Troutman Pepper Weekly Consumer Financial Services COVID-19 Newsletter
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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:
Privacy and Cybersecurity 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.
- 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
- On June 17, U.S. Senator Kirsten Gillibrand announced the
revival of the Data Protection Act of 2021, which seeks to create a
Data Protection Agency that would “protect Americans’
data, safeguard their privacy, and ensure data practices are fair
and transparent.” Due to the COVID-19 pandemic, more and more
people are providing their personal information to companies and
“companies are free to sell individuals’ data to the
highest bidder without fear of real consequences, posing a severe
threat to modern-day privacy and civil rights,” Senator
Gillibrand said. This new legislation would include:
- Supervision of Data Aggregators
- Office of Civil Rights
- Enforcement Powers
- Penalties and Fines
- Defines Key Terms for Transparency
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
- 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
- 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
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.
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