Mortgage Banking Update
In this issue:
- CFPB Files Opposition to All American Check Cashing’s Cert Petition; All American Replies
- NYDFS Proposes New Regulation to Ease Restrictions on Sharing CSI
- Congress Further Extends National Flood Insurance Program
- This Week’s Podcast: Targeted Marketing and Fair Lending Risk
- OCC and FDIC Issue Proposed Rules to Undo Madden
- CFPB Publishes Fall 2019 Rulemaking Agenda
- CFPB to Assess TRID Rule’s Effectiveness
- Trade Groups Respond to Motion to Dismiss Lawsuit Challenging Nevada Law Allowing Applicant to Rely on Spouse’s or Former Spouse’s Credit Report
- Did You Know?
Although the Consumer Financial Protection Bureau (CFPB) now agrees that its structure is unconstitutional, it has filed a brief opposing the Petition for a Writ of Certiorari Before Judgment filed by All American Check Cashing with the U.S. Supreme Court. All American’s interlocutory appeal from the district court’s ruling upholding the CFPB’s constitutionality is still pending before the Fifth Circuit (and a second oral argument was scheduled for December 4). In its petition, All American argued that “there is nothing to be gained by waiting [for the Fifth Circuit’s decision]” because the arguments regarding the CFPB’s constitutionality have already been exhaustively explored in the circuit courts.
Having filed its petition before the Supreme Court granted Seila Law’s certiorari petition, All American argued that its case was a better vehicle than Seila Law for deciding the constitutionality question but that, at a minimum, its case should be heard as a companion case to Seila Law. All American’s petition presents two questions: whether the CFPB’s structure violates the separation of powers and whether a constitutional defect would entitle a company subject to a CFPB enforcement action to “meaningful relief, such as dismissal of the action.”
In addition to arguing in its opposition that granting All American’s petition “would do nothing to enhance” the Supreme Court’s consideration of the constitutionality question also presented in Seila Law, the CFPB argues that All American’s second question does not warrant Supreme Court review. According to the Bureau, “lower courts have not yet addressed the particular issue here—whether an enforcement action that was filed by an official who was unconstitutionally insulated from removal by the President must be dismissed even where an official fully accountable to the President decides that it should move forward.” The Bureau observes that there is no circuit conflict on related remedial issues, with “the few reasoned decisions that address related issues [agreeing] that [a separation-of-powers violation] does not compel invalidation of the agency’s action if those actions are subsequently approved in compliance with separation-of-powers requirements.”
In addition, the Bureau notes that “the ratification is implicated in at most a handful of cases” and asserts that the courts “adjudicating those cases can decide that issue in the first instance if and when doing so becomes necessary.” (The Bureau states in a footnote that the constitutional issue has not been preserved in all of the 19 enforcement actions it currently has pending.) Finally, the CFPB asserts that All American’s argument that the proper remedy for a constitutional violation is dismissal of the CFPB’s enforcement action is wrong on the merits because ratification by a CFPB director who is subject to appropriate executive oversight can cure any constitutional defect.
In its reply brief, All American reasserts its argument that actions by an unconstitutional agency cannot be made valid through ratification and that “[t]he only remedy to address the CFPB’s structural flaws is dismissal.” It also argues that its case presents “a crucial companion issue to the merits question that the Court will resolve in Seila Law,” and “the only opportunity for the Court to consider the full remedial consequences of the CFPB’s unconstitutionality.” All American contends that if the Court does not resolve the remedial question now, it will haunt the CFPB’s pending enforcement actions “not to mention other invalid CFPB actions, and cases concerning the acts of the Federal Housing Finance Agency or any other unconstitutionally structured agency.” All American states that it is “prepared to expedite briefing in this case to allow it to be heard together with Seila Law.” It suggests a briefing schedule “in which the opening brief is filed 14 days after the petition is granted [which] would allow the CFPB to have the full 30 days to respond, and still enable this Court to schedule this case, as well as Seila Law, as early as February.”
All American also notes in its reply brief that a group of 11 (Republican) state Attorneys General have filed an amicus brief in support of All American’s petition. In their brief, the AGs also reject the CFPB’s ratification argument. They urge the Supreme Court to resolve the “lingering question of whether the appropriate remedy [for the CFPB’s unconstitutionality] changes simply because an actor who claims to be removable at will purports to ratify the decision of an otherwise unconstitutional agency” and assert that “delay will only serve to prolong confusion in the multi-billion-dollar market in consumer financial products.”
