On March 21, the U.S. House of Representatives passed S.B. 2393, which extends through 2017 the provision of the Servicemembers Civil Relief Act’s (SCRA) that protects servicemembers against foreclosure without a court order or waiver for one year following completion of their service. On January 1, 2016, the foreclosure protection provision reverted back to the period of active duty military service plus 90 days, rather than the period of active duty military service plus one year. Upon the President’s signature, the SCRA’s protection against foreclosure without a court order or waiver will return to the period of active duty military service plus one year through December 31, 2017.
On April 18, Senators Sherrod Brown (D-OH), Jeffrey Merkley (D-OR), and Jeanne Shaheen (D-NH) sent a letter to the Government Accountability Office (GAO) requesting that it complete a study on the fintech industry. Under the Dodd-Frank Act, the GAO is required to examine the regulatory structure of person-to-person (P2P) lending. While the letter recognizes that the GAO issued a report on P2P lending in 2011, the senators urged the GAO to recognize that the lending platforms of financial technology firms (often called fintech) “has changed dramatically and evolved beyond consumer lending,” and that “P2P lending, now generally called marketplace lending, is not the only form of fintech that has developed over the last several years.” The letter further cautions that, “gaps in understanding and regulation of emerging financial products may result in predatory lending, consumer abuse, or systemic issues.” Finally, Senators Brown, Merkley, and Shaheen urged the GAO to provide responses to questions relating to, among other things, (i) the size and structure of the loan portfolios maintained by privately owned fintech lenders; (ii) how fintech lenders’ relationships with financial institutions impact both the financial system at large and regulatory framework; (ii) whether the risks that may arise from the investor base shifting from individual investor to institutional investor have grown since this issue was first noted in the GAO’s 2011 report; and (iii) the anti-money laundering, data security, and privacy requirements fintech companies are subject to.
On March 17, Senator Patty Murray (D-WA) sponsored the SCRA Enhancement and Improvement Act of 2016 (the Act). The Act focuses especially on student loan servicers, but encompasses all financial institutions covered by the SCRA. Although the text of the Act is not yet available, the recently issued press release on the Act describes its proposed changes to the SCRA. Among other changes, the Act would revise the SCRA by: (i) requiring automatic application of the SCRA’s interest rate cap; (ii) ensuring that student loan servicers have a dedicated SCRA representative; (iii) reducing the SCRA’s interest rate cap from 6% to 3%; (iv) protecting servicemembers when their loans are transferred or sold by requiring “sufficient notice”; (v) forgiving all federal and private student loan debt if a servicemember dies in the line of duty; (vi) expanding the interest rate cap to all debts, no matter when incurred; (vii) clarifying that servicemembers may bring a private right of action under the SCRA; (viii) doubling the fines for violations of the SCRA; and (ix) expanding certain protections on mortgages, leases, and cable and internet contracts.
On February 10, Indiana Attorney General Greg Zoeller and Missouri Attorney General Chris Koster, along with 23 other state attorneys general, wrote to the Senate Committee on Commerce, Science, and Transportation (Committee) urging it to pass legislation repealing a recent amendment to the Telephone Consumer Protection Act (TCPA) that allows debt collection robocalls to consumers’ cellphones. According to the AGs’ letter, the TCPA currently “permits citizens to be bombarded by unwanted and previously illegal robocalls to their cell phones if the calls are made pursuant to the collection of debt owed to or guaranteed by the United States.” The letter references the FCC’s efforts to slow the proliferation of robocalling and calls the recent amendment to the TCPA a “step backward in our law enforcement efforts” to protect consumers from “unwanted and unwelcome robocalls.”
This week, the Obama Administration released the Fiscal Year 2017 Budget Proposal. President Obama’s proposed budget for the Department of the Treasury would, through the Community Development Financial Institutions (CDFI) Fund, reserve at least $10 million until September 30, 2018 to provide grants for loan loss reserve funds and to provide technical assistance for small dollar loan programs under section 1206 of the Dodd-Frank Act. The Small Dollar Loan Program, according to the budget proposal, “will support broader access to safe and affordable financial products and provide an alternative to predatory lending by encouraging CDFIs to establish and maintain small dollar loan programs.” Earlier this year, Senator Sherrod Brown (D-OH), in a letter to the President, requested that the FY 2017 budget proposal prioritize funding for small dollar loan programs, as outlined in Title XII – Improving Access to Mainstream Financial Institutions – of the Dodd-Frank Act. Read more…