Illinois Governor Pritzker signed the new Civil Rights Safeguard Act (Senate Bill 3777) on July 31, 2026 to codify disparate impact as an available theory of discrimination, including in providing financial services.

The state’s Human Rights Act currently provides that it is a civil rights violation for a financial institution, on the grounds of “unlawful discrimination,” to deny services to a person, or to provide a person with different services, including denying or varying the terms of a loan, or using lending standards that have no economic basis. (The Human Rights Act also prohibits discrimination in other realms, including employment, real estate transactions, and public accommodations.) A “financial institution” for this purpose includes a bank, credit union, insurance company, mortgage banking company, or savings and loan association that operates or has a place of business in the state.

The new Civil Rights Safeguard Act amends the Human Rights Act, including by revising the state’s definition of “unlawful discrimination.” The new definition clarifies that “unlawful discrimination” includes discrimination against a person, “whether by purpose or effect,” because of his or her actual or perceived protected status. Accordingly, for example, even if a financial institution has no intention to discriminate in its provision of loans or other services, if its lending standards or other activities have the effect of treating persons differently on a protected basis, it appears those standards or activities could implicate fair lending scrutiny in Illinois.

Continue Reading Illinois Prohibits Disparate Impact Discrimination

The California Business and Consumer Services Agency (“BCSA”) officially began operations on July 1, 2026, following a reorganization under California Governor Gavin Newsom’s Reorganization Plan GRP-1 that split the former Business, Consumer Services, and Housing Agency into two agencies, the California Housing and Homelessness Agency and the BCSA. Rohit Chopra, former Director of the Consumer Financial Protection Bureau (“CFPB”) and former Commissioner of the Federal Trade Commission (“FTC”), has been sworn in as the BCSA’s first secretary. In a press release Governor Newsom and Secretary Chopra announced that the BCSA’s focus will include (i) protecting consumers, entrepreneurs, and small businesses; (ii) enforcement against harmful and anticompetitive business practices; and (iii) ensuring that new technologies benefit all Californians.

Governor Newsom’s office indicated that despite any rollback of federal consumer protections, California aims to be at the forefront of efforts to protect consumers and lower costs, including targeting junk fees and hidden charges, strengthening online privacy and consumer data protections, expanding enforcement actions against scams and predatory practices, and increasing corporate transparency and accountability. In its first action on July 6, the BCSA targets consumer data protections, issuing a letter to the FTC urging that the FTC block a request for a “politically motivated” pardon against X in connection with a 2022 law enforcement order for  data and privacy law violations. The letter emphasizes the importance of safeguarding personal data to prevent consumer losses from identity theft and scams, particularly for older adults and military members. The letter also compares the BCSA’s Department of Consumer Affairs statutory authority to accept consumer complaints on “unfair methods of competition” and “unfair or deceptive acts or practices” with the FTC Act, as well as other BCSA departments’ authority to enforce certain data security and privacy requirements. The BCSA indicates that it has reviewed the FTC’s use of the petition process to terminate orders and concluded that termination would be unprecedented.

Additionally, Secretary Chopra’s published BCSA’s first blog post on July 14, 2026 emphasizing support for small, independent businesses. The post notes that many of the 4.3 million small businesses in the state face challenges such as coercive practices and fee structures by their vendors, and that entrepreneurs have unique needs for financing their expansion. The BSCA intends to enforce regulations protecting small businesses from unnecessary fees, burdensome terms, and predatory practices, and seeks public feedback on the experiences of small businesses.

In the coming months, we expect the BCSA to take action related to priority areas that Governor Newsom’s office cited, and coordinate with the Department of Financial Protection and Innovation and the California Department of Justice on consumer protection matters.

On May 12, 2026, California Governor Gavin Newsom announced that Rohit Chopra, former Director of the Consumer Financial Protection Bureau (“CFPB”) and former Commissioner of the Federal Trade Commission, will serve as Secretary of California’s new Business and Consumer Services Agency (“BCSA”). The BCSA is scheduled to launch on July 1, 2026.

