Mortgage Banking Update - March 12, 2020
In This Issue:
- FTC Releases 2019 Privacy and Data Security Update
- SCOTUS Hears Oral Argument in Seila Law
- This Week’s Podcast: Seila Law - Why George Washington University Law School Professor Alan Morrison Argues SCOTUS Should Not Rule on the CFPB’s Constitutionality
- Fifth Circuit Rules CFPB’s Structure is Constitutional
- CFPB Publishes TRID FAQs on Treatment of Lender Credits
- Department of Defense Reverts to Prior Position on MLA Interpretive Rule Q&A #2 Regarding Motor Vehicle and Personal Property Financing and Issues New Guidance on the Use of ITINs in Verifying MLA Covered Borrower Status; Ballard Spahr to Hold Webinar on March 13
- Leonard Chanin to Serve as Part-Time CFPB Acting Deputy Director
- CFPB Announces Advisory Opinion Program, Updates Responsible Business Conduct Bulletin, Proposes Whistleblower Legislation
- Washington State and Connecticut Take No-Action Positions Regarding Licensees Working From Home Due to Coronavirus
- Did You Know?
- Looking Ahead
On February 25, the Federal Trade Commission (FTC) released its annual Privacy and Data Security Update, which highlights the FTC’s activities during the past year.
According to the update, the FTC enforcement actions in the past year involved privacy and data security addressing a range of issues, including identity theft, credit reporting and financial privacy, the EU-U.S. Privacy Shield framework, children’s privacy, and Do Not Call. Specifically, the FTC entered into consent orders with a wide range of financial institutions, including a major consumer reporting agency (Equifax), debt collectors (Effen Ads, Global Asset Financial Services Group, ACDI Group), a credit repair company (Grand Teton Professionals), a student loan debt relief company (Mission Hills Federal), as well as a service provider to the auto finance industry (DealerBuilt).
The update also summarizes the FTC’s efforts to implement and review certain rules within the FTC’s jurisdiction, such as the Gramm-Leach-Bliley Act (GLBA) and the Children’s Online Privacy Protection Act (COPPA). In July 2019, the FTC finalized the Military Credit Monitoring Rule, which requires nationwide consumer reporting agencies to provide free electronic credit monitoring services for active duty military consumers; to notify active duty military consumers within 48 hours of any material additions or modifications to their credit files and free access to that file; to restrict secondary uses and disclosures of information collected from an active duty military consumer requesting the credit monitoring service; and to ban marketing during the enrollment process until after an active duty military consumer has been enrolled in the free credit monitoring service.
The update also provided information about the FTC’s recent workshops (focused on consumer privacy, COPPA, and a joint workshop with the Consumer Financial Protection Bureau on accuracy in consumer reporting) and publication of resources for consumer education and guidance for business.
- Kim Phan
The U.S. Supreme Court heard oral argument in Seila Law. The two questions before the Court are whether the provision in Title X of the Dodd-Frank Act that only allows the President to remove the CFPB Director for “inefficiency, neglect of duty, or malfeasance in office” violates separation of powers in the U.S. Constitution and, if the provision is unconstitutional, whether it can be severed from the remainder of Title X.
The four attorneys who argued the case were: Kannon K. Shanmugam for Seila Law; Noel J. Francisco, Solicitor General, DOJ, for the CFPB; Paul D. Clement, Court-appointed amicus curiae in support of the Bureau’s constitutionality; and Douglas N. Letter, General Counsel, U.S. House of Representatives. Attending the oral argument were former CFPB Director Richard Cordray, former Acting CFPB Director Mick Mulvaney, and current CFPB Director Kathy Kraninger. (Ironically, the oral argument coincided with the release of Mr. Cordray’s new book about his experiences as CFPB Director.) Also attending the argument was former Senator Chris Dodd, whose name, together with that of former Congressman Barney Frank, the Dodd-Frank Act carries. All of the Justices, with the exception of Justice Thomas, asked questions during the argument. The transcript of the oral argument is available here.
