To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Financial Services industry over the past week:

Federal Activities

State Activities

Federal Activities:

• On July 1, the Federal Housing Finance Agency (FHFA) and the Consumer Financial Protection Bureau (CFPB) published updated loan-level data for public use collected through the National Survey of Mortgage Originations (NSMO). The data also provide updated mortgage performance and credit information for a nationally representative sample of mortgage borrowers from 2013 to 2021. For more information, click here.
• On June 30, the EU’s Markets in Crypto-Assets (MiCA) Regulation came into effect, introducing new rules for stablecoins and crypto asset service providers. The regulations aim to bring legitimacy and clarity to the crypto industry within the EU. Initial effects include the potential delisting of non-compliant stablecoins and increased regulatory oversight. Industry experts believe this will enhance consumer protection and foster a safer environment for crypto users. For more information, click here.
• On June 29, Ethereum co-founder Vitalik Buterin publicly criticized the current state of crypto regulations, calling them an “anarcho-tyranny.” He argued that regulations either allow bad actors to thrive or punish transparent developers. Buterin suggested solutions like limiting leverage, requiring audits, and implementing knowledge tests as viable means of regulation. He emphasized the need for good-faith engagement from both regulators and the industry to create effective regulations. For more information, click here.
• On June 28, the Supreme Court ended the Chevron doctrine, shifting authority to courts to interpret ambiguous statutes. This decision, stemming from the case Loper Bright Enterprises v. Raimondo, could alter the regulatory landscape for the crypto industry, potentially reducing the SEC’s “crypto by enforcement” strategy. While the crypto community sees this as a win, it may lead to increased legal challenges and regulatory uncertainty. For more information, click here.
• On June 27, the U.S. Supreme Court issued an opinion in SEC v. Jarkesy ruling that, pursuant to the Seventh Amendment, when the Securities and Exchange Commission (SEC) brings an enforcement action seeking civil penalties, it must do so in federal court, where a jury trial is available, as opposed to initiating enforcement actions within its own in-house proceedings. For more information, click here.
• On June 27, Coinbase filed lawsuits against the SEC and Federal Deposit Insurance Corporation (FDIC), demanding transparency on crypto regulations. Coinbase alleged that the SEC’s inconsistent enforcement actions and the FDIC’s pressure on banks were harming the crypto industry. The lawsuits, filed under the Freedom of Information Act (FOIA), aimed to compel the agencies to release information on their regulatory actions and set clear rules for the digital asset sector. Coinbase’s Chief Legal Officer Paul Grewal announced the filings on social media, emphasizing the need for transparent and consistent regulation. For more information, click here.
• On June 27, the U.S. Department of Justice (DOJ) sentenced Michael Kane and Shane Hampton of Hydrogen Technology for their roles in a multimillion-dollar crypto securities fraud scheme. The executives used a trading bot to inflate the price of their cryptocurrency, HYDRO, resulting in $7 million in wash trades and $300 million in spoof trades. Kane received a sentence of three years and nine months, while Hampton was sentenced to two years and 11 months. For more information, click here.
• On June 27, the Financial Industry Regulatory Authority (FINRA) issued a regulatory notice, reminding members of regulatory obligations when using generative artificial intelligence (AI) and large language model tools. For more information, click here.
• On June 25, the CFPB issued an interim final rule to extend compliance deadlines for the small business lending rule, which follows the recent Supreme Court decision in CFPB v. CFSA. For more information, click here.
• On June 24, the Office of the Comptroller of the Currency (OCC) requested comment on a proposal to revise its recovery planning guidelines for certain large insured national banks, federal savings associations, and federal branches. For more information, click here.