The briefs in All American have been distributed for the Supreme Court’s conference on December 6. While the Supreme Court might grant All American’s petition and make All American a companion case to Seila Law, it might instead grant the petition but hold All American until it decides Seila Law.
Last week, the New York Department of Financial Services (NYDFS) announced a proposed new regulation that provides greater flexibility for entities licensed, chartered, authorized, registered, or supervised by the NYDFS to disclose confidential supervisory information (CSI) to legal counsel and independent auditors. The proposal would make NY Banking Law more consistent with federal law, which generally permits supervised institutions to share CSI, such as exam reports, with their advisors and auditors without getting approval from their regulators.
Currently, regulated entities must receive prior written approval from NYDFS each time they want to share CSI with their legal counsel or independent auditors. See Section 36.10 of the NY Banking Law (which generally provides that CSI shall remain confidential “and shall not be made public unless, in the judgment of the superintendent, the ends of justice and the public advantage will be subserved by the publication thereof”).
The new proposed regulation would permit a regulated entity to share CSI with its legal counsel or independent auditor without prior written approval from the NYDFS if there is a written agreement between the regulated entity and their counselor or auditor in which the lawyer or auditor agrees, among other things:
- To keep such information confidential;
- To only use disclosed CSI for the purpose of providing legal representation or auditing services to the regulated entity;
- Not to disclose the CSI to its employees, officers, or directors except to those that “need to know” and only on the condition that they maintain confidentiality of the information;
- To notify the NYDFS of any demand or request for the CSI and to assert on behalf of the NYDFS “all such legal privileges and protections as the [NYDFS] may request”; and
- To obtain any required prior consent or approval from any other state or federal agency and to execute a statement affirming such consents and approvals were obtained, or if no other consents or approvals are required, so stating.
The proposed regulation also provides that the regulated entity must keep a written record of all CSI disclosed pursuant to the regulation and a copy of each written agreement.
The new proposed regulation is subject to a 60-day comment period following publication in the NY State Register later this month.
As previously reported, the authorization for National Flood Insurance Program was scheduled to expire on November 21, 2019. Congress recently once again extended the program, this time until December 20, 2019.
In this podcast, we examine the fair lending risk to financial services providers that use targeted marketing. After reviewing what targeted marketing is, the forms it can take, and current litigation, we discuss the potential fair lending claims and the options available to providers to reduce the fair lending risk created by the use of third-party targeted marketing platforms.
Click here to listen to the podcast.
The Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Commission (FDIC) issued proposed rules this week intended to eliminate the uncertainty created by the Second Circuit’s decision in Madden v. Midland Funding. In that decision, the Second Circuit held that a nonbank that purchased charged-off loans from a national bank could not charge the same rate of interest on the loan that Section 85 of the National Bank Act (NBA) allowed the national bank to charge. The proposals would codify each agency’s interpretation that a bank loan assignee can charge the same interest rate that the bank is authorized to charge under federal law. Comments on the OCC’s proposal must be submitted by January 21, 2020. Comments on the FDIC’s proposal must be submitted no later than 60 days after the date the proposal is published in the Federal Register.
The rules rely on the power of national banks, federal savings associations, and state banks to make loans, assign loans to third parties, and charge interest on such loans. With regard to interest rate authority, the OCC points to Section 85 (applicable to national banks) and 12 U.S.C. §1463(g) (the provision of the Home Owners’ Loan Act [HOLA], patterned on Section 85 and applicable to both federal and state-chartered savings associations). These provisions give national banks and savings associations “most favored lender” status, meaning they can charge interest at the highest rate allowed to any lender by the laws of the state where the national bank or savings association is located also “export” that rate to borrowers in other states, regardless of any other state law purporting to limit interest charges. The FDIC points to Section 27(a) of the Federal Deposit Insurance Act (FDI Act)12 U.S.C. §1831d(a), also patterned on Section 85, which allows an FDIC-insured state bank to export to out-of-state borrowers the interest rate permitted by the state in which the state bank is located to its most favored lender, regardless of any contrary laws of such borrowers’ states.
As support for their interpretations, both agencies reference the “valid-when-made” and “stands-in-the shoe” principles. As articulated by the agencies, the “valid-when-made” principle provides that a loan that is non-usurious at origination does not subsequently become usurious when assigned. The “stands-in-the shoe” principle provides that a loan does not become usurious after assignment because the assignee stands in the assignor’s shoes when enforcing the contractually agreed upon interest term.