Many of the Justices’ questions were focused on whether a for-cause removal restriction on the President’s authority to remove an executive officer is only permissible for a multimember agency. Both Mr. Shanmugam and Solicitor General Francisco argued that the Court should not extend its 1935 decision in Humphrey’s Executor that upheld a for-cause removal restriction on members of a multimember agency to a single-director agency. Solicitor General Francisco argued that extending Humphrey’s Executor to a single-director agency would create the possibility that Congress could limit the President’s ability to remove cabinet members. When questioned about that possibility by Justice Gorsuch, Mr. Clement suggested that a for-cause removal restriction could not permissibly apply to cabinet members who exercise duties directly assigned to the President by the Constitution. Justices Ginsburg, Kagan, Sotomayor, and Breyer appeared to be skeptical of the argument made by Seila Law and the DOJ that limiting for-cause removal to multimember agencies was necessary to provide the President with sufficient control over executive officers.
Another focus of the Justices’ questions was the meaning of the Dodd-Frank “inefficiency, neglect of duty, or malfeasance in office” (INM) removal standard. Mr. Clement argued that the standard can be interpreted to give the President significant discretion to remove an officer. He suggested that that the interpretation of the INM standard could be flexible based on the context, giving as an example a situation in which the President wanted to remove the CFPB Director because he or she was targeting a friend of the President in an enforcement action (high INM standard) versus a situation in which there was a policy difference between the President and the Director (low INM standard). Justices Kavanaugh and Gorsuch suggested Mr. Clement’s argument was an attempt to “water down” the INM standard and Chief Justice Roberts raised the concern that Mr. Clement’s approach would lead to case-by-case litigation over whether the INM standard was met.
In several of the past cases involving a challenge to the CFPB’s constitutionality, parties have used the Title X provision that establishes funding for the CFPB outside of the Congressional appropriations process as further support for the argument that the CFPB is unconstitutionally structured. Although neither Seila Law nor the DOJ raised the CFPB’s funding in their arguments to the Supreme Court, Chief Justice Roberts questioned whether it should be a factor considered by the Court.
In contrast to many other Supreme Court cases, the Justices’ questions and comments during oral argument did not point to a likely outcome. Should the Court reach the merits of the constitutional question, Chief Justice Roberts and Justices Kavanaugh, Alito, and Gorsuch seem likely to conclude that the removal provision is unconstitutional while Justices Ginsburg, Kagan, Sotomayor, and Breyer would likely take the opposite position. Only Justices Ginsburg and Sotomayor raised the possibility that the Court did not need to reach the constitutional question. While it is possible that a majority of the Court would vote in favor of an outcome in which the Court did not decide the constitutional question, that does not seem to be the likely disposition of the case.
Finally, with the exception of Justice Kavanaugh, the oral argument provided no clues as to how the Justices would vote on severability should the Court reach the constitutional question and a majority concludes that the for-cause removal provision is unconstitutional. Consistent with his view in the PHH case as a member of the D.C. Circuit, Justice Kavanaugh suggested that severance of the removal provision from Title X would be the appropriate remedy for a constitutional violation.
We continue to also find irony in the DOJ’s position that the removal provision is unconstitutional. Should that position prevail, Democrats are more likely than Republicans to benefit because it is unlikely that President Trump would want to remove Director Kraninger while a new Democratic President would likely remove her.
With oral argument just days away, we interview Professor Morrison, who filed an amicus brief urging SCOTUS not to decide whether Dodd-Frank’s limits on the President’s authority to remove the CFPB Director are constitutional and dismiss the case. We examine his arguments that Seila Law has no standing to challenge the limits’ constitutionality and there is no longer a case or controversy that gives a federal court jurisdiction to hear the challenge.
Click here to listen to the podcast.
On March 3, the same day that the U.S. Supreme Court heard oral argument in Seila Law, the Fifth Circuit, in a 2-1 decision, ruled in All American Check Cashing that the CFPB’s structure is constitutional.
