Like most industries today, consumer finance services businesses are being significantly impacted by the novel coronavirus (“COVID-19”). Troutman Sanders and Pepper Hamilton have developed a dedicated COVID-19 Resource Center to guide clients through this unprecedented global health challenge. We regularly update this site with COVID-19-related news and developments, recommendations from leading health organizations, and tools that businesses can use free of charge.
Additionally, this Tuesday at 3:00 p.m. EDT, Troutman Sanders will host a webinar to provide quick answers to critical COVID-19-related compliance questions for financial services companies. Click here to register for the webinar.
To help you keep abreast of relevant activities, below is 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:
– On March 27, President Trump signed into law H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), a $2 trillion relief measure.
Provisions in the CARES Act dramatically impact businesses in the consumer financial services space:
- A foreclosure moratorium on federally-related loans;
- A right to request and receive forbearance on federally-related mortgage loans;
- A moratorium on certain evictions; and
- Credit reporting requirements for consumers who perform loan forbearance agreements with creditors.
For in-depth analysis on these provisions, click here.
In addition, the CARES Act created a new program within the United States Small Business Administration’s (“SBA”) flagship 7(a) loan program called the “Paycheck Protection Program.” Under this new program, the SBA will guarantee 100% of the amounts loaned by participating lenders to certain United Sates small businesses, nonprofit organizations, veterans organizations, and tribal businesses. Click here for more analysis.
– On March 22, Sen. Sherrod Brown (D-Ohio) introduced a bill to amend the Fair Debt Collection Practices Act to expand consumer protections provided to debtors and small businesses during a declared major disaster or emergency. Those enhanced consumer protections would begin the day after a declaration of a major disaster or emergency and last 120 days after it terminates. Click here for more analysis.
– On March 23, Democratic Sen. Cory Booker (N.J.) and Sen. Sherrod Brown introduced the Stop Overdraft Profiteering Act, which would prevent banks from imposing overdraft fees for a six-month period following a national emergency or disaster. Click here for more analysis.
– The Department of Education announced on March 25 that it would defer collection actions on defaulted student loans for at least 60 days as part of the federal government’s response to COVID-19. Click here for more analysis.
– Federal financial regulators and other entities continue to issue guidance to consumers and regulated consumer financial service providers. New guidance includes:
- On March 26, the Consumer Financial Protection Bureau announced resources for consumers to protect their finances during the COVID-19 pandemic. Click here for more analysis. The announcement also stated that the CFPB would consider the impact of COVID-19 on a financial institution and any “good-faith efforts demonstrably designed to assist consumers” during an examination. Consistent with this, the CFPB issued policy statements regarding:
- On March 25, the Federal Financial Institutions Examination Council announced that “federal banking agencies will not take action against any institution for submitting its March 31, 2020, Reports of Condition and Income (Call Reports) after the respective filing deadline, as long as the report is submitted within 30 days of the official filing date.” Similarly, the Federal Reserve Board announced on March 26 that it would “not take action against a financial institution with $5 billion or less in total assets” for tardiness if it submits certain March 31 statements within 30 days of the official filing due date.
- On March 26, federal financial regulators advised financial institutions to consider providing small-dollar loans to cash-strapped consumers during the COVID-19 pandemic. Click here for more analysis.
- On March 22, the federal financial regulatory agencies issued an interagency statement providing guidance to lenders on how to deal with loan modifications and reporting for consumers affected by COVID-19. This statement encouraged lenders to work with borrowers in light of COVID-19 and stressed that the agencies will not criticize lenders for mitigating credit risk with prudent actions. Click here for more analysis.
– The North American Collection Agency Regulatory Association issued statements targeted to consumers and commercial debtors, regulated entities, and regulators, respectively, encouraging them to take steps to mitigate burdens on the other identified groups during COVID-19.
– 26 states have issued orders for its citizens to stay at home. 13 other states have issued some form of stay-at-home orders. Furthermore, there are other states that have issued restrictions on businesses without also issuing orders for citizens to stay at home. In total, all but one state has in place some form of restriction on business activities. Consumer financial services businesses should look closely at these orders to ensure their operations remain compliant. Click here to access the COVID-19 Resource Center, which maintains an up-to-date map showing the states with business restriction orders in place.