The OCC rule would provide: “Interest on a loan that is permissible under 12 U.S.C. 85 [or 12 U.S.C 1463(g)(1)] shall not be affected by the sale, assignment, or other transfer of the loan.”
The FDIC rule would provide: “Whether interest on a loan is permissible under section 27 of the Federal Deposit Insurance Act is determined as of the date the loan was made. The permissibility under section 27 of the Federal Deposit Insurance Act of interest on a loan shall not be affected by any subsequent events, including … the sale, assignment, or other transfer of a loan.”
The OCC’s rule would be added to 12 C.F.R. §7.4001, which interprets a national bank’s interest rate authority under Section 85, and 12 C.F.R. §160.110, which interprets a savings association’s interest rate authority under 12 U.S.C. §1463(g). The FDIC’s rule would become part of previously reserved 12 C.F.R. Part 331. Part 331 would be titled “Federal Interest Rate Authority” and, in addition to the new rule above addressing loan assignments, would include other rules intended to implement Section 27 of the FDI Act as well as FDI Act Section 24(j) (which deals with the application of state law to a branch of a state bank located in a state in which the bank is not chartered).
Both agencies elected not to address a second major source of uncertainty concerning the interest rate authority of loans that are made by banks with substantial origination, marketing, and/or servicing assistance from nonbank third parties. At least where the nonbank agent acquires the “predominant economic interest” in the loans, the interest charges have been challenged by enforcement authorities and plaintiffs’ attorneys on the theory that the nonbank agent is the “true lender,” and therefore, the loan is subject to state licensing and usury laws.
The OCC stated that its proposed rule “would not address which entity is the true lender when a bank makes a loan and assigns it to a third party” and that “[t]he true lender issue, which has been considered by courts recently, is outside the scope of this rulemaking.” Likewise, the FDIC stated that its proposed rule does not “address the question of whether a State bank … is a real party in interest with respect to a loan or has an economic interest in the loan under state law, e.g. which entity is the ‘true lender.’” The FDIC added that “it will view unfavorably entities that partner with a State bank with the sole goal of evading a lower interest rate established under the law of the entity’s licensing State(s).”
We are pleased that the OCC and FDIC have squarely addressed the problem created by the Madden decision (an action we have advocated for) but disappointed that they have chosen not to grapple with the “true lender” issue at this time. As recognized by the U.S. Supreme Court in its seminal Marquette decision, banks have a need for certainty in their lending operations. It is Congress or the banking agencies, through their legislative, rule-making, and supervisory powers, and not the courts, through piece-meal litigation, that are best-suited to determining when a loan is properly made by a bank or savings association under its home-state rate authority.
In our view, each agency should adopt a rule that provides loans funded by a bank in its own name as creditor are fully subject to Section 85 or Section 27(a) and other provisions of the NBA, HOLA, or FDIC Act, as applicable, for their entire term. The rule should clarify that this does not give financial institutions a free ride; rather, they are expected to manage and supervise the lending process in accordance with OCC or FDIC guidance and will be subject to regulatory consequences if and to the extent that loan programs are unsafe or unsound or fail to comply with applicable law. In other words, it is the origination of the loan by a bank or savings association (and the attendant legal consequences if the loans are improperly originated), and not whether the bank retains the predominant economic interest in the loan, that should govern the regulatory treatment of the loan under federal law.
We are also disappointed by the FDIC’s statement that it will take an unfavorable view of bank-nonbank partnerships, where the “sole goal [is] evading” state-law rate limits. This statement appears to be taken directly from the bulletin issued by the OCC in May 2018, setting forth core lending principles, and policies and practices for short-term, small-dollar installment lending by national banks, federal savings banks, and federal branches and agencies of foreign banks. The FDIC’s statement could be read to call into question a valuable distribution channel for bank loans and seems at odds with the broad view of federal preemption enunciated by the FDIC in the proposal with respect to Section 27(a) as well as the FDIC’s stated goal of eliminating uncertainty regarding the enforceability of interest rate terms. At the very least, the FDIC should clarify that the propriety of relationships of this type is a matter for the FDIC to address in the supervisory process and not a matter for the courts to address as a matter of law.
Despite our griping that the OCC and FDIC are not dealing with the “true lender” argument in their proposals, we believe that, overall, the proposals represent a very positive step forward. Unsurprisingly, the proposals have already generated a storm of criticism and threats of eventual litigation from consumer advocates with more paternalistic views than our own. Madden and “true lender” controversy are likely to remain for many years in the future.