In the underlying case, All American Check Cashing moved to dismiss a CFPB enforcement action filed against it in a Mississippi federal district court on the grounds that the Dodd-Frank Act’s for-cause removal provision violates the separation of powers in the U.S. Constitution. The district court denied the motion to dismiss, holding that the Bureau’s structure was constitutional, and then certified its order for interlocutory appeal which the Fifth Circuit agreed to hear. After the Fifth Circuit heard oral argument in All American Check Cashing, the Fifth Circuit granted the petition for en banc review in Collins v. Mnuchin which involved a similar constitutional challenge to the structure of the Federal Housing Finance Agency (FHFA). The en banc Fifth Circuit reinstated the portion of the Fifth Circuit panel’s opinion in Collins which held that the FHFA’s structure was unconstitutional because the provision of the Housing and Economic Recovery Act of 2008 that only allows the President to remove the FHFA Director “for cause” excessively insulated the agency from Executive Branch oversight.
In reinstating this portion of the panel’s opinion, the en banc court in Collins observed that the panel had “distinguishe[d] the D.C. Circuit’s PHH decision.” The panel had stated that it was “mindful” of the D.C. Circuit’s en banc PHH decision finding the CFPB’s structure to be constitutional but that “salient distinctions between the agencies compel a contrary conclusion.” The panel had observed that, unlike the Federal Housing Finance Oversight Board that oversees the FHFA, the Financial Stability Oversight Council (FSOC) can directly control the CFPB’s actions because it holds veto-power over the CFPB’s policies. It concluded that the absence of formal oversight of the FHFA by the Executive Branch, combined with the for-cause removal provision, made the FHFA’s structure unconstitutional. Having withheld its decision in All American Check Cashing pending the en banc Fifth Circuit’s decision in Collins, the Fifth Circuit panel in All American Check Cashing held a second round of oral argument regarding the effect of Collins.
In All American Check Cashing, in an opinion written by Judge Higginbotham in which Judge Higginson concurred, the court concluded that the CFPB’s structure “is well within the constitutional lines drawn by the Supreme Court [regarding limits on the President’s removal power.]” The opinion rejected All American Check Cashing’s attempt to distinguish the U.S. Supreme Court’s 1935 decision in Humphrey’s Executor which upheld a for-cause removal provision for FTC Commissioners on the grounds that the FTC is a multi-commissioner agency rather than an agency led by a single director. (In Seila Law, both Seila Law and the DOJ have made a similar attempt to distinguish Humphrey’s Executor.) In the majority’s view, the CFPB’s single-director structure “mitigates the constitutional concerns underlying for-cause removal.” The majority observed that before 2008, seven agencies shared responsibility for consumer protection and that “the diffusion of responsibility looked past regulatory arbitrage and undercut accountability” because “a President determined to change the administration of consumer financial protection would have faced a bureaucratic maze—multiple multi-member agencies with disparate authorities spread across eighteen statutes.” According to the majority:
The CFPB’s single-leader structure places responsibility, public scrutiny, and political pressure on the shoulders of one individual, preventing the risk of buck-passing that may undermine the accountability of some multi-member agencies. And it allows the President to exercise tighter control over the CFPB, as the President need only remove the Director, not several commissioners, to change its direction. His appointees are positioned with firm control.
The majority also stated that if the CFPB’s constitutionality was in doubt, the court should exercise constitutional avoidance by reading the for-cause removal standard to impose a lesser limit on the President’s removal power. The Dodd-Frank removal standard allows the President to remove the CFPB Director for “inefficiency, neglect of duty, or malfeasance in office.” The majority offered case law and dictionary support for interpreting “inefficiency” to encompass policy disagreements. (A similar argument was made in Seila Law by Paul Clement, the Court-appointed amicus curiae who defended the CFPB’s constitutionality.)