• On June 21, the FHFA announced its conditional approval for Freddie Mac to engage in a limited pilot to purchase certain single-family closed-end second mortgages. This conditional approval follows FHFA’s first publication of a proposed new product by either Freddie Mac or Fannie Mae (the Enterprises) for public comment under the new process mandated by the Prior Approval for Enterprise Products regulation, which became effective in April 2023. For more information, click here.
• On June 20, the CFPB, OCC, Federal Reserve System (Fed), FDIC, National Credit Union Administration (NCUA), and FHFA issued a final rule implementing new provisions governing the use of automated valuation models, which requires that mortgage servicers adopt policies and procedures ensuring that automated valuation models operate with certain quality control standards, designed to operate with a high level of confidence. For more information, click here.
• On June 20, the FDIC Board of Directors approved a final rule to strengthen resolution planning for insured depository institutions (IDIs) with at least $50 billion in total assets. The FDIC issued a final rule that incorporates several changes from the agency’s proposed rule published in September of 2023. For more information, click here.
• On June 20, the FHFA issued a Request for Input (RFI) on opportunities to improve the Federal Home Loan Banks’ (FHLBanks) processes for members and project sponsors to apply for Affordable Housing Program (AHP) funding. For more information, click here.
• On June 20, the Fed released an article related to the systemic implications that burgeoning relationships between banks and nonbank financial intermediaries (NBFIs) have on the financial industry. The article discusses several findings contained in a study completed by the Fed and focuses on the growth in asset- and liability-dependencies between banks and NBFIs. The Fed underscores the systemic risk of such dependencies, noting its observation that in “times of heightened market-wide stress,” demands for liquidity from NBFIs increase, forcing intervention by authorities. The article opines that “effective financial regulation and system risk surveillance requires a holistic approach that recognizes banks and NBFIs as highly interdependent sectors.” For more information, click here.
• On June 18, the CFPB filed a proposed order that would require Freedom Mortgage Corporation to pay a $3.95 million penalty for submitting error-riddled mortgage loan data to federal regulators. In October 2023, the CFPB sued the nonbank mortgage company for violating both the Home Mortgage Disclosure Act (HMDA) and a 2019 CFPB order. In addition to the civil money penalty, if entered by the court, today’s proposed stipulated judgment and order will require Freedom Mortgage to regularly audit, test, and correct the company’s HMDA data. For more information, click here.
• On June 18, the CFPB ordered a reverse mortgage servicing operation to stop illegal activities that harmed older homeowners and caused them to fear losing their homes. The CFPB found that the customer service operation of Sutherland Global, its subsidiaries Sutherland Government Solutions and Sutherland Mortgage Services, and NOVAD Management Consulting had inadequate resources and staffing to handle as many as 150,000 borrowers, which allegedly caused systematic failures to respond to thousands of homeowner requests for assistance, and caused financial harm to borrowers, including losing out on home sales and paying unnecessary costs. The order permanently bans Sutherland Global, Sutherland Government Solutions, and NOVAD from engaging in reverse mortgage activities, imposes strict compliance requirements on future reverse mortgage activities of Sutherland Mortgage Services, requires the Sutherland companies to pay $11.5 million in redress to affected consumers, and requires all companies to pay a civil penalty of approximately $5 million, which will be deposited in the CFPB’s victims relief fund. For more information, click here.
• On June 17, the Federal Trade Commission (FTC) announced that it is taking action against software maker Adobe and two of its executives, Maninder Sawhney and David Wadhwani, for deceiving consumers by hiding the early termination fee for its subscription plan and making it difficult for consumers to cancel their subscriptions. For more information, click here.

