Troutman Pepper Weekly Consumer Financial Services COVID-19 Newsletter – Consumer Protection

Like most industries today, Consumer Finance Services businesses
are being significantly impacted by the novel coronavirus
(COVID-19). Troutman Pepper has developed a dedicated COVID-19 Resource Center to guide clients
through this unprecedented global health challenge. We regularly
update this site with COVID-19 news and developments,
recommendations from leading health organizations, and tools that
businesses can use free of charge.

Our bank and loan servicing clients also face novel challenges
affecting their industry due to COVID-19, particularly the
ever-changing rules and regulations concerning evictions and
foreclosures. We closely track these updates and have assembled an
interactive tracker containing state orders and guidance documents
regarding residential foreclosure and eviction moratoriums. You may
access this interactive tool at https://covid19.troutman.com/.

To help you keep abreast of relevant activities, below find a
breakdown of some of the biggest COVID-19 driven events at the
federal and state levels to impact the Consumer Finance Services
industry this past week:

Federal Activities

State Activities

Privacy and Cybersecurity Activities

Federal Activities:

• On June 18, the Federal Housing Administration (FHA) announced
  updates to its student loan
  monthly payment calculations to help provide greater access to
  affordable single-family FHA-insured mortgage financing for
  creditworthy individuals with student loan debt, which has a
  disproportionate impact on people of color. According to the FHA
  release, the updated policy more closely aligns student loan debt
  calculation policies with other housing agencies, helping to
  streamline and simplify originations for borrowers with student
  loan debt obligations. For more information, click here.

• On June 17, the Federal Financial Institutions Examination
  Council (FFIEC) announced the availability of
  data on 2020 mortgage lending transactions at 4,475 U.S. financial
  institutions reported under the Home Mortgage Disclosure Act
  (HMDA). Covered institutions include banks, savings associations,
  credit unions, and mortgage companies. The data
  products released by the FFIEC provide comprehensive
  information on mortgage market activity used by industry, consumer
  groups, regulators, and others to assess potential fair lending
  risks and for other purposes. For more information, click here.

• On June 16, the Consumer Financial Protection Bureau (CFPB)
  issued an interpretive rule, setting
  forth the basis for its authority to examine supervised financial
  institutions for risks to active duty servicemembers and their
  dependents from conduct that violates the Military Lending Act
  (MLA). For more information, click here.

• On June 16, the U.S. Department of Education announced the
  approval of 18,000 borrower defense to repayment (borrower defense)
  claims for individuals who attended ITT Technical Institute. These
  borrowers will receive 100% loan discharges, resulting in
  approximately $500 million in relief. This brings total loan
  cancellation under the Biden-Harris administration borrower defense
  to $1.5 billion for approximately 90,000 borrowers. For more
  information, click here.

• On June 16, the CFPB updated a report it first released last
  year that detailed the delinquency rates on major types of
  credit to illustrate the financial effect of the COVID-19 pandemic
  on consumers. Now looking at data through the end of April 2021,
  the CFPB’s data indicates that delinquency rates on auto loans,
  student loans, credit cards, and mortgages are still below
  pre-pandemic levels, but “time will tell whether delinquencies
  begin to rise again through the summer and fall of 2021.” For
  more information, click here.

• On June 15, the Federal Communications Commission (FCC) announced that its reassigned
  numbers database (RND) will undergo a beta test from July 1 through
  September 30, during which callers and caller agents may use the
  database without charge. The FCC has worked on the RND – which is
  intended to be used by callers to determine if a cell phone number
  has been reassigned to someone other than the individual seeking to
  be contacted – for over three years. Knowing that a phone number
  has been reassigned can tell a company not to contact that number.
  For more information on the RND and participating in the FCC’s
  beta testing, click here.