Judge Smith, in a dissenting opinion, concluded that CFPB’s structure is unconstitutional because it “enjoys the identical insulation [from Presidential oversight] that we held unlawful in Collins. The glove fits.” He observed that while the President can influence multi-member agencies “by designating their chairs and removing them at will from that position,” in a single-director agency, “a President can find himself ‘stuck for years’ with a Director selected by a predecessor and opposed to the current administration’s policies.” He also noted that the President’s oversight is further reduced when an agency does not rely on appropriations because the President loses the ability to oversee the agency by vetoing spending bills related to the agency and submitting annual budgets to Congress. (At the Seila Law oral argument, Chief Justice Roberts raised the CFPB’s funding outside of the appropriations process as a potential factor for the Court to consider.)
Judge Smith also rejected the majority’s assertion that Collins did not control because the en banc Fifth Circuit had distinguished the D.C. Circuit’s en banc PHH decision and the FSOC’s role in controlling the CFPB’s actions. In his view, the en banc Fifth Circuit’s discussion of the CFPB and the FSOC’s role was dictum and “was plainly not a pillar upon which Collins stood or fell, but only an observation by some judges to show that they were focusing on the particulars of the agency at issue.” He noted that although the FSOC has veto authority as to CFPB rulemaking, it has no authority over the CFPB’s enforcement actions and also reviewed the limitations on the President’s ability to appoint and remove FSOC voting members. According to Judge Smith, “it is hard to imagine an oversight council with less capacity to oversee.”
Judge Higginson wrote a separate opinion affirming the district court’s ruling in which he stated that although he would have preferred for the panel to have held its decision in All American Check Cashing in abeyance until the Supreme Court decides Seila Law, his preference “was unpersuasive [with his colleagues] for reasons [he] respect[s].” He also stated that he was “confident that views [his colleagues] may choose to elaborate will offer new insights to the Supreme Court.” The issuance of the panel’s decision on the same day as the oral argument in Seila Law has sparked criticism, with one commentator suggesting that should Mr. Clement file the decision with the Supreme Court in Seila Law as additional authority supporting his position that the CFPB’s structure is constitutional, the Supreme Court should provide the parties an opportunity to file supplemental briefs.
The CFPB recently published 10 new TRID FAQs related to lender credits.
Previously the CFPB staff provided informal verbal guidance regarding lender credits, and the 2017 amendments to the TRID rule, often referred to as TRID 2.0, added commentary to TRID provisions of Regulation Z that address the disclosure and treatment of lender credits. However, there has continued to be confusion in the industry on how to properly disclose lender credits on the Loan Estimate and Closing Disclosure, and especially how to treat tolerances and changed circumstances as they apply to lender credits.
Most of the FAQs are consistent verbal guidance previously provided by the CFPB staff. Some examples include 1. expanded descriptions of general versus specific credits, 2. the disclosure of such credits on the Loan Estimate and Closing Disclosure, and 3. the ability to not disclose (or back out) fees that a creditor will absorb on the Loan Estimate and then subsequently disclose such fees on the Closing Disclosure.
Most notably, FAQ #10 addresses the treatment of lender credits for tolerance purposes. In this FAQ, the CFPB describes lender credits as “a negative charge to the consumer subject to the good faith requirements of the TRID Rule.” As such, if “[t]he actual total amount of the lender credits, whether specific or general … provided by the creditor” is less than initially disclosed, then it is to be treated as an increased charge for the purposes of evaluating tolerances and cures. The FAQ clearly states that lender credits may only be reduced, thereby increasing the charge to the consumer, if “there is an accompanying changed circumstance or other triggering event” allowing a tolerance reset pursuant to 1026.19(e)(3)(iv).