The CFPB has published its Fall 2019 rulemaking agenda as part of the Fall 2019 Unified Agenda of Federal Regulatory and Deregulatory Actions, which is coordinated by the Office of Management and Budget. It represents the CFPB’s second rulemaking agenda under Director Kraninger’s leadership. The agenda’s preamble indicates that the information in the agenda is current as of July 25, 2019 and identifies the regulatory matters that the Bureau “reasonably anticipates having under consideration during the period from October 1, 2019 to September 30, 2020.”
The Bureau issued a proposed debt collection rule in May 2019. In the preamble to the rulemaking agenda, the Bureau stated that it is testing consumer disclosures related to time-barred debt disclosures and, after testing, will assess whether to issue a supplemental proposal seeking comments on a proposal concerning such disclosures. The agenda indicates that the Bureau expects to issue a final debt collection rule in 2020.
The only other noteworthy information in the preamble is the Bureau’s announcement that in light of the feedback it received in response to the series of requests for information (RFIs) it issued in 2018, it has decided to add two new items to its long-term regulatory agenda. One item is a possible rulemaking to address feedback the Bureau received that its loan originator compensation requirements are too restrictive. The Bureau plans to examine whether it should (1) permit adjustments to a loan originator’s compensation in connection with originating state housing finance authority loans to facilitate the origination of such loans and (2) permit creditors to decrease an originator’s compensation due to the originator’s error.
The second item the Bureau plans to add to its long-term regulatory agenda relates to feedback it received that the intersections of certain Regulation Z requirements and E-SIGN are too restrictive for consumers applying for credit cards electronically and for consumers willing, or preferring, to only receive information electronically. The Bureau is considering a rulemaking to address “a range of issues at the intersection of E-SIGN and Regulation Z with regard to credit cards.” Noting that similar concerns about the effect of E-SIGN were raised with respect to other consumer financial products and services, including checking accounts, the Bureau states that it anticipates what it learns in the credit card context may assist it in assessing whether there are similar concerns with other products and services that may be appropriate to address in future rulemakings.
In addition to debt collection, other current rulemakings listed in the agenda are:
- The Payday Rule. In February 2019, the Bureau issued a proposal to rescind the ability to repay provisions of its final payday/auto title/high-rate installment loan rule. The agenda estimates issuance of a final rule in April 2020.
- Business lending data (Dodd-Frank Section 1071). Section 1071 amended the Equal Credit Opportunity Act (ECOA) to require financial institutions to collect and maintain certain data in connection with credit applications made by women- or minority-owned businesses and small businesses. Such data includes the race, sex, and ethnicity of the principal owners of the business. The Bureau held a symposium on Section 1071 last month. No timetable for rulemaking is provided in the agenda. However, the CFPB discussed its rulemaking plans in its cross-motion for summary judgment filed earlier this month in the lawsuit brought by the California Reinvestment Coalition, the National Association for Latino Community Asset Builders, and two individual small business owners seeking a declaration that the CFPB’s failure to issue regulations implementing Section 1071 violates the Administrative Procedure Act and requiring the CFPB to promptly issue such regulations. The Bureau stated that it “intends to complete its internal policymaking process in the next six months,” and within six months thereafter (estimated to be by next November), it “expects to release a detailed outline of the proposals under consideration” to be followed by a report issued by a Small Business Regulatory Enforcement Fairness Act (SBREFA) panel “within two months of being officially convened.” It notes, however, that because “the Bureau cannot predict the nature and extent of the comments it will receive in connection with the SBREFA process, or that it will receive in response to a notice of proposed rulemaking…the Bureau’s plan does not yet include intended dates for the issuance of a proposed or final rule.”
- PACE financing. In March 2019, the CFPB issued an advance notice of proposed rulemaking to solicit information on Property Assessed Clean Energy (PACE) financing. The agenda estimates that pre-rule activity will occur in December 2019.
- Qualified mortgages. The Bureau estimates action in December 2019 in connection with the scheduled expiration of the temporary GSE QM category.
- Home Mortgage Disclosure Act (HMDA). In May 2019, the CFPB issued a proposed HMDA rule concerning the volume threshold that triggers reporting of open-end credit lines and closed-end mortgage loans. Last month, the Bureau issued a final rule concerning an extension of the temporary threshold for open-end credit lines. It estimates that it will issue another final rule in March 2020 concerning the permanent thresholds for both open-end credit lines and closed-end mortgage loans.
In addition to loan originator compensation and E-SIGN requirements, other long-term agenda items (for which no time estimates for further action are given) include:
- Abusive Acts and Practices. The Bureau held a symposium in June 2019 to inform its next steps regarding a possible rulemaking to clarify the meaning of “abusive.”