The new agency will consolidate a broad range of licensing, supervisory, and enforcement functions affecting consumer-facing industries. BCSA will oversee several key departments, including the Department of Financial Protection and Innovation, the Department of Consumer Affairs, and the Department of Real Estate.

California has been a leader in state efforts to fill the void left by the decrease in CFPB enforcement activity, and the appointment of Chopra signals California’s continued focus on consumer protection.  During his time at the CFPB, Chopra was known for his aggressive positions on issues including fees and so-called “repeat offenders” and for high remediation and penalty amounts in settled matters. 

Governor Newsom’s office emphasized Chopra’s record of addressing junk fees, corporate misconduct, and unfair practices affecting consumers and small businesses and stated that the BCSA will build on the state’s existing efforts to address junk fees, expand enforcement against scams and predatory practices, strengthen online privacy and consumer-data protections, and increase corporate transparency and accountability.

Companies offering consumer financial services or small business loan products in California should take note. We will continue to monitor the BSCA’s launch and enforcement activity.

In a series of Legal Updates, we previously discussed legislation introduced and passed by the Maryland General Assembly and then signed by Maryland Governor Wes Moore, which provided an exemption for “passive trusts” from the licensing requirements of the Maryland Mortgage Lender Law and Maryland Installment Loan Law.

The version of law that passed the Senate, SB 1026, provided another exemption from the Maryland Mortgage Lender Law and Maryland Installment Loan Law for essentially all purchasers of mortgage loans. However, the House version, HB 1516, did not include this “all purchasers” exemption.  Despite this inconsistency, Governor Moore approved both versions, resulting in a conflict as to the applicability of the Maryland Mortgage Lender Law and Maryland Installment Loan Law to purchasers of mortgage loans.

Almost immediately after Governor Moore signed the conflicting bills, the Maryland Office of Financial Regulation (OFR) issued guidance taking the position that SB 1026 was an inaccurate, earlier version of the proposed law and deemed HB 1516 as the accurate version.

In mid-April 2026, Governor Moore signed SB 784, which will repeal the “all purchasers” exemption and therefore makes the Maryland Code and OFR guidance consistent with each other.  According to the bill, the intent of the bill is to be construed as a “clarifying corrective measure to repeal a provision of law erroneously enacted.”

Notably, SB 784 does not affect the previous legislation that provided an exemption for passive trusts from the licensing requirements of the Maryland Mortgage Lender Law and Maryland Installment Loan Law.  Thus, while SB 784 takes effect on July 1, 2026, the status quo will not change for passive trusts and those relying on the OFR’s earlier guidance.  Those relying on the “all purchasers” exemption, however, will need to reevaluate whether they are required to hold a license in Maryland.

On March 24, 2026, the Department of Housing and Urban Development (“HUD”) announced that it is launching an investigation under the federal Fair Housing Act into a state-sponsored special purpose credit program (described below) that reportedly uses race as an eligibility factor.

The Washington Homeownership Resource Center runs the Covenant Homeownership Program (the “Program”), which the state legislature created in 2023 to “address the history of housing discrimination due to racially restrictive real estate covenants in Washington state.” The Washington legislation provides that generations of systemic “redlining, racially restrictive covenants, mortgage subsidies and incentives” created barriers to mortgage credit and homeownership for black, indigenous, and people of color and other historically marginalized communities in Washington. To remedy those circumstances, the legislature created a down payment and closing cost assistance program for eligible first-time homebuyers, repayable upon the sale or refinancing of the home, and forgivable after a period of time for certain eligible households.

According to the Program’s website, persons eligible for the Program are those who lived in the state before 1968 (or have a parent or grandparent who did), are first-time homebuyers who meet the income guidelines (up to 120% Area Median Income), and are a member of a racial group identified through the organization’s mandated study.