Although most of the guidance included in the new FAQs is largely settled industry understanding and consistent with past informal verbal guidance from the CFPB staff, the FAQs will likely be positively received by the industry as a continued effort by the CFPB to publish written guidance, something that was resisted in the past. However, while FAQ #10 addressing lender credits is also consistent with the preamble to the original TRID rule, which was reinforced in the preamble to TRID 2.0, some industry members may still hesitate to adopt the position that a lender credit can be reduced by a valid change in circumstance or other regulatory trigger for change absent an amendment to Regulation Z or its commentary. The TRID rule itself expressly provides for a reduction in a lender credit only in a situation in which the interest rate was floating at the time of the initial Loan Estimate, and the subsequently locking of the rate provides for a different lender credit amount.
Department of Defense Reverts to Prior Position on MLA Interpretive Rule Q&A #2 Regarding Motor Vehicle and Personal Property Financing and Issues New Guidance on the Use of ITINs in Verifying MLA Covered Borrower Status; Ballard Spahr to Hold Webinar on March 13
In a new interpretive rule published on February 28, 2020, the Department of Defense (DoD) has announced that it is withdrawing guidance previously issued in its December 14, 2017 Interpretive Rule, Q&A #2, governing motor vehicle and other personal property financing, and will revert back to the position it set forth in the original Q&A #2 published in the August 26, 2016 Interpretive Rule. DoD also issued a new Q&A #21 that expressly permits the use of Individual Taxpayer Identification Numbers (ITINs) to verify whether certain dependents are covered borrowers for the purpose the MLA’s safe harbor.
On March 13, 2020, from 12 p.m. to 1 p.m. ET, Ballard Spahr will hold a webinar, “The DoD’s MLA Interpretive Rule Rollback on GAP and Other Recent Developments in Military Lending Law.” Click here to register.
With regard to motor vehicle and other personal property financing, Interpretive Rule Q&A #2 asks:
Does credit that a creditor extends for the purpose of purchasing a motor vehicle or personal property, which secures the credit, fall within the exception to ‘‘consumer credit’’ under 32 CFR 232.3(f)(2)(ii) or (iii) where the creditor simultaneously extends credit in an amount greater than the purchase price of the motor vehicle or personal property?
In the 2017 Amended Answer to Q&A #2, DoD specifically stated that a credit transaction that includes financing for Guaranteed Auto Protection (GAP) insurance or a credit insurance premium would not qualify for the exception because “the credit transaction provides additional financing that is unrelated to the purchase” of the motor vehicle or personal property. GAP insurance protects borrowers from incurring financial losses when a vehicle is damaged and declared a total loss.
After issuing the amended Q&A #2, DoD received several formal requests from industry associations and others urging its withdrawal. According to DoD, the industry expressed “concern that creditors would be unable to technically comply with the MLA if the purchase included products not expressly related to the purchase of the vehicle as described in the amended Q&A #2 . . . because § 232.8(f) of the regulation would prohibit creditors from taking a security interest in the vehicle in those circumstances and creditors may not extend credit if they could not take a security interest in the vehicle being purchased.” DoD acknowledged that it “finds merit in this concern and agrees that additional analysis is warranted.”
As a consequence, DoD is now reverting to the original 2016 Q&A #2 to “allow the Department to conduct additional analysis on this matter”. The original, now reinstated Q&A #2 does not directly address the issue of financing GAP insurance or other credit products as part of motor vehicle or other personal property credit transactions. Instead, it states that “[a]ny credit transaction that provides purchase money secured financing of personal property along with additional ‘cash-out’ financing is not eligible for the exception under §232.3(f)(2)(iii) and must comply with the provisions set forth in the MLA regulation.” 81 F.R. 58840, 58841. While DoD “takes no position on any of the arguments or assertions advanced as a basis for withdrawing the amended Q&A #2”, DoD’s 2017 hardline position discouraging the financing of GAP insurance and other credit products as part of motor vehicle or other personal property credit transactions has changed – at least for now.