- Inherited Regulations. These are the existing regulations that the CFPB inherited from other agencies through the transfer of authorities under the Dodd-Frank Act. The CFPB indicates that it expects to focus its initial review on the subparts of Regulation Z that implement the Truth in Lending Act (TILA) with respect to open-end credit and credit cards in particular. By way of example, the CFPB states that it expects to consider adjusting rules concerning the database of credit card agreements it is required to maintain by the CARD Act “to reduce [the] burden on issuers that submit credit card agreements to the Bureau and make the database more useful for consumers and the general public.” The CFPB states it may launch additional projects after reviewing the responses it received to its RFIs on the inherited regulations and rules issued by the CFPB.
- Consumer Access to Financial Records. In November 2016, the CFPB issued a RFI about market practices related to consumer access to financial information. The Bureau will continue to monitor market developments and evaluate possible policy responses to issues identified, including potential rulemaking. Possible topics the Bureau might consider include specific acts or practices and consumer disclosures. In addition, the Bureau plans to consider “whether clarifications or adjustments are necessary with respect to existing regulatory structures that may be implicated by current and potential developments in this area.” The Bureau expects to hold a symposium on consumer-authorized financial data sharing in 2020.
The Bureau’s regulatory priorities could change significantly if the U.S. Supreme Court rules in Seila Law that the Dodd-Frank Act provision that allows the President to remove the Bureau’s Director only “for cause” is unconstitutional and the appropriate remedy is to sever that provision. Such a decision would allow a Democratic President, if elected in 2020, to remove Director Kraninger without cause.
The Dodd-Frank Act requires the CFPB to conduct an assessment of each “significant rule” adopted by the Bureau. The Bureau has determined that the TILA/RESPA Integrated Disclosure (TRID) Rule qualifies as a “significant rule.” Assessment reports must be published no later than five years after the effective date of the rule being assessed. The TRID Rule’s original effective date, prior to its amendments, was October 3, 2015.
In connection with its assessment of the TRID Rule, the Bureau issued a request for information (the RFI) on November 20, 2019, which was published in the Federal Register November 22, 2019. The goal of the assessment is to address the TRID Rule’s “effectiveness in meeting the purposes and objectives of” title X of Dodd Frank, as well as “specific goals stated by the Bureau.” 12 U.S.C. 5512(d)(1).
The Bureau plans to conduct its assessment utilizing a “cost-benefit perspective,” focusing on the TRID Rule’s impact on consumers, firms (creditors, settlement service providers, mortgage brokers, etc.), and markets related to mortgage origination using a variety of information collection methods. Some of those methods include the utilization of internal Bureau data, data collected by the Bureau pursuant to regulation (such as HMDA data), industry surveys, and structured interviews. The RFI outlines the following broad questions that the Bureau will consider in examining the TRID Rule’s impact:
- How did the TRID Rule affect the consumers’ understanding of their mortgage disclosures?
- How did the TRID Rule affect mortgage and settlement service shopping behaviors?
- How did the TRID Rule affect satisfaction with their mortgage disclosures, mortgage products, and settlement services?
- How did the TRID Rule affect ability to compare and choose among mortgages and settlement services?
- What were the TRID Rule’s implementation costs to firms?
- What are the TRID Rule’s ongoing costs to firms?
- How did the TRID Rule affect creditors’ ability to sell mortgages to others on the secondary market?
- How did the TRID Rule affect the way creditors disclose information to consumers?
- Did the TRID Rule affect the price of mortgages or the volume of mortgage originations in the aggregate or for particular market segments or mortgage product types (construction loans, subordinate liens, manufactured housing, etc.)?
- Did the TRID Rule affect entry, exit, or consolidation in any parts of the mortgage market?
- Did the TRID Rule’s specific provisions affect market structure by changing the relationship between various providers (e.g., creditors and settlement agents or creditors and their affiliates)?