• On June 14, the CFPB released a report analyzing the
  differences in lending patterns for lenders below and above the
  100-loan, closed-end threshold set by the 2020 Home Mortgage
  Disclosure Act (HDMA). While the CFPB’s analysis is
  preliminary, the report shows some differences in lending patterns
  for lenders above and below the threshold. For more information on
  the report and the background on HDMA data collection, reporting,
  and disclosure processes, click here.

• On June 14, the CFPB issued consumer guidance on what to do
  ahead of the Centers for Disease Control’s (CDC) eviction
  moratorium June 31 expiration. According to a recent housing study published
  by Harvard University, more than two million homeowners are behind
  on their mortgages and risk being forced out of their homes. For
  more information, click here.

• On June 11, the CFPB published the Spring 2021 Agenda as part of
  its 2021 Unified Agenda of Federal
  Regulatory and Deregulatory Actions, which is coordinated by
  the Office of Management and Budget under Executive Order 12866.
  The Spring 2021 Agenda lists the regulatory matters currently
  pursued by CFPB interim leadership, pending appointment and
  confirmation of a permanent director. The Fall 2021 Unified Agenda
  will reflect the permanent director’s changes to the CFPB
  regulatory agenda. For more information, click here.

• On June 10, a Wisconsin federal judge ordered a temporary halt
  to a $4 billion federal loan relief program intended to address
  longstanding inequities for farmers of color after a legal
  challenge by white farmers, who argued the policy discriminates against them. The
  plaintiffs in the case – 12 farmers from nine states – filed suit
  against the U.S. Department of Agriculture (USDA) over the roughly
  $4 billion set aside for loan forgiveness for socially
  disadvantaged farmers and ranchers in the $1.9 trillion American
  Rescue Plan. For more information, click here.

State Activities:

• On June 16, the New Jersey Assembly Community and Development
  and Affairs Committee advanced Senate Bill 3584, which establishes
  immunity related to the COVID-19 spread in planned real estate
  developments. S.B. 3584 would “prohibit any causes of action
  for damages arising from a COVID-19 exposure or transmission on the
  premises of a planned real estate development,” but it
  “would not apply to acts or omissions constituting a crime,
  actual fraud, actual malice, gross negligence, recklessness, or
  willful misconduct.” For more information, click here.

• On June 15, New York Attorney General Letitia James issued an
  alert to New Yorkers to remain vigilant against a surge in
  telephone scams seeking to take advantage of consumers. As part of
  the fraud, scammers put pressure on customers to pay immediately or
  else have their services cut off instantly. “As New Yorkers
  continue to suffer the economic impacts of the COVID-19 public
  health crisis, scammers have seen this as an opportunity to take
  advantage of the economic anxiety that many New Yorkers feel and
  the additional time some have needed to pay their bills,” said
  Attorney General James. For more information, click here.

• On June 15, the Supreme Court of Virginia issued its
  twenty-third order, extending the declaration of judicial emergency
  for the COVID-19 pandemic through July 11. Under the terms of the
  order, courts continue to have authorization to accept
  electronically signed pleadings, orders, and other documents. For
  more information, click here.

• On June 15, Vermont ended its state of emergency. As a result,
  Vermont’s eviction moratorium for nonpayment of rent or
  no-cause evictions can proceed on July 15 under S. 333 -
  Vermont’s eviction moratorium. For more information, click here.

• On June 17, the Richmond Times Dispatch reported that
  Virginia Governor Ralph Northam will not exercise executive
  authority to extend eviction protections imposed during the
  COVID-19 pandemic. Absent any action by the governor and starting
  July 1, landlords will no longer be required to notify tenants
  about how to apply for rent relief through a state program or abate
  from proceeding from eviction for 45 days while waiting for a
  relief application approval. For more information, click here.

• On June 14 Texas Governor Greg Abbott signed HB 3510. Effective
  September 1, the new law will allow employees of companies licensed
  by the Texas Finance Commission – which include vehicle finance
  companies, traditional installment lenders, and mortgage lenders -
  to work remotely from licensed locations, provided certain
  requirements are met. For more information, click here.

