June 24, 2020

Consumer Financial Services Practice Digest

3 min

Seila Law v. CFPB

We are closely watching the Supreme Court for its decision on Seila Law v. CFPB. As we wrote in March, the Court's decision could reshape the Dodd-Frank Act and the relationship between the president and independent agencies. To date, there are still 14 decisions on merits cases to be announced during this term of the Supreme Court. The Court is expected to hand down its Seila Law decision in the coming days, and we will provide in-depth analysis when it does.

CFPB Proposes Significant Changes to the QM Rule, but Extends GSE Patch

The CFPB has proposed to revise the general rule regarding "qualified mortgages" in light of the upcoming expiration of the temporary GSE Patch, representing a significant change in store for the mortgage industry. The proposal would eliminate the 43% DTI requirement and replace it with a "price-based approach." To allow time to finalize its proposal, the CFPB proposes to extend the GSE Patch until the new QM rule is in place.

The Elusive Madden Fix: OCC Codifies "Valid When Made" for Loans by National Banks and Federal Savings Associations

Recently, the Office of the Comptroller of the Currency (OCC) issued a final rule to address the legal uncertainties caused by the Second Circuit Court of Appeal's decision in Madden v. Midland Funding, LLC (Madden). The rule makes clear that non-bank financial companies that purchase or take assignment of loans lawfully originated by national banks and federal savings associations are permitted to charge the same interest rate as charged by the banks that made the loan. Adopting the rule as proposed in November 2019, the regulatory text specifically provides that "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 rule is effective 60 days after publication in the Federal Register.

New Language Access Service Disclosures Required for New York City Collections

Debt collectors licensed by the New York City Department of Consumer Affairs (NYC DCA) will be required to comply with new requirements to provide language access service disclosures to consumers starting June 27, 2020. The NYC DCA adopted the new rules on May 28, 2020.

Payments Law Virtual Bootcamp

The Merchant Acquirers Committee (MAC) and Venable LLP hosted the Payments Law Virtual Bootcamp during the week of June 8 - 12, 2020. Tailored for general counsel, heads of government affairs, and regulatory compliance officers at all companies in the payments ecosystem, the Bootcamp provided a live one-hour webinar each day, Monday through Friday, covering new topics daily. Sessions included, "Legislative Update for the Payments Industry," "Managing Processing Risks in the Time of COVID-19," "Federal and State Scrutiny of Payments," "International Roundtable on the Payments Industry," and "What's Next in Payments."

New York-Based Business Financing Companies Allegedly Deceive and Threaten Business Consumers

The FTC continues policing business-to-business deception and its focus on small-business financing. On June 10, 2020, the FTC filed a Complaint in the Southern District of New York against two New York-based companies and several of their owners and officers for allegedly violating the FTC Act in connection with their business financing activities.

COVID-19 Recent News

SBA and Treasury Issue New Loan Forgiveness Application Form and Guidance for the Paycheck Protection Program Flexibility Act

Spousal Consent Physical Presence Requirement Relaxed During 2020 Because of COVID-19 Pandemic

SBA and Treasury Issue New Guidance Interpreting the Paycheck Protection Program Flexibility Act

Paycheck Protection Program Flexibility Act Enacted

The New Paycheck Protection Program Flexibility Act: How It Will Impact the Paycheck Protection Program

The Evolving Paycheck Protection Program (PPP): How to Interpret the Forgiveness Application and What to Expect for Next Steps