In the new Q&A #21 regarding the use of ITINs, DoD clarified that for the purposes of the MLA safe harbor provision, “an ITIN is a ‘Social Security number.’” Now that ITINs have been added to the DMDC database, a search can identify all covered borrowers who have either a social security number or ITIN. Therefore, it is now clear that a party verifying the covered borrower status of dependents of service members can rely on an ITIN tax processing number in lieu of a social security number in using DMDC. While all U.S. servicemembers have social security numbers, certain dependents of servicemembers do not have social security numbers due to their resident or nonresident alien status.
According to Bloomberg Law, Leonard Chanin will serve as part-time CFPB Acting Deputy Director. Brian Johnson, the CFPB’s current Deputy Director, was scheduled to leave the agency on March 6.
Leonard is currently serving as Deputy to FDIC Chairman Jelena McWilliams and will continue in that position while serving as CFPB Acting Deputy Director. Leonard has spent many years in government service, including as Assistant Director of the CFPB’s Office of Regulations and, before joining the CFPB, as Director of the Fed’s Division of Consumer and Community Affairs.
A hearty congratulations to Leonard on receiving this appointment as the “No. 2 person” at the CFPB. We have known and worked with Leonard for decades and he is, without a doubt, one of the most knowledgeable consumer financial services lawyers in the country. I am delighted that Leonard will be joining us as the FDIC’s representative on the “Federal Regulators Speak” panel at PLI’s 25th Annual Consumer Financial Services Institute in New York City on March 23, 2020. To register and obtain a 25 percent discount on the registration fee as a client or friend of our firm, please click here and use the code RGA0 KAP25 at checkout.
The CFPB announced that it was taking three steps consisting of implementing an advisory opinion program, updating its responsible business conduct bulletin, and proposing an award program for whistleblowers.
Advisory program. Despite objections from Democratic Senators, the Bureau announced that it is implementing an advisory opinion program that will allow companies to submit requests for an advisory opinion to the Bureau via its website. The Bureau will be issuing procedures for how requests will be addressed, including how the Bureau will prioritize requests. Advisory opinions issued by the Bureau will be published in the Federal Register and on the Bureau’s website. Such opinions will include interpretations of the Bureau’s existing rules. The Bureau will also continue to provide responses to individual regulatory inquiries.
Responsible business conduct bulletin. Bulletin 2020-01 updates the Bureau’s responsible business conduct bulletin issued in June 2013 (Bulletin 2013-06). Like the 2013 bulletin, the updated bulletin identifies four categories of “responsible conduct”: self-assessing (referred to in the 2013 bulletin as “self-policing”), self-reporting, remediating, and cooperating. While the 2013 bulletin focused on the Bureau’s consideration of these categories in enforcement actions, the updated bulletin discusses the Bureau’s use of these factors “when evaluating whether some form of credit is warranted in an enforcement investigation or supervisory matter.” As examples of how the Bureau might give “credit” to a company, the Bureau indicates that it might close an enforcement investigation with no action or decide not to include Matters Requiring Attention in an exam report or supervisory letter. If also indicates that even if it does take action, responsible conduct could result in other credit. For an entity supervised by the Bureau, it might resolve violations non-publicly through the supervision process. Responsible conduct could also result in a reduction in the number of violations pursued by the Bureau or a reduction in the sanctions or penalties sought by the Bureau in an enforcement action.
Other differences between the 2013 bulletin and the updated bulletin include:
- Self-assessing. In the updated bulletin, the questions the Bureau will consider regarding self-assessing no longer include whether the violation was significant to the entity’s profitability or business model.
- Self-reporting. The Bureau notes in the updated bulletin that “an entity’s self-reporting of a potential issue does not require it to concede that it has violated the law.”
- Cooperating. The Bureau notes in the updated bulletin that it “does not consider an entity’s good faith assertion of privilege in an enforcement investigation to be a lack of cooperation: an entity asserting privileges in good faith remains eligible for potential favorable consideration for cooperating.”
