in the following table:

• (e) Amended to add: (3) If (i) the loan or extension of credit has a principal amount less than five thousand dollars ($5,000), (ii) the borrower is a natural person, and (iii) the debt is incurred primarily for personal, family, or household purposes, the loan or extension of credit shall not have an annual percentage rate that exceeds thirty-six percent (36%), inclusive of the origination fees permitted by this subsection and the interest permitted by subsection (c) of this section. For purposes of this subsection, "annual percentage rate" shall be calculated in accordance with the federal Consumer Credit Protection Act, Chapter 41 of Title 15 of the United States Code, (Truth in Lending Act) and the regulations adopted under it.
• (f) Technical changes

§ 24-10.1. Late fees

• (a) Technical changes
• (b) Amended to add: 
  • (1) A late payment charge shall not exceed any of the following: 
    • a. The amount disclosed with particularity to the borrower pursuant to the federal Consumer Credit Protection Act, Chapter 41 of Title 15 of the United States Code, (Truth in Lending Act) and the regulations adopted under it, if that act applies to the transaction. 
    • b. For a loan or extension of credit that meets all of the following conditions, the greater of thirty-five dollars ($35.00) or four percent (4%) of the amount of the payment past due:  
      • 1. The loan or extension of credit is made by a bank or savings institution organized under the law of North Carolina or of the United States. 
      • 2. The loan or extension of credit is not secured by real property. 
      • 3. The loan or extension of credit is governed by G.S. 24-1.1.
      • 4. The loan or extension of credit has an original principal balance greater than or equal to one thousand five hundred dollars ($1,500).
    • For any other type of loan or extension of credit governed by G.S. 24-1.1 or G.S. 24-1.1A, four percent (4%) of the amount of the payment past due
  • (2) Deleted
  • (3) Amended to add: A late payment charge shall not be charged unless one of the following is true: a. The payment is 30 days past due or more for a loan on which interest on each installment is paid in advance. b. The payment is 15 days past due or more for any other loan
  • (4) Technical changes
  • (5) Technical changes
    
  • (6) Technical changes
    
• (c) Technical changes

This act is effective when it becomes law (September 10, 2019) and applies to contracts entered into, renewed, or modified on or after that date.

DSNews--Seth Welborn

With New Jersey facing high foreclosure rates, even amidst overall low volumes across the country, state lawmakers and homeowners continue to work to address challenges raised by the issue, NJTV News reports.

“It is a multi-layer problem that has a lot of actors that need to be involved in this process to fix it,” said Sen. Troy Singleton, Chair of the Senate Community and Urban Affairs Committee.

Singleton is the sponsor of a package of bills currently moving through the state legislature that are designed to address the alleged foreclosure issues, including bills which would create a statewide database of foreclosed properties. New Jersey lawmakers passed the bipartisan legislation in February consisting of a package of nine different bills aimed at streamlining pending foreclosure cases in the state.

Sen. Steven Oroho, another of the bills' sponsors, said they were designed to "give families the opportunity to start fresh while helping towns reduce the number of vacant houses that create public safety issues in our neighborhoods.

Singleton told NJTV, “We wanted to make sure there was also a notification so folks know who is the responsible person for foreclosed properties. [If] a local mayor, for instance, needs to know, ‘I need to go back to such and such from mortgage company Y or bank X,’ they’ll have the name and contact information for those individuals.”

Michael Affuso, EVP of New Jersey’s Bankers Association, called for better accountability for out-of-state mortgage companies.

“Think about in urban areas where you have attached houses,” Affuso said. “We want to know who is responsible for the maintenance of those homes. We’ve had laws on the books for years that forces lenders to maintain the homes. However, the state or the city cannot figure out who the lender is. Without this database they never will.

In a white paper published by the National Mortgage Servicing Association (NMSA), the NMSA discussed some “common sense, practical, and affordable remedies,” aimed at reducing the costs of foreclosure practices and community blight. According to the white paper, entitled “Understanding the True Costs of Abandoned Properties: How Maintenance Can Make a Difference,” the typical foreclosed home can impose costs of around $170,000, $85,000 of which is attributable to vacant property requirements and condition.

“It’s time to rethink how we deal with vacant and abandoned properties,” the white paper states. You can read the full white paper here.