The unprecedented spread of Covid‑19 and accompanying market turmoil is presenting new challenges for financial institutions on a daily, if not hourly, basis. APPROVED and Buckley are monitoring these developments and have collected and summarized below some of the preliminary guidance issued by the states thus far.
We have also become aware of several county clerk offices that are closing or limiting access to the public (e.g., by appointment only, accepting e-records or mail recordings only, open for recording only) in response to Covid-19. Institutions should reach out to their title insurers to determine how they will handle transactions.
- The Alaska Department of Commerce, Community & Economic Development communicated to NMLS that an Alaska mortgage loan originators’ (MLO) license is issued for a calendar year (being quarantined for 14-30 days would not be considered the “majority” of their time over the course of a year) and that a branch registration for the MLO’s home would not be required for this short period of time.
- On March 12, the Alabama State Banking Department issued a reminder that business continuity planning should be reviewed and updated because the Department plans to maintain normal operations regarding licensure and examination amid the Covid-19 outbreak. Licensees should immediately notify the Department of any circumstances that require the closure, relocation, or remote work program and any efforts taken to work with customers.
- On March 13, the Arkansas Securities Department issued interim regulatory guidance temporarily allowing licensed mortgage loan officers to work from home even if the home is not a licensed branch location provided that the MLO working from home is in compliance with all state and federal data security requirements.
- On March 9, the Connecticut Department of Banking issued a memorandum indicating that individuals who work for Consumer Credit Licensees currently licensed in Connecticut may temporarily work from home even though such home location is not currently licensed by as a branch office, so long as certain criteria are met.
- On March 12, the Idaho Department of Finance issued temporary guidance permitting licensees, registrants, and their employees the ability to work from their residence, even if the residence is not a licensed or registered Idaho branch location provided certain requirements are followed.
- On March 16, the Kansas Office of the State Bank Commissioner (OSBC) issued temporary guidance allowing licensees, registrants, and their employees to work remotely from their residence or a company designated location, even if the residence or location is not a licensed or registered branch location. OSBC also set forth best practices for remote works to ensure that security of information is maintained.
- On March 11, the Massachusetts Division of Banks issued a reminder that licensees should have in place business continuity plans in relation to Covid-19 and its potential impact on the delivery of financial services. During a period of quarantine or social distancing in homes due to Covid-19, the Division does not require mortgage loan originators’ homes to be licensed as a branch as long as they do not advertise the home as an office and do not meet consumers at their home. The Division would also permit all other licensees to work from home, provided certain conditions are met.
- On March 13, the Maryland Commissioner of Financial Regulation issued a bulletin advising that regulated entities should have a comprehensive disaster recovery plan in place that identifies how they will respond to various disasters and emergencies. The bulletin also identifies questions received from regulated entities and the Commissioner’s responses. Specifically, the Commissioner responded to questions regarding working from unlicensed locations, preferred methods of communication with the Commissioner, and notification to the Commissioner if a licensed business is closed because of mass quarantines during any part of an examination.
- On March 14, the Mississippi Department of Banking and Consumer Finance (DBCF) issued memoranda to Consumer Finance Licensees and Mortgage Licensees that includes general guidance to the industry and “outline[s] flexibility in DBCF processes in response to the COVID-19 event.” Among other things, the guidance advises licensees to periodically review related risk management plans (specifically continuity and pandemic plans) to ensure continuity of products and services with minimal disruption. It also advises that, if “necessary and appropriate,” licensees may relocate offices or have employees work from home. Additionally, effective March 13, the DBCF will discontinue onsite examinations. During this time, DBCF will be available to assist the industry and consumers via telephone and email communication.
- On March 16, the DBCF issued interim guidance allowing mortgage loan originators to temporarily work from home, whether located in Mississippi or another state, even if the home is not a licensed branch provided certain requirements are met.
- The Montana Division of Banking and Financial Institutions has issued guidance temporarily allowing licensed mortgage loan originators to work from home, whether located in Montana or another state, even if the home is not a licensed branch with some conditions.
- On March 12, the Nebraska Department of Banking and Finance (NBFD) issued guidance on temporary branch locations outside of the NMLS upon notification. Pursuant to the guidance, licensed and sponsored mortgage loan originators may temporarily work from an unlicensed branch, including a home office, provided certain conditions are met.
- On March 16, the NBFD issued guidance on annual meetings of credit union members, which are required by the Nebraska Credit Union Act. Pursuant to the guidance, Nebraska state-chartered credit unions may postpone their annual meetings of members if the meetings are to be held during the months of March, April, May, or June 2020. The board of directors of a credit union may reschedule the postponed annual meeting so that it will be held in July 2020 or August 2020 and provide members with thirty (30) days prior written or electronic notice of the rescheduled meetings. Records related to the rescheduling of the annual meeting must be kept for the Department’s review. All other provisions of the Nebraska Credit Union Act will remain in place.