• On June 11, Illinois Governor J.B. Pritzker issued an order to
  rescind Executive Order 2020-25 on June 25. Executive Order 2020-25
  suspended the “provisions of the Illinois Code of Civil
  Procedure that permit the service of a garnishment summons, wage
  deduction summons, and a citation to discover assets on a consumer
  debtor or consumer garnishee.” For more information, click here.

• The Appellate Court of Illinois, First District recently ruled
  that the Illinois Rent Control Preemption Act (IRCPA) preempted the
  tenant’s claims against the lender under Chicago’s Keep
  Chicago Renting Ordinance (KCRO). Specifically, the court found
  that the KCRO requirement to “offer qualified tenants either a
  $10,600 relocation fee or extend the tenant’s lease with an
  annual rental rate that does not exceed 102% of their current
  rental rate” is preempted and this provision is not severable
  from the remainder of the ordinance. For more information, click here.

• On June 14, the Eleventh Circuit Court of Appeals issued an
  order withholding issuance of a mandate in the Hunstein v.
  Preferred Collection and Management Services, Inc. For more
  information, click here.

• On June 16, CNBC reported that eight states – Alabama,
  Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West
  Virginia, and Wyoming – are opting out of federal unemployment
  benefit programs. This brings the total to 25 states turning down
  federal funds prior to the program’s official expiration on
  September 6. Further, Indiana residents are suing Governor Eric
  Holcomb in state court to maintain aid programs, arguing the
  decision to stop benefits violates the state’s unemployment
  statute. For more information, click here.

Privacy and Cybersecurity
Activities:

To read more about this new legislation, click here.

• On June 16, CyberScoop reported that “health
  passes, sometimes known as vaccine passports [may be used] as a
  means to securely reopen businesses and borders as COVID-19 cases
  drop and vaccination rates rise.” In addition, businesses or
  airports can utilize scannable codes to access patient health data
  instead of relying on physical records. Data protection experts
  anticipate that health passes and digital IDs are here to stay.
  Digital IDs offers a convenient way to authenticate and verify
  individuals. For example, IBM is working on a digital ID with New
  York state that would collect vaccine status, driver’s
  licenses, and other personal records. More on IBM’s move can be
  read here. However, privacy experts
  warn that tech companies embracing this new technology should
  consider assessing risks to data. Both the Biden administration and
  the Department of Homeland Security are beginning to provide
  guidelines on privacy best practices as they relate to digital IDs.
  To read CyberScoop’s report, click here. For those interested in
  learning more about vaccine certificates and the potential
  implications of using them, check out Troutman Pepper’s
  Law360 article by clicking here.

• On June 15, the Federal Trade Commission (FTC) warned companies
  of the danger of various business-to-business (B2B) scams as
  employees begin to return to the workplace. “[C]on artists
  were already using the coronavirus as a hook for swindlers and
  scams . . Now that many companies are returning to an in-person
  workplace, some fraudsters will try to take advantage of the
  transition.” As a result, the FTC urges companies to keep
  their guard up against various forms of B2B deception by:
  

  • Spotting the signs of an imposter scam;

  
  

  • Sticking with suppliers they know or recommended by people they
    trust; and

  
  

  • Alerting their staff to unemployment benefits fraud.

To read the FTC’s complete list of tips to protect against
workplace B2B scams, click here.

• On June 14, the FTC stressed to companies the importance of
  staying in control of sensitive information as many corporations
  shift back to an in-person workplace following over a year of
  remote work due to the COVID-19 pandemic. In an effort to ease the
  transition back to the office and “reduce the risk that
  COVID-19 scammers, data thieves, and financial fraudsters will
  follow [companies] there,” the FTC reminds companies they
  should:
  

  • Update their data inventory;

  
  

  • Double check security on new platforms and software;

  
  

  • Consider an in-house security refresher; and

  
  

  • Evaluate and adjust their practices in light of their COVID-19
    experience.

To read the FTC’s full list of tips on maintaining
appropriate data security standards, click here.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.