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• On May 31, President Biden executed a veto of a House Joint Resolution that would have repealed the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin No. 121, which instructs financial institutions holding digital assets for customers to keep the assets on their balance sheets. For more information, click here.
• On May 31, the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System (Board), and the Office of the Comptroller of the Currency (OCC) issued updated host state loan-to-deposit ratios that are used to evaluate compliance with the Riegle-Neal Interstate Banking and Branching Efficiency Act. Each respective host state loan-to-deposit ratio shows the ratio of total loans in a state to total deposits in the state for all banks that have that state as their home state. These ratios replace those issued in May 2023. For more information, click here.
• On May 30, the Consumer Financial Protection Bureau (CFPB) launched a public inquiry into junk fees that are increasing mortgage closing costs. According to a CFPB analysis, the closing costs borrowers pay in connection with a mortgage have risen steeply in recent years. From 2021 to 2023, median total loan costs for home mortgages increased by over 36%. For more information, click here.
• On May 29, the OCC announced the launch of REACh 2.0 at its Project REACh Financial Inclusion Summit. Project REACh, the Roundtable for Economic Access and Change, brings together leaders from the banking industry, national civil rights organizations, businesses, and technology to identify and reduce barriers that prevent full, equal, and fair participation in the nation’s economy. For more information, click here.
• On May 28, the U.S. Department of Treasury’s Office of Foreign Asset Control (OFAC) sanctioned Chinese national Yunhe Wang, known for his alleged control of a botnet of infected computers associated with the residential proxy service known as “911 S5.” OFAC designated 49 digital asset wallet addresses associated with Wang, and these addresses held over $130 million in digital assets on-chain. For more information, click here.
• On May 23, U.S. Department of Housing and Urban Development (HUD) issued Mortgagee Letter (ML) 2024-10 titled “Significant Cybersecurity Incident (Cyber Incident) Reporting Requirements,” which required Federal Housing Administration-approved mortgagees to notify HUD when a “cyber incident” occurs. For more information, click here.
• On May 22, the FDIC, the Board, and the OCC, under the auspices of the Federal Financial Institutions Examination Council (FFIEC), published the attached final regulatory reporting changes in the Federal Register. These reporting changes proposed by the agencies on September 28, 2023 (see FIL-53-2023) and December 27, 2023 (see FIL-68-2023), would apply to all three versions of the Call Report (FFIEC 031, FFIEC 041, and FFIEC 051) and to the Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 002), as applicable, and are subject to approval by the U.S. Office of Management and Budget. For more information, click here.
• On May 20, the Conference of State Bank Supervisors (CSBS) issued a request for public comment on proposed increases to processing fees for the Nationwide Multistate Licensing System and Registry (NMLS). If approved following the comment period, the proposed increase will be the first time these fees have changed since NMLS launched nationwide in 2008. For more information, click here.

State Activities:

• On May 30, New York State Department of Financial Services (NYDFS) issued guidance requiring NYDFS-regulated virtual currency entities to maintain and implement effective policies and procedures to promptly address customer service requests and complaints. For more information, click here.
• On May 23, the North Carolina Supreme Court ruled that North Carolina law supported a credit union’s unilateral amendment to its contract to include an arbitration provision and class action waiver. The decision was issued in a case, Canteen v. Charlotte Metro Credit Union, where the credit union, which held checking accounts for various parties, was sued in a class action alleging that the credit union improperly charged its customers overdraft fees. The credit union’s account agreement permitted the credit union to unilaterally amend the agreement upon providing notice to the account holder. The credit union amended the contract to include an arbitration provision and class action waiver and, when it was eventually sued, moved to compel arbitration of the claims. The plaintiff argued that such a revision of the parties’ agreement was a violation of the implied covenant of good faith and fair dealing implied by law into every contract. However, the North Carolina Supreme Court disagreed, noting that as long as unilateral amendments relate to “the universe of terms discussed and anticipated in the original contract,” the amendment is permissible. The court was careful, however, to point out that its decision does not grant a party “free rein” to change a contract in any manner it desires. In this instance, according to the court, because the contract’s choice of law provision raised the forum for disputes as a term of the contract, it was appropriate for the credit union to revise that term to require arbitration without offending the implied duty of good faith and fair dealing. For more information, click here.