- On March 17, the NBFD summarized regulatory assistance that it is considering until the state of emergency has lifted. For example, the guidance suggests efforts that financial institutions may take when working with customers, such as allowing shortened hours, reducing customer contact, updating signage relative to hours and locations, allowing customers to defer, skip payments, or extend payment due dates, etc. The guidance also summarizes the NBFD’s position with respect to financial condition review, supervisory response, regulatory relief, regulatory reporting requirements, and alternative service options for customers. The guidance provides additional information on examinations, digital applications, and audits.
- On March 13, the Nevada Department of Business and Industry, Division of Mortgage Lending, issued guidance to temporarily allow licensed mortgage loan originators to work from home, including persons associated with principal office locations, branch office locations, and other licensed locations located in other states.
- On March 13, the New Hampshire Banking Department (NHBD) issued a memorandum to licensed financial services institutions: (i) encouraging such institutions to work constructively with New Hampshire consumers who may experience difficulties in light of the economic disruptions caused by Covid-19; and (ii) providing guidance relating to mortgage loan originators working from home or other locations so long as certain conditions are met. On March 16, the NHBD issued further clarification of the March 13 guidance concerning branch closings as well as an FAQ.
- On March 17, the New Mexico Regulation and Licensing Department issued temporary regulatory guidance regarding working from home due to Covid-19 concerns. The guidance permits New Mexico mortgage licensees and their staff to work from their home residence, which may not be licensed as a branch, provided certain requirements are met.
- The New York Department of Financial Services (DFS) has created a webpage providing information for industry and regulated entities.
- On March 12, the New York Superintendent of Financial Services issued an order providing that regulated entities may temporarily relocate an authorized place of business and close any of their branch offices or locations if adversely affected by Covid-19 upon prompt written notice and compliance with the law, among other things.
- On March 10, DFS issued several industry letters related to Covid-19. Two of those letters require responses from New York regulated institutions no later than April 9, 2020. Responses must be submitted via email to email@example.com.
- In one letter, DFS encourages New York licensed lenders, among others, to evaluate how they may assist businesses that have been adversely impacted by Covid-19. Specifically, it suggests that such lenders consider easing new loan terms and waiving late fees, among other measures. Further, DFS explains that reasonable and prudent efforts to provide assistance to affected businesses are “consistent with safe and sound banking practices as well as in the public interest.”
- In another letter, DFS requires New York regulated institutions to provide a response on the institution’s plans to manage the potential financial risk stemming from Covid-19. According to the letter, the plans should include, at a minimum, an assessment of the following:
- Credit risk ratings of the customers, counterparties, and business sectors impacted by Covid-19.
- Credit exposure to customers, counterparties, and business sectors impacted by Covid-19 arising from lending, trading, investing, hedging, and other financial transactions, including any credit modifications, extensions, and restructurings (including capitalizations of interest).
- Scope and size of credits adversely impacted by Covid-19 that currently are in, or potentially may move to, non-performing/delinquent status, including consideration of stress testing and/or sensitivity analysis of loan portfolios and the adequacy of loan loss reserves.
- Valuation of assets and investments that may be, or have been, impacted by Covid-19.
- Overall impact of Covid-19 on earnings, profits, capital, and liquidity (including impact on loan-to-deposit ratio) of the institution.
- Reasonable and prudent steps to assist those adversely impacted by Covid-19 (such as those described in the letter referenced immediately below).
- In a third letter, DFS requires New York regulated institutions to provide a response on the institution’s plans to manage the risk of disruptions to its services and operations caused by Covid-19. According to the letter, the plans should include, at a minimum, the following:
- Preventative measures tailored to the institution’s specific profile and operations to mitigate the risk of operational disruption, which should include identifying the impact on customers and counterparts.
- A documented strategy addressing the impact of the outbreak in stages, so that the institution’s efforts can be appropriately scaled, consistent with the effects of a particular stage of the outbreak, which includes an assessment of how quickly measures could be adopted and how long operations could be sustained under different stages of the outbreak.
- Assessment of all facilities (including alternative or back-up sites), systems, policies, and procedures necessary to continue critical operations and services if members of the staff are unavailable for long periods or are working off-site, including an assessment and testing as to whether large scale off-site working arrangements can be activated and maintained to ensure operational continuity. This would also include an assessment and testing of the capacity of the existing information technology and systems in light of a potential increased remote usage.
- An assessment of potential increased cyber-attacks and fraud.
- Employee protection strategies, critical to sustaining an adequate workforce during the outbreak, including employee awareness and steps employees can take to reduce the likelihood of contracting Covid-19.
- Assessment of the preparedness of critical outside-party service providers and suppliers.
- Development of a communication plan to effectively communicate with customers, counterparties, and the public, and to deliver important news and instructions to employees, along with establishing forums for questions to be asked and addressed.
- Testing the plan to ensure the plan policies, processes, and procedures are effective.
- Governance and oversight of the plan, including identifying the critical members of a response team, to ensure ongoing review and updates to the plan, including the tracking of relevant information from government sources and the institution’s own monitoring program.
- DFS published a fourth industry letter to institutions engaged in virtual currency business activity setting forth guidance and a request for assurance to ensure that such regulated institutions have preparedness plans in place to address operational risk posed by Covid-19. In the guidance, DFS required every regulated institution to submit a response to DFS describing the plan of preparedness to manage the risk of disruption to its services and operations as soon as possible and no later than April 9, 2020 (30 days from the date of the guidance).
