On March 12, Arkansas enacted HB 1466 which amends the state’s Fair Mortgage Lending Act. HB 1466 introduces a set of definitions and regulatory requirements for mortgage brokers, bankers, servicers, loan officers, and transitional loan officers. It establishes rulemaking authority for the Arkansas securities commissioner to adopt rules to protect the public and participate in the multistate automated licensing system. HB 1466 amends the surety bond requirement for mortgage brokers, bankers and servicers, including outlining conditions for claims against the bond. It requires audited financial statements for licensure as a mortgage banker or servicer, specifying net worth requirements and complying with accounting standards.
HB 1466 introduces prudential standards for covered institution servicers, including financial condition requirements, corporate governance, risk management programs, and safeguarding customer information. It mandates the development of information security programs with specific elements such as risk assessments, encryption, multifactor authentication, and incident response plans. Finally, HB 1466 introduces an exception for financial institutions maintaining customer information for fewer than 5,000 consumers.
On the same day, Arkansas also enacted HB 1184 to further amend the Fair Mortgage Lending Act for consumer privacy protections in certain mortgage applications. HB 1184 introduces new definitions, including “consumer report” and “mortgage trigger lead,” which refers to leads generated from consumer reports triggered by credit inquiries. It specifies that mortgage trigger leads do not include reports obtained by lenders servicing existing indebtedness of the applicant.
HB 1184 amends Arkansas Code § 23-39-513 to prescribe an additional prohibited activity for mortgage loan companies and mortgage loan brokers. Specifically, HB 1184 prohibits using mortgage trigger leads in a “misleading or deceptive manner,” which includes the failure to disclose the following to the consumer: (i) the loan officer’s name; (ii) the mortgage broker or banker the loan officer represents; and (iii) how the loan officer obtained the consumer’s contact information. HB 1184 requires transparency about the solicitation being based on purchased personal information and clarification that the loan officer is not affiliated with the original creditor. It prohibits soliciting consumers who have opted out of prescreened offers or are on the National Do-Not-Call Registry. Additionally, it forbids knowingly using information from mortgage trigger leads in violation of HB 1184 or the FCRA.