HUD asserts that the Program may violate the Fair Housing Act, which prohibits housing and mortgage financing discrimination based on race, among other factors. HUD Secretary Turner stated that the agency will vigorously enforce the Act and seek to eliminate illegal racial preferences.

Continue Reading HUD Launches Fair Housing Investigation into Special Purpose Credit Program

In January 2026, the New York State Department of Financial Services (“DFS”) adopted its regulations (the “Regulations”) implementing the provisions of the state’s Community Reinvestment Act covering non-bank, independent mortgage bankers, also known as independent mortgage bankers, licensed under the New York Licensed Mortgage Bankers Law (“Mortgage Bankers”). Because the federal Community Reinvestment Act only applies to insured depository institutions, some states, including Illinois, Massachusetts, and New York, have adopted similar laws and applied those laws to non-depository mortgage companies. The Regulations impose filing, self-testing, and self-assessment requirements on Mortgage Bankers; require DFS to evaluate Mortgage Bankers, including by testing their performance in meeting community credit needs; and implicate applications. The evaluation requirements are similar to those imposed on insured depository institutions under the federal Community Reinvestment Act and its implementing regulations.

While the Regulations became effective the same day of their publication—January 7, 2026—the compliance date is July 7, 2026.

Continue Reading New York State Department of Financial Services Adopts Regulations Implementing the Community Reinvestment Act Covering Mortgage Bankers

Ginnie Mae recently announced that it will permit the issuance of mortgage-backed securities (MBS) backed by mortgage loans documented using electronic promissory notes (eNotes) under its Pools Issued for Immediate Transfer (PIIT) program beginning February 1, 2026.  The PIIT program is a “co-issue” program that allows loan originators to pool loans with Ginnie Mae, and simultaneously transfer the issuer and servicing responsibility to a purchaser of the related servicing rights.  Loans backed by eNotes are a quickly growing part of the residential lending market – in its announcement Ginnie Mae states that since it began accepting digitally backed loans (the pilot program launched in 2020) at least $92 billion dollars in eNote backed assets have been included in Ginnie Mae MBS, with over 50 issuers participating in the program.  Until now, however, Ginnie Mae was unable to accommodate eNotes in the PIIT program.  Fannie Mae and Freddie Mac already have co-issue programs for the purchase and pooling of loans backed by eNotes.

Continue Reading Ginnie Mae Accommodates Further Use of eNotes

On December 19, 2025, New York Governor Hochul signed the Fostering Affordability and Integrity Through Reasonable (“FAIR”) Business Practices Act. The FAIR Business Practices Act adds prohibitions against “unfair” and “abusive” acts or practices to the state attorney general’s arsenal, which otherwise expressly addressed only such acts or practices that are “deceptive.”

The state Attorney General Letitia James’ office advanced the legislation last summer, proclaiming that it is necessary to protect consumers from a wide array of harms, including deed theft, junk fees, hard-to-cancel subscriptions, data breaches, and other unfair, deceptive, or abusive practices (“UDAAPs”). Attorney General James described the legislation as a direct response to the federal government’s “retreat” from protecting consumers. The legislation’s statement of purpose provides that prohibiting only deceptive business acts and practices has proven insufficient to protect the state’s residents and economy. It also refers to court-imposed limits on the attorney general’s enforcement authority based on a strict reading of the current law.

The New York FAIR Business Practices Act broadly provides that unfair, deceptive, or abusive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in the state are unlawful. The Act adopts standards that the Consumer Financial Protection Bureau (“CFPB”) previously established for what constitutes unfairness and abusiveness. Then the Act clarifies that the attorney general may bring an action or proceeding to enjoin any UDAAPs committed by any individual, firm, corporation, company, partnership, or association, or agent or employee of such a person, that is conducting any business in the state. The Act emphasizes that a UDAAP is actionable regardless of whether it is “consumer-oriented,” reportedly to ensure the protections extend to businesses and nonprofit organizations as well as individuals. The Act even strikes the word “consumer” from the heading of the statutory article. The Act becomes effective on February 17, 2026.