• On May 22, the Florida First District Court of Appeal ruled that the Office of Financial Regulation’s (OFR) previous suspension of Binance.US’ money-services business license — which came as a response to Binance’s ex-CEO’s guilty plea in federal court during November 2023 — was procedurally improper because the OFR, among other things, did not state the specific reasons for concluding that its decision to suspend Binance.US’ money-services business license were fair under the circumstances. For more information, click here.
• On May 21, South Carolina Governor Henry McMaster signed S700, the state’s Earned Wage Access Service Act (EWA), making South Carolina the fifth state to enact such legislation. Earned wage access is gaining momentum as a means of allowing employees to access their earned wages before a regularly scheduled payday. The EWA requires earned wage access providers to register annually with the state’s Department of Consumer Affairs for operation within the state. The EWA will also require such providers to disclose the fees that will be charged to an employee or employer for the EWA provider’s services. However, the EWA specifies that EWA services are not to be treated as loans and, therefore, EWA providers will not be viewed as lenders under the EWA, a divergence from some of the similar laws that have been enacted in other states. For more information, click here.
• On May 21, Minnesota Governor Tim Walz approved SF 4097, which will put the state’s Medical Debt Fairness Act (act) into effect. The act, which is being referred to some as “controversial,” will become effective in large part October 1, with certain provisions taking effect in April 2025. Among other things, the act prohibits hospitals from sending a patient’s account to collections before either determining that the patient is ineligible for charity care or denying an application to charity care. Additionally, entities responsible for collecting medical debts are prohibited under the act from reporting medical debt to credit reporting agencies. The act also prohibits such entities from transferring the debt of a deceased patient to the patient’s spouse, and places numerous restrictions on the conduct of certain parties responsible for collecting medical debts. Among other things, such entities are prohibited from using or threatening to use methods of collection that would violate state law. Collection entities are also prohibited for communicating with debtors in a misleading or deceptive manner. For more information, click here.
• On May 20, Walz approved HF 3438. The bill establishes advertising, displaying, or offering a price for goods or services while failing to include all mandatory fees or surcharges as an unfair and deceptive trade practice. “Mandatory fees” are defined to include a fee or surcharge that: (a) must be paid in order to purchase the goods or services being advertised; (b) is not reasonably avoidable by the consumer; or (c) a reasonable person would expect to be included in the purchase of the goods or services being advertised. The bill also carves out certain exceptions, such as fees related to the purchase of a motor vehicle and fees associated with settlement services as defined under the Real Estate Settlement Procedures Act. The bill will take effect on January 1, 2025. For more information, click here.
• On May 17, Colorado Governor Jared Polis signed HB24-1011. The bill will require mortgage servicers to disclose certain information to a borrower concerning the disbursement of insurance proceeds. Specifically, a mortgage servicer must, upon a borrower’s requests, promptly disclose the specific conditions under which the servicer will disburse insurance proceeds to the borrower in the event of a covered loss to the residential property that is the subject of a mortgage. In the event of a loss, the borrower must create a repair or rebuild plan for the residential property and submit the plan to the servicer for approval. The mortgage servicer must then approve or deny the plan within 30 days of receipt, and the plan must include specific milestones for disbursement of insurance proceeds. The bill also specifies how disbursements are to be made, depending on whether the borrower is less than or greater than 31 days delinquent in making payments on the subject mortgage. For more information, click here.
• On May 17, Polis approved SB205. The bill requires a developer or a deployer of a high-risk artificial intelligence (AI) system to use reasonable care to avoid algorithmic discrimination in any high-risk system. Among other things, the bill provides consumers with an opportunity to correct any incorrect personal data that a high-risk AI system processed in making a consequential decision. For more information, click here.