Whistleblower legislative language. The Bureau has proposed legislative language to amend Title X of the Dodd-Frank Act to establish a whistleblower award program for individuals who report “original information relating to a violation of Federal consumer financial law.” Existing Dodd-Frank Section 1057 protects whistleblowers who report alleged violations of the Consumer Financial Protection Act, any law subject to the jurisdiction of the CFPB, or any CFPB rule, from retaliation by their employers. These protections apply if the employee reports the alleged violations to the employer, the CFPB, or any other federal, state, or local government authority or law enforcement agency. The proposed amendment would create whistleblower incentives in the form of monetary awards. Such awards would be based on a percentage of the amount of monetary sanctions collected in a “successful” administrative proceeding or court action brought by Bureau, including any settlement. The proposed amendment also includes confidentiality protections for whistleblowers.
The concept of incentivizing whistleblowers is not new to the Dodd-Frank Act. As originally enacted, the Act contained provisions to reward whistleblowers who provide information to the Securities and Exchange Commission regarding securities violations or bribes paid to foreign officials in violation of the Foreign Corrupt Practices Act and whistleblowers who provide information to the Commodities Futures Trading Commission regarding violations in the trading of commodities and on the currencies exchanges.
State regulators in Washington and Connecticut the financial services industries are beginning to issue guidance to address questions about licensees working at home due to the coronavirus (COVID-19) outbreak. State laws generally require licensable activity to take place only at licensed locations, such as a main office or branch office. However, Washington State and Connecticut have taken no-action positions for certain employees and individuals who conduct licensable activities at home.
Given the declared state of emergency in Washington State, the Washington State Department of Financial Institutions has issued Interim Guidance to temporarily allow licensed mortgage loan originators (MLO) to work from home, whether located in Washington State or another state, even if the home is not a licensed branch, provided certain data security conditions are met. These conditions are: 1. the licensed MLO must be able to access the company’s secure origination system directly using a virtual privacy network (VPN) or similar system; 2. all security updates, patches, or other alterations to the devices security must be maintained; and 3. the licensed MLO must not keep any physical business records at any location other than the licensed main office. The Department will not take action against such licensed MLO or the sponsoring licensed company. The Interim Guidance is effective immediately through June 5, 2020.
As part of an effort to contain the spread of the coronavirus and minimize its impact on Connecticut businesses, the Connecticut Department of Banking has issued a memorandum to formalize its no-action position regarding individuals who temporarily work from home due to the outbreak of the disease. Licensees regulated by the Department, such as mortgage lenders, mortgage servicers, and mortgage brokers, are required to have a branch office location license to conduct licensable activity at a location other than the licensed main office. However, the Department will not take action against employees of licensees who work from home and meet the following requirements: 1. working from home is related to the coronavirus; 2. the individual maintains all necessary licenses to conduct licensable activity; 3. no activity will be conducted with the public at the home location; and 4. the licensee must continue to exercise reasonable supervision over the employee. The Department’s no-action position is effective immediately through April 30, 2020.
West Virginia Adopts ‘Rational Nexus’ Standard for MLO Licensing
The West Virginia legislature recently amended the state’s SAFE Mortgage Licensing Act to add a “rational nexus” requirement that could disqualify an applicant seeking a mortgage loan originator (MLO) license from licensure if a prior criminal conviction bears a rational nexus to mortgage loan origination activity. In making this determination, the West Virginia Commissioner of Financial Institutions will consider the following factors: 1. the nature and seriousness of the crime; 2. the length of time since the crime occurred; 3. the relationship of the crime to the ability, capacity, and fitness required to perform the duties and discharge the responsibilities of the occupation; and 4. any evidence of rehabilitation or treatment undertaken by the applicant. The amendment will become effective on May 19, 2020.
Tempe, AZ | April 23-24, 2020
Social Media – Staying Compliant while Staying Connected
New York, NY | May 3-6, 2020
Speaker: Daniel JT McKenna
Speaker: Richard J. Andreano, Jr.
Speaker: Stacey L. Valerio
Speaker: Stacey L. Valerio
Speaker: Reid F. Herlihy
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