- On March 17, the governor and the attorney general of New York announced that, effective immediately, New York will temporarily postpone collection efforts on certain debts. Consumers with student loan debt and medical debt owed to the state will be receive at least a 30-day hiatus on payments—including a freeze on the accrual of interest on the debts—in order to allow them to deal with the effects of Covid-19. Debts must fit certain criteria in order to qualify for the debt payment freeze. Among other things, the criteria include (i) “[p]atients that owe medical debt due to the five state hospitals and the five state veterans’ home[s]”; (ii) “[s]tudents that owe student debt due to State University of New York campuses”; and (iii) “[i]ndividual debtors, sole-proprietors, small business owners, and certain homeowners that owe debt relating to oil spill cleanup and removal costs, property damage, and breach of contract, as well as other fees owed to state agencies.” New Yorkers who have other types of debt that are owed to the state and who are referred to the Office of the Attorney General may apply for a temporary freeze on collection by submitting an application which can be found here.
- On March 5, the North Dakota Department of Financial Institutions issued guidance alerting regulated entities to review its preparedness plan and alert the Department if the entity’s hours change or are adjusted as a result of Covid-19. The Department also noted that it will allows individuals to work remotely without notification as long as the locations is not held open to the public as a place of business. Separately, on March 16, the Department alerted the public that it will post notifications of the reduction of hours and/or services at branch locations.
- The Ohio Department of Commerce, Division of Financial Institutions sent out an email reminding Ohio bankers that temporary emergency closures of banking locations must be reported and closures lasting longer than two consecutive days must receive advance approval.
- On March 13, the Oklahoma Department of Consumer Credit issued interim guidance outlining requirements for the temporary operations from home and alternate locations and expedited change of address and temporary fee waivers for licensed locations that are compromised and/or undergoing decontamination procedures.
- On March 12, the Oregon Division of Financial Regulation (DFR) issued Bulletin No. DFR 2020-6 temporarily authorizing Oregon-licensed mortgage loan originators and other employees of Oregon licensed mortgage lenders, mortgage loan services, consumer finance companies, payday/title lenders, and manufactured structure dealers to work from home while transacting business when certain conditions are met.
- The Pennsylvania Department of Banking and Securities states on its website that it will not take exception to licensees and registrants working from alternate site locations, whether licensed or not, only while the Commonwealth of Pennsylvania is under a Proclamation of Disaster Emergency.
- On March 13, the Rhode Island Department of Business Regulation, Banking Division issued Banking Bulletin 2020-1 providing interim regulatory guidance allowing licensed mortgage loan originations to work from home, whether located in Rhode Island or another state, even if the home is not a licensed branch subject to certain conditions.
- On March 12, the South Dakota Division of Banking issued Memorandum 11-003 providing interim regulatory guidance allowing licensed mortgage loan originators to work from home, whether located in South Dakota or another state, even if the home is not a previously authorized location, so long as certain conditions are met.
- On March 13, the Texas Department of Savings and Mortgage Lending issued a statement to state savings bank presidents and chief executive officers, reminding them to review their business continuity plans, particularly as they relate to pandemics.
- On March 13 and 17, the Texas Office of Consumer Credit Commission issued advisory bulletins to regulated lenders, credit access businesses, property tax lenders, and motor vehicle sales finance licensees regarding responses they can take to Covid-19, including allowing licensees to conduct business activities from unlicensed locations provided certain requirements are met (e.g., the licensee prepares a written plan or document describing next steps and locations where credit access business activity will take place).
- On March 16, the Texas Department of Banking issued Industry Notice 2020-03 providing guidance to regulated institutions regarding customer support, pandemic preparedness including tips on emergency closures, and future examinations.
- On March 12, the Utah Department of Financial Institutions sent an email permitting regulated entities to temporarily reduce or suspend operations or reduce operating hours without Department approval so long as the entity provides adequate notice to customers and sends an email to the Department informing it of the actions taken.
- The Utah Department of Commerce, Division of Real Estate announced on their website that due to Covid-19 concerns, real estate and appraisal licensees that have not completed their RAP Back Fingerprinting enrollment in advance of their March or April 2020 license renewal will have their license expirations temporarily postponed until further notice.
- On March 13, the Vermont Department of Financial Regulation issued a memorandum advising licensees and sponsoring companies that the Department will not take action against licensed mortgage loan originators and their sponsoring company if the MLO works from home so long as certain requirements are met.
- On March 5, the Washington Department of Financial Institutions, Division of Consumer Services issued interim regulatory guidance expressing the Department’s intent to temporarily allow licensed mortgage loan originators to work from home, whether located in Washington State or another state, even if the home is not a licensed branch provided certain conditions are met. The Department also published a website providing Covid-19 resources for DFI licensees.
- The Wisconsin Department of Financial Institutions, Division of Banking published a website providing regulated entities with Covid-19 information and resources. The Division also noted that it will take a no-action position concerning a licensed mortgage loan originator working from a location that is not the licensed or registered office or branch office upon compliance with certain criteria.