State Activities:

• On June 26, 25 state financial regulators settled with Plutus Financial, Inc., Abra Trading, LLC, and related entities, along with CEO William “Bill” Barhydt, to return up to $82 million in virtual assets to customers. The settlement followed an investigation revealing that Abra operated without the necessary state licenses. Abra agreed to cease certain activities and refund remaining virtual assets to U.S. customers. The states involved waived monetary penalties to facilitate customer repayment. For more information, click here.
• On June 25, Rhode Island Governor Daniel McKee signed H7282, a bill designed to amend outdated provisions of various banking statutes and the state’s home loan protection act. Among other changes, the bill amends current law with respect the minimal capital requirement applicable to currency transmission licensees. The bill also adds some new consumer protections. For example, the bill prohibits a student loan servicer from withholding transcripts from borrowers that are or were delinquent in making student loan payments. For more information, click here.
• On June 24, Governor McKee signed H7103. The bill prohibits health care providers, facilities, and emergency medical transportation services from furnishing information regarding medical debt to consumer reporting agencies, among other items. Further, the bill provides that any portion of a medical debt that is furnished to a credit bureau will be void. For more information, click here.
• On June 24, Governor McKee signed S2709. The bill provides for the following with regards to medical debt credit reporting:
  • Health care providers, facilities, and emergency medical services are prohibited from reporting medical debt to credit reporting agencies, and contracts with collection entities must include a clause prohibiting the reporting of medical debt;
  • Credit reporting agencies are barred from acquiring, recording, or reporting any medical debt, and are barred from including adverse information related to medical debt in consumer reports; and

Debt collectors are prohibited from using false or misleading information to collect medical debt or suggest that such debt will affect credit reports or scores, and are required to disclose in correspondence with a consumer that Rhode Island laws prohibit credit bureaus from reporting medical debt. For more information, click here.

• On June 24, New Governor Kathy Hochul announced guidance from the New York State Department of Financial Services, informing insurers that they are prohibited from making or inquiring about coverage decisions based on a property’s status as an affordable housing development. Hochul noted that the guidance serves to notify insurers that “New York will not tolerate bias against [its] affordable housing providers.” The guidance follows recent legislation designed to eliminate discrimination in insurance based on tenants’ source of income or the existence of affordable dwelling units within a building. For more information, click here.
• On June 20, the Nevada Secretary of State filed regulation NAC 604D, LCB File No. R096-23, which was adopted by the financial division of the state’s Department of Business and Industry. The regulation is intended to establish provisions related to enforcement of the state’s earned wage access law that was signed into law on June 15. Among other things, the regulation establishes fees for (a) the initial application for and the initial issuance of a license as a provider; (b) the annual renewal of such license; and (c) the reinstatement of an expired license. Additionally, the regulation prohibits a provider from charging a user a cancellation fee or other fee of any kind for the user to cancel his or her participation in an agreement for the provision of earned wage access services. The regulation further prohibits a licensee from advertising in any manner that (a) may tend to confuse the identity of the licenses or (b) is unethical, false, or misleading. The regulation also empowers the commissioner to revoke or suspend the license of a licensee for certain violations in accordance with the state’s earned access wage law. For more information, click here.
• On June 18, the U.S. District Court for the District of Colorado, interpreting the state’s opt-out statute pursuant to the federal Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA), granted a motion (filed by the plaintiff financial trade organizations) enjoining Colorado from enforcing its lower interest rate caps with respect to loans issued to Colorado borrowers by the plaintiffs’ members. The court noted its agreement with plaintiffs that Colorado has attempted to exceed the scope of its opt-out authority by interpreting the “loans made in” to include all loans to borrowers located in Colorado. The court opined that the determination of where a loan is “made,” as the term relates to DIDMCA opt-outs, depends on where the lender performs its “loan-making functions,” not the location of the borrower, as Colorado argued. For more information, click here.
• The Ohio Division of Financial Institutions (Division) recently released a letter intended to alert Ohio mortgage professionals that the Division is repealing its previous guidance prohibiting mortgage professionals from acting as both mortgage professionals and real estate brokers in a single transaction. The Division noted that, while mortgage professionals are no longer prohibited from engaging in a dual capacity, those who do are subject to disclosure requirements. For more information, click here.
• The California Department of Financial Protection and Innovation (DFPI) recently released proposed regulations related to its Debt Collection Licensing Act. Among other things, the proposed rules would require licensees to electronically submit annual reports that include an attestation to the accuracy and completion of the information contained within the report. The proposed rules would also define “net proceeds generated by California debtor accounts.” For more information, click here.