Jan. 25: Snapshot of state lending laws changing & evolving; Cordray & California: 50 mini CFPBs?

It is important for people in our biz to remember the ultimate goal: to help finance home ownership by guiding the client through the process. Many lenders have slogans to that affect. Fairway Independent Mortgage’s, for example, is, “We make the home loan process as simple as possible by guiding you through every step.” With all the information flowing our way every day, however, it is very easy to become caught up in the minutiae and forget the ultimate purpose. I wrote a short piece on exactly that: “Home Ownership is Still Part of the American Dream” and a few folks wrote in some thoughts.

As an example, Tim Ross of Ross Mortgage sent, “I enjoyed reading your article about the American Dream. In addition to the Vision and Core Values of Ross Mortgage we also site our purpose (defined as why we exist, beyond making money) that says: ‘We make the promise of the American Dream possible.’ The ability to buy, sell and own property has defined our nation throughout its history. Owning one’s home has always been considered a significant part of the modern American Dream; it provides pride, security, control and stability. Homeownership is an aspect of being an American.”

So whether it is an appropriate slogan, or a bus tour that HUD is leading to address affordable housing that was announced yesterday, keep the borrower in mind. Speaking of helping the borrower, it is good to stay abreast of what states are doing regarding their lending laws. With that in mind…

State lending law changes: always something new

It’s rough, and expensive, being a multi-state lender or vendor, keeping track of not only what is happening with regulatory changes at the Federal level but also with each state. Let’s play catch up and take a random legal walk around the nation to see who’s doing what.

Utah adopted rules regarding continuing education (CE) requirements for mortgage loan originators (MLOs), adjusting the timing of the CE requirements and specifying CE requirements for reinstatement.

The Missouri House Bill 2092 modifies provisions relating to Mortgage Loan Originators. Sections 443.717, 443.825, and 443.857, RSMo. have been repealed and replaced with three new sections. The new sections are directly related to mortgage loan originators pre-licensing education requirements, the application process for a residential mortgage loan broker license and the requirement for each residential mortgage loan broker to maintain, in the state of Missouri, at least one full-service office with limited exceptions.

Governor Gretchen Whitmer recently signed HB5084, amending sections 493.133 and .135 of the Michigan Compiled Laws to provide 120-day temporary authority to originate loans in Michigan for federally registered loan originators moving to a licensed institution, or for currently state-licensed loan originators applying for a loan originator license in Michigan.

The Colorado Division of Real Estate has adopted provisions regarding the temporary authority to act as a mortgage loan originator. The new provisions have a list of requirements that must be met by an applicant applying for a mortgage loan originator temporary license.

A recent MQMR blog post covered how Georgia has a new law with specific requirements with regard to a mortgage loan originator (MLO) acting under Temporary Authority (TA). As of January 9, the Georgia Department of Banking and Finance requires the following and more with regard to Temporary Authority: All advertisements mentioning a MLOs ability to act as an MLO in GA must “clearly and conspicuously” disclose that the MLO is operating under Temporary Authority and is not currently licensed in GA, and has a pending application with the Department, which may be granted or denied. The MLO acting under TA must indicate “temporary authority to operate,” or a substantially similar designation next to the signature line on any document, application, or disclosure signed by the MLO in connection with any residential mortgage loan application. Mortgage companies must now maintain in their journal of mortgage loan transactions clear identification regarding when any MLO utilizes TA at any point in the application or loan process, as well as the final status of the MLO’s GA license application. There are plenty of other rules to follow that can be found on the MQMR website.

2,500 miles away, in California, the California Consumer Privacy Act continues to turn heads. Financial firms must comply with the California Consumer Privacy Act, which gives people the right to access and delete personal data companies have collected. The law, which took effect Jan. 1, applies to any firm that has clients in the state.

Let’s take a step back for a moment. Robbie Chrisman sent, “Many intrusions of privacy issues arising in the internet and online interactions involve the expectation of privacy about electronic mail and similar electronic communications, including voice and video transmissions. In general, what is a reasonable expectation of privacy for employees of a company in the industry?

“As I understand it, while several court decisions have held that a plaintiff has no legitimate expectation of privacy in job-related conversations, communications, inquiries, investigations, or searches on the business premises regarding an employer or employee, there are ways to mitigate the following concerns when drafting company policy. That will help deal with the protection of the interests involving an employee’s physical person as well as physical and electronic locations. Assuming company email is not for personal use, employees should have a protected privacy interest against employer intrusion into the employee’s physical person, bodily functions and personal possessions; and physical and electronic locations, including employer-provided locations, as to which the employee has a reasonable expectation of privacy.

“A recent post by Lenders Compliance Group points out that, ‘An employee has a reasonable expectation in the privacy of a physical or electronic work location provided by the employer if the employer has provided notice that the location or aspects of the location are private for employees; or customarily treated as private for employees. Importantly, an employer intrudes upon an employee’s protected privacy interest by means such as an examination, search, or surveillance into certain locations.’”

Regarding who and what the CCPA applies to, and if the CCPA gives consumers the right to ask businesses, that fit certain criteria, to provide them all of the personal information that business has on them and/or ask the business to delete that information, Mitch Tannenbaum opined, “The reality is a little different. CCPA has an explicit exemption for GLBA covered information. The law says:  the CCPA does not apply to personal information ‘collected, processed, sold, or disclosed pursuant to the federal Gramm-Leach-Bliley Act, and implementing regulations…’ CCPA § 1798.145(e).


“In addition, the law provides a number of specific exemptions such as for preventing fraud.