Conventional wisdom holds that as the federal CFPB under the Trump administration sets narrower enforcement priorities, state regulators will fill that gap. Pennsylvania and California, among others, have prioritized consumer financial protection in 2025. We have definitely seen New York State continue certain enforcement efforts that the CFPB has dropped. The New York FAIR Business Practices Act indicates that the state is prepared to fill any perceived consumer protection vacuum.

Litigation involving Colorado’s opt-out from the interest exportation provisions of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) has taken an adverse turn for the financial services industry. On November 10, the United States Court of Appeals for the Tenth Circuit issued a ruling reversing a preliminary injunction imposed by the United States District Court for the District of Colorado in June 2024 that prevented enforcement of Colorado’s usury restrictions against parties to the litigation, including any members of various industry association parties—the National Association of Industrial Bankers, American Financial Services Association and American Fintech Council—with respect to loans in which the lender was not located, for interest exportation purposes, in Colorado. Subject to further proceedings, the Tenth Circuit’s ruling re-opens the door for loans originated by state-chartered banks and similar financial institutions to be subject to Colorado usury restrictions when either: (i) the borrower is located in the state; or (ii) subject to certain exceptions, the lender is located in the state, regardless of the location of the borrower. The ruling will become effective, if at all, only after issuance of the Tenth Circuit mandate, which may be stayed pending further appellate proceedings as discussed below.

As addressed in our prior discussion of the Colorado DIDMCA opt-out and related litigation, DIDMCA provides the basis, under federal banking law, for state-chartered, FDIC-insured banks and certain similar financial institutions to “export” the interest-related requirements of their home or, in certain cases, branch office (host) states when lending elsewhere. Both national banks and state-chartered banks have such authority, but DIDMCA conditions state-chartered banks’ authority on the ability of individual states to opt out of the interest exportation regime under 12 U.S.C. § 1831d. Iowa and Puerto Rico have had longstanding opt-outs; certain other states initially opted out but later repealed such opt-outs; and Colorado enacted an opt-out that would have become effective July 1, 2024 but for litigation by industry participants that resulted in the June 2024 preliminary injunction. 

Continue Reading DIDMCA Opt-Out Update — Tenth Circuit Reverses Colorado Preliminary Injunction

Around Christmas 2024, the Ohio Division of Financial Institutions (“DFI”) left a lump of coal in marketplace consumer lenders’ proverbial stockings by issuing guidance that asserted a license under the Ohio Small Loan Act (“SLA”) was required to arrange consumer loans of $5,000 or less in exchange for compensation—even if those loans were issued by federally insured banks pursuant to their authority under federal banking law. Expanded guidance and FAQs issued in January 2025 further supported DFI’s position that a license would be required for many parties engaged in arranging or brokering Ohio loans. Combined, the issuances left some market participants—particularly those operating under bank partnership models—scrambling to determine whether their programs were subject to the SLA under the DFI’s new position, whether to apply for a license, and whether obtaining a license would then impose material substantive limitations on affected lending programs.

In a positive development for consumer lending platforms (among other industry participants), the DFI appears to have withdrawn the 2024 guidance, albeit subject to the regulator’s ongoing consideration of underlying issues.

As of October 31, 2025, the DFI has updated its guidance on the application of the SLA to bank partnerships, reversing course from its earlier interpretation of the statute. The updated guidance states that the DFI will not require any non-bank entity that is compensated for arranging bank loans in any amount to obtain a license under the SLA or to otherwise engage in such activity.  Critically, the guidance also provides that the DFI does not intend to pursue enforcement action against any entity for engaging in such activity in calendar year 2025 without a valid license (whether or not such entity pursued a license application following the December 2024 and January 2025 guidance issuances).

Continue Reading Ohio Walks Back Prior Small Loan Act Guidance, Eases Licensing Position for Bank Partnerships