– 46 different state regulatory agencies have issued guidance/communications to their licensed consumer financial services businesses in response to the pandemic. The Nationwide Multistate Licensing System (“NMLS”) is maintaining an up-to-date list of guidance from state regulators concerning COVID-19. In addition, the NMLS Policy Committee encouraged regulators to be lenient and not take administrative action against their licensees if required reports are filed within 30 days of the placement of the license item. This revised a previous announcement by NMLS of a 60-day reporting extension. Specific details of this announcement can be viewed on NMLS’ Coronavirus/COVID-19 Updates webpage.
– Alongside the CARE Act’s foreclosure moratorium on federally-related loans, many states have enacted various moratoriums related to consumer housing:
- California halted all evictions through May 31, 2020, but the order does not relieve a tenant from paying rent or prevent a landlord from recovering rent that this due.
- Delaware has postponed all landlord and tenant proceedings until after May 1, 2020.
- Indiana prohibited residential eviction proceedings or foreclosure actions during the state of emergency.
- Kansas halted mortgage foreclosure efforts and eviction proceedings through May 1, 2020.
- Kentucky has canceled all eviction proceedings until April 10, 2020.
- Maryland has banned evictions during the state of emergency.
- New York on March 19, 2020 suspended mortgage payments for 90 days of borrowers financially affected by COVID-19.
- North Carolina stopped eviction and foreclosure hearings through April 15, 2020.
– In addition to the above, the Massachusetts Attorney General issued a sweeping emergency regulation instituting a prohibition on debt collectors making outbound debt collection calls or pursuing other debt collection practices as a result of the COVID-19 pandemic. Click here for more analysis. Similarly, Ohio legislators have introduced numerous emergency measures to address COVID-19, including a bill which would require creditors and debt collectors to stop collection activities during a state of emergency. This bill is modeled after the bill by Sen. Sherrod Brown. Click here for more analysis.
– California and New Jersey announced that financial institutions operating within their states agreed to offer mortgage payment forbearances of up to 90 days to borrowers economically impacted by COVID-19.
– 24 states have weighed in on how their governments will conduct “the public’s business” in the public eye, despite the increasing precautions that these same states are enforcing in regard to public meetings. Click here for more analysis.
– Federal regulators continue to issue privacy and information security guidance to businesses affected by COVID-19. New guidance includes:
- On March 28, HHS reminded healthcare covered entities of Health Insurance Portability and Accountability Act flexibilities made available by the Office for Civil Rights in response to COVID-19, such as:
- Allowing providers to serve patients through commonly used apps like FaceTime, Skype, and Zoom to provide telehealth remote communications (Click here for details);
- Guidance empowering first responders and others who receive protected health information about individuals who tested positive or have been exposed to COVID-19 (Click here for details).
- On March 27, the Equal Employment Opportunity Commission posted a webinar addressing several privacy and information security concerns applicable during COVID-19 (Click here for details and link to webinar):
- Employers may ask, question, or test employees relating to COVID-19 symptoms; however, only if the employees are physically coming into the workplace. If teleworking, then employers may not ask, question, or test.
- The Americans with Disabilities Acts allows employers to bar employees from physical presence in the workplace if the employees refuse to answer private health questions or provide temperature relating to COVID-19 concerns.
- The Genetic Information Nondiscrimination Act prohibits employers from asking employees whether family members have COVID-19. EEOC suggests that employers should consider, instead, asking whether employees have been exposed to anyone known to have COVID-19.
- A manager may report to employer officials whether he or she knows that an employee has COVID-19, or symptoms associated with COVID-19. Disclosing identity is not a requirement and not the default; only enough information should be disclosed to the employer official so that the official can act. Disclosing identity is fact specific.
- An employee may disclose to a supervisor if he or she knows that a coworker who reports to the same workplace has symptoms associated with COVID-19.
- An employer may disclose that an employee is teleworking or on leave but must not provide the reason.
- Employers may not disclose to the workforce the name of an employee with COVID-19, even if the employer believes that information lacking name would be insufficient to allow other employees to know if they should take further steps to protect themselves or others.
- When working remotely, employers must still keep medical information of employees confidential. If no formal system is in place during remote work, the holder of the confidential information must still safeguard the information and then properly store it when no longer working remotely due to COVID-19.
- Under the ADA, employers may notify public health authority if they learn an employee has COVID-19 because COVID-19 poses a significant risk of substantial harm to others.
- On March 27, Federal Trade Commission staff sent letters to VoIP service providers warning them that “assisting and facilitating” illegal telemarketing or robocalls related to the COVID-19 pandemic is against the law. Click here for details.