“But that is not a get out of jail free card because you have to consider what information is collected pursuant to these various provisions. The likely biggest land mine is marketing data which, by my interpretation, is not covered, intentionally, by any of these exemptions. The other problem is those collections of data that you don’t know about. The likely biggest example of that is data collected by LOs and their teams that are not stored in official company repositories. These are a problem because they are likely not covered by the GLBA or fraud exemptions and must be included in a request to delete data or for a copy of data you have collected.


“Most importantly, any transaction data, which I interpret as data collected between loan app and closing and to include servicing data, is exempt. That is a huge percentage of data collected by mortgage companies.


“There is also an exemption for companies under $25 million in revenue plus under 50,000 visitors a year. It is likely more companies will be exempt under the first part of that (less than $25 mil in revenue) but some of those may be caught up in the 50,000-visitor rule. That rule says that if you collect data on more than 50,000 CONSUMERS, HOUSEHOLDS OR DEVICES a year, the exemption does not apply. That means, at a minimum, that if you have more than 50,000 unique visitors to your collective web sites (note that CCPA applies to the highest-level corporate entity and not to each subsidiary) a year, you lose the exemption.


“There is also a lookback component to the law. Beginning January 1, 2020, California residents can make a request for any data you collected from them during the preceding 12 months. Expect to get some of these. Are you ready to provide that information now?


CCPA is likely a done deal unless the Feds step in and enact something. But that only helps if the feds choose to override state law, which is not a given. Remember also that this is an election year and taking away rights that 40 million people already have them might be seen as trampling on state’s rights, especially if opponents to any federal bill frame it as ‘he wants to take away your rights.’ Plus, since it is an election year, Congress won’t do much work anyway.


“Also remember that any company doing business in Europe already has to set up the process to deal with 90 percent of this, so for them, it is a much smaller hill.

“Finally, big companies have already started to say that they are going to offer these rights to all Americans. Why? Because it looks like they are very consumer friendly and it kicks their competitors in a very sensitive body part. Also, it is just easier for the big guys to treat everyone the same. NOW Congress will be taking rights away from everyone. Is that popular in an election year?”

While we’re chatting about California, which accounts for about 25 percent of the residential lending market, there’s a new bill by Assemblyman David Chiu, D-San Francisco, which would cap a state tax break for mortgages to the interest paid on the first $750,000 of a loan for a primary home. It would eliminate the deduction altogether for mortgage interest on second homes.

And California Governor Gavin Newsom recently published the proposed 2020-21 state budget, which (beginning on page 173) provides for $10.2 million to begin reorganizing the Department of Business Oversight (DBO). Look who’s helping: Richard Cordray.

New York enacted the Zombie Property Remediation Act of 2019 which allows municipalities to compel mortgagees to either commence or complete mortgage foreclosure proceedings or issue a certificate of discharge of the mortgage for any abandoned property (i.e., zombie property).

Effective March 5 New York has introduced an Act amending the real property law related to the regulation of reverse mortgages that are issued pursuant to the Federal Home Equity Conversation Mortgage Program. Effective as of March 5, the provisions outline prohibited actions, mandatory actions and requirements regarding the verification process related to foreclosures. But the New York governor signed AB 5626 which amends the state’s real property law related to lenders offering reverse mortgages in the state issued under the FHA’s home equity conversion mortgage for seniors program (HECMs). The Act provides that an authorized lender, or any other party or entity, is prohibited from engaging in any unfair or deceptive practices connected to the marketing or offering of reverse mortgage loans and must not: (i) use the words “public service announcement” in an advertisement or writing; (ii) use the words “government insured” or other similar language to represent that the reverse mortgage loans are “insured, supported and sponsored by any governmental entity” in any form of advertisement or writing; or (iii) “represent that any such loan is other than a commercial product.”

Under AB 5626 Lenders will also be required to provide certain consumer protection information as specified by the NYDFS Superintendent, and must comply with stipulated requirements during the application process. The Act also outlines various servicing- and foreclosure-related requirements and restrictions, and provides a private right of action to any person injured by reason of any violation of the Act, or any violation of the rules and regulations of HUD relating to the HECM program, to recover three times the person’s actual damages, plus reasonably attorney’s fees.


Effective as of January 1 certain foreclosure-related documents in Oregon must contain information regarding assistance that may be available to veterans.

If you’re a broker in Kentucky you should know that the Kentucky Department of Financial Institutions amended (pages 1126-1128), in part, its Consumer Loan Company, Check Cashing and Deferred Deposit Service Business, Mortgage Loan Company, and Mortgage Loan Broker licensing provisions.

Weiner Brodsky Kider reminded clients that the Washington State Supreme Court recently ruled that a city ordinance which required landlords to rent properties to the first qualified applicant does not constitute a regulatory taking.

A 77-year-old man is having a drink in a Chicago bar. Suddenly a gorgeous girl enters and sits down a few seats away. The girl is so attractive that he just can’t take his eyes off her.

After a short while, the girl notices him staring, and approaches him. 

Before the man has time to apologize, the girl looks him deep in the eyes and says to him in a sultry tone: “I’ll do anything you’d like. Anything you can imagine in your wildest dreams, it doesn’t matter how extreme or unusual it is, I’m game. I want $100, and there’s another condition.”

Completely stunned by the sudden turn of events, the man asks her what her condition is.

“You have to tell me what you want me to do in just three words.”

The man takes a moment to consider the offer from the beautiful woman. 

He whips out his wallet and puts $100 dollars in her hand.

He then looks her square in the eyes and says slowly and clearly: “Paint my house.”

(Our needs change as we get older)

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Home Ownership is Still Part of the American Dream” If you have the inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.


(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)


Rob Chrisman