The Bureau is seeking public comments relevant to the issues identified in the RFI, “any other information relevant in assessing the effectiveness of the TRID Rule in meeting the purposes and objectives of title X of the Dodd-Frank Act and the specific goals of the Bureau,” and, in particular, any or all of the following:
- The feasibility and effectiveness of the assessment plan, the objectives of the TRID Rule that the Bureau intends to use in the assessment, and the outcomes, metrics, baselines, and analytical methods for assessing the effectiveness of the TRID Rule as described in the RFI;
- Data and other factual information that the Bureau may find useful in executing its assessment plan and answering related research questions, particularly research questions that may be difficult to address with the data currently available to the Bureau, as described in the RFI;
- Recommendations to improve the assessment plan, as well as data, other factual information, and sources of data that would be useful and available to the Bureau to execute any recommended improvements to the assessment plan;
- Data and other factual information about the benefits and costs of the TRID Rule for consumers, creditors, or other stakeholders;
- Data and other factual information about the effects of the TRID Rule on transparency, efficiency, access, and innovation in the mortgage market;
- Data and other factual information about the TRID Rule’s effectiveness in meeting the purposes and objectives of title X of the Dodd-Frank Act, which are listed in the RFI;
- Data and other factual information on the disclosure dataset specified in the Assessing Firm Effects section of the RFI;
- Any aspects of the TRID Rule that were or are confusing or on which more guidance was or is needed during implementation, including whether the issues have been resolved or remain unresolved; and
- Recommendations for modifying, expanding, or eliminating the TRID Rule.
Because Congress directed the CFPB to develop integrated disclosures under the Truth in Lending Act and Real Estate Settlement Procedures Act, and the industry has undertaken a complex and expensive implementation, it is unlikely that the CFPB will eliminate the TRID Rule. Industry has found the TRID Rule to be overly complex and prescriptive, and require disclosures that often do not reflect real-world pricing or values (e.g., the methodologies to disclose title insurance premiums and the items in the Calculating Cash to Close table of the TRID Rule disclosures). Significant modifications to the TRID Rule are necessary to streamline and simplify the rule for the benefit of consumers and the industry.
Comments on the RFI must be submitted by January 21, 2020.
The three trade groups challenging an amendment to Nevada law that allows an applicant for credit with no credit history to request that the creditor deem the applicant’s credit history to be identical to that of the applicant’s spouse during the marriage have responded to the motion to dismiss their lawsuit filed by the Commissioner of the Financial Institutions Division (FID) of the Nevada Department of Business and Industry and the Nevada Attorney General. The amendment is contained in Senate Bill 311, which was signed into law by the Nevada Governor on July 1, 2019 and became effective on October 1. A preliminary injunction motion filed by the trade groups is currently pending.
The lawsuit includes an allegation that the amendment is preempted by the Fair Credit Reporting Act and the Equal Credit Opportunity Act. In their motion to dismiss, the Commissioner and AG argue that the plaintiffs’ claims do not satisfy Article III ripeness standards because there is no history of enforcement, and the FID should be allowed to consider regulations to address the plaintiffs’ preemption concerns.
In their response to the motion to dismiss, the trade groups argue that their lawsuit is constitutionally ripe because (1) it coerces their members “into a dilemma of having to choose between violating state law or violating federal law,” which is “precisely the sort of dilemma the Declaratory Judgment Act was meant to ameliorate,” and (2) there is a credible threat that the amendment will be enforced. The reasons given by the trade groups for why there is a credible threat include: the FID declined the trade groups’ request for it to issue a notice of non-enforcement before the amendment took effect; when a statute is new, the absence of historical enforcement is not relevant; and the universe of potential complainants is not limited to the defendants since the law can be enforced by private plaintiffs.
The trade groups also assert that it is irrelevant and wrong for the Commissioner and AG to suggest that the FID could resolve the conflict between the amendment and federal law. According to the trade groups, the contention is irrelevant because the FID has provided no evidence of what it intends to do to resolve the conflict, nor have the Commissioner or AG explained “why, if all problems might be solved through agency action, the [FID] has done nothing about SB 311 in the six months that have passed since the Governor approved it.” They assert the contention is wrong “because resolving the conflict between SB 311 and federal law will not address the many other practical and privacy-related defects set forth in the plaintiffs’ complaint.”
NMLS Policy Guidebook Adds Temporary Authority Section
On November 23, 2019, an updated version of the NMLS Policy Guidebook was posted to the NMLS Resource Center. It includes a new section on Temporary Authority to Operate (TA) that provides technical guidance for qualified mortgage loan originators seeking to originate loans under Temporary Authority. The new section covers TA eligibility requirements, the duration of the TA period, and TA application requirements, among other topics.
Wisconsin Adopts Temporary Authority Provisions
Wisconsin is the latest state to pass legislation amending its statutes to add provisions addressing temporary authority to operate as a mortgage loan originator while a license application is pending pursuant to the federal SAFE Act. The amendment to the Wisconsin statutes became effective on November 28, 2019.
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