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On February 27, the California Department of Financial Protection and Innovation (DFPI) issued new guidance with respect to the performance of remote work by mortgage loan originators (MLOs) working for licensees under the California Residential Mortgage Lending Act (California Financial Code Sections 50000 et seq., the “CRMLA”). The CRMLA does not expressly prohibit employees of a licensee from working at a remote location, such as an employee’s home. A licensee may authorize an employee to perform limited functions at a remote location that is not considered a branch office, provided that the location does not have the indicia of a branch office and is not advertised to the public as a business location. However, the guidance noted that a branch manager must continue to supervise employees who are working remotely, and that the DFPI will continue to examine the supervisory activities of a branch manager to ensure that the branch manager is adequately supervising each MLO and employee regardless of whether they are working at a remote location or a branch office.…

Continue Reading California DFPI Publishes New Guidance on Remote Work by MLOs

On January 26, the California DFPI announced its participation in a $22.5MM multi-state into a settlement with a with a Cayman Islands digital asset firm to resolve a securities enforcement action in connection with the platform’s earn interest product program. A North American Securities Administrators Association working group—composed of the DFPI and state regulators from Washington, Kentucky, New York, Oklahoma, Indiana, Maryland, South Carolina, Vermont, and Wisconsin—collaborated in the investigation into the firm. The group alleged that the platform failed to register as a securities and commodities broker but told investors that it was fully in compliance (we discussed similar actions in a previous blog post here). The DFPI’s previous desist-and-refrain order concluded that the earn interest accounts, which enables retail investors to earn interest upwards of 36% APR on crypto assets, constituted the unqualified sale of securities in the form of investment contracts in violation of California law.…

Continue Reading Recent Crypto Settlements Signal State and Federal Enforcement Trends

Recently, the FTC and California Department of Financial Protection (DFPI) sued several companies and owners for allegedly operating an illegal mortgage relief operation. This action alleges that the defendants’ conduct violated the California Consumer Financial Protection Law (CCFPL), the FTC Act, the FTC’s Mortgage Assistance Relief Services Rule (the MARS Rule or Regulation O), the Telemarketing Sales Rule, and the Covid-19 Consumer Protection Act.
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Continue Reading FTC, DFPI Shut Down Mortgage Relief Operation

On July 15, the California DFPI released draft text for a proposed second rulemaking under the Debt Collection Licensing Act (DCLA) relating to the scope, annual report, and bond amount increase provisions of the DCLA.
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Continue Reading DFPI Second Rulemaking Proposal on Debt Collection Licensing

Two weeks after the DFPI set a Dec. 9 effective date for its long-threatened commercial financing disclosure requirement (we discussed these regulations in a previous bog, here), the DFPI issued proposed commercial UDAAP and annual reporting regulations likely impacting many of the same companies. Specifically, the proposed regulations would apply to providers of commercial financing or other financial products and services to small businesses, nonprofits, and family farms, and would (i) expand the DFPI’s UDAAP authority, and (2) impose annual reporting requirements on covered providers (we briefly discussed these proposed regulations in a previous blog post here).
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Continue Reading Proposed California Commercial UDAAP and Annual Reporting Regs to be Promulgated Under California Consumer Financial Protection Law

On June 24, the California Department of Financial Protection and Innovation (DFPI) issued proposed regulations implementing certain provisions of the California Consumer Financial Protection Law (CFPL) related to commercial financial products and services. Written comments on the proposed regulations are due by August 8.
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Continue Reading DFPI Issues Proposed Rules for Commercial Financing

On April 28, Governor Newsom signed Senate Bill 577 which will, among other things, bring back the California Financing Laws (CFL) licensing exemption which permits a lender to make a single commercial loan within a 12-month period without first obtaining a license.  The previous law, which contained this exemption, had expired by its terms on December 31, 2021.  The California Department of Financial Protection and Innovation has seen an uptick in California finance lender license applications this year, and speculation is that one of the reasons for that was the loss of this exemption.  The new law takes effect immediately as an emergency statute.  The exemption does not apply to consumer loans.
Continue Reading California Reinstates Licensing Exemption for Single Commercial Loan Made During 12-month Period

On April 8, the California Department of Financial Protection and Innovation (DFPI) filed a cross-complaint against a Chicago-based FinTech company alleging that as the “true lender” of consumer installment loans, it is subject to and also violated the Californian Financing Laws (CFL) by making loans in excess of the CFL 36% rate cap and that the FinTech violated the California Consumer Financial Protection Law (CCFPL) by offering and collecting on loans with rates exceeding the rate cap.  The cross-complaint was filed in response to a complaint filed by the Fintech company in March to prevent the DFPI from applying California usury law to loans made through its partnership with a state-chartered bank located in Utah (we discussed this complaint in a previous blog post here). …
Continue Reading California Strikes Back: Filing Cross-Complaint Alleging FinTech is “True Lender,” Seeks $100M Penalty