The pace of legislative activity during this current year can make it hard to stay abreast of new laws.  The Consumer Finance State Roundup is intended to provide a brief overview of recently enacted legislation of potential interest.

Between the end of July and the first week of August, two states enacted legislation of potential interest to Consumer Finance ABstract readers:

• District of Columbia:  Effective as an emergency measure from July 31 to October 29, 2023, B 25-357 (Act #25-0189), the “Public Health Emergency Credit Alert Emergency Amendment Act of 2023”, provides certain consumer protections to DC residents in connection with their credit reports under Section 28-3871 of the D.C. Code.  First, Section 28-3871(a)(1) requires a credit reporting agency to accept and include in the consumer’s file a personal statement provided by the consumer indicating that the consumer has been financially impacted by the COVID-19 emergency. Second, Section 28-3871(c) prohibits a user of a credit report from taking into consideration adverse information in a credit report that was a result of an action or inaction by the consumer that occurred during the public health emergency, if the credit report includes a personal statement in the form required by Section 28-3871(a).  Third, Section 28-3871(d) requires that an entity providing a credit report to a DC resident upon that consumer’s request (pursuant to 15 U.S.C. § 1681) must notify the DC resident of the right to request a personal statement to accompany the credit report.  Fourth, the emergency measure addresses the ability of the D.C. Attorney General to remedy violations, including through the imposition of penalties.  (We note that this measure includes provisions identical to those previously enacted by the D.C. Council on a short-term basis while it considers permanent legislation with the same effect.  B 25-358, a temporary measure that would extend the same provisions on a 225-day basis, is currently pending in the D.C. Council.)

• District of Columbia:  Effective as an emergency measure from July 27 to October 25, 2023, B 25-363 (Act #25-0192), the “Foreclosure Moratorium and Homeowner Assistance Fund Coordination Emergency Amendment Act of 2023”, provides for foreclosure protections to certain DC homeowners.  For the period of July 1 through September 30, 2022, the measure protects homeowners: (a) who applied for funding from the DC Homeowner Assistance Fund (“DC HAF”) program prior to September 30, 2022; and (b) whose applications are under review, pending approval, pending payment, or under appeal.  The measure prohibits: (a) a lender or servicer from initiating or conducting a foreclosure action; (b) the initiation of a sale under the Condominium Act of 1976; or (c) the entry of a judgment foreclosing the right of redemption.  Second, on or after July 25, 2022, the measure prohibits a mortgage lender, condominium association, homeowners’ association, or tax sale purchaser, or an agent acting as a representative for any housing or financing entity of a homeowner, from commencing or proceeding with a foreclosure action until 30 days after sending the homeowner to warn of its intention to initiate or continue a foreclosure.  (Like B 25-357, we note that this measure includes provisions identical to those previously enacted by the D.C. Council on a short-term basis while it considers permanent legislation with the same effect.  B 25-364, a temporary measure that would extend the same provisions on a 225-day basis, is currently pending in the D.C. Council.)

• Illinois:  Effective January 1, 2024, House Bill 2094 (Public Act 103-0292) amends the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1) to address requirements for mortgage marketing materials from a mortgage company not connected to the consumer’s mortgage company.  Specifically, the measure adds new subsection 505/2AAA(a-5), under which:
  • No language may be used to state or imply that any response by a consumer who is not an existing customer is required … such as the use of the terms “urgent”, “action required”, “materials inspected”, “time sensitive”, or “important account information enclosed”;
  • The mortgage company’s name of the solicitor must be prominently stated in the body of the text, at the head of the letter or message in a font bigger than the body of the text, and on any envelope;
  • The mortgage company’s name of the consumer may not be used to state or insinuate in any way that the marketing material is from the consumer’s mortgage company rather than the solicitor’s mortgage company and is merely a solicitation;
  • The name of the consumer’s mortgage company must not be visible through an envelope window, appear on the envelope itself, or appear in an email subject line;
  • The text must clearly state if the consumer’s mortgage company had no part in helping the solicitor obtain the homeowner’s mortgage information.

A violation of the new subsection constitutes an unlawful practice under the Consumer Fraud and Deceptive Business Practices Act.

• Illinois:  Effective July 28, 2023, House Bill 2717 (Public Act 103-0322) amends two sections under the Mortgage Escrow Account Act (765 ILCS 910/1) with respect to higher-priced mortgage loans.  First, the measure amends Section 5 to clarify that a mortgage lender that complies with the escrow account requirements under 12 CFR Part 1026 for a “higher-priced mortgage loan” (as defined therein) is deemed to comply with the requirement under the section to notify a borrower about terminating or continuing that escrow account.  Second, the measure amends Section 7 to provide a borrower does not have the right to terminate any escrow account arrangement for a higher-priced mortgage loan, unless the borrower has met all the conditions for cancellation of an escrow account for a higher-priced mortgage loan under 12 CFR Part 1026.

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