Utah has followed California and New York by enacting its own Truth in Lending-like commercial financing disclosure law, but with an additional twist—Utah’s new law has a registration requirement. On March 24, Utah Governor Spencer Cox signed SB 183 into law, with an effective date of January 1, 2023. We discuss how this new law fits into the recent trend of states enacting commercial financing disclosure laws, the companies that are subject to and exempt from the Utah law, the law’s registration obligation, the disclosures that a commercial financer must provide before consummating a transaction, and additional details and takeaways in Mayer Brown’s Legal Update.

In February 2022, a legal opinion issued by the California Department of Financial Protection and Innovation (“DFPI”) concluded that employer-provided earned wage access (“EWA”) transactions are not loans under the California Financing Law and California Deferred Deposit Transaction Law.  The DFPI’s legal opinion stands to provide significant clarity to the EWA industry and should encourage the continued adoption of earned wage access as a solution to employees’ needs for low-cost temporary liquidity.

Before diving into the DFPI legal opinion, we briefly remind readers of the basic structure of EWA programs.  Earned wage access is a service that allows workers to obtain wages that they have earned, but have not yet been paid, prior to the worker’s regularly scheduled payday.  Although the exact structure of each program differs, EWA programs generally fall into two broad categories:

  • Direct To Consumer Models are offered directly to workers, without the employer’s involvement.  Any eligible worker can access EWA from a direct to consumer model, as the worker’s employer offering the service is not a prerequisite.  Because direct to consumer models do not integrate with employers, recoupment of EWA advances is typically effected through a single-use automated clearinghouse transaction from the employee’s personal bank account on the employee’s payday.
  • Employer Integrated Models involve the EWA provider entering into a contract with an employer to offer the service as an employee benefit to the employer’s employees.  An EWA provider using the employer integrated model may integrate with the employer’s payroll and time card systems to receive data about the amount of earned wages that an employee has accrued as of a certain date.  Employer integrated programs typically fund an earned wage advance through the employer’s payroll system and then recoup the advance through a payroll deduction facilitated by the employer on the employee’s next regular payday.

Some EWA providers charge fees for use of the service, which are typically either flat transaction fees or “participation” fees for use of the program.

As an innovative and emerging product, EWA programs present novel financial regulatory issues.  The most significant of these issues is the status of an EWA transaction as a non-credit transaction. Continue Reading California DFPI Affirms Employer-Integrated Earned Wage Access Is Not a Loan

Marketplace lender Opportunity Financial, LLC has gone on the offensive against the California Department of Financial Protection and Innovation to protect its bank partnership program against challenge on a “true lender” theory. On March 7, 2022, OppFi filed suit against the DFPI to ask the state court to declare that FinWise Bank, a Utah-chartered bank, is the true lender of loans facilitated through OppFi’s online platform and funded by the bank. Read more about OppFi’s action and other recent activity on the true lender front at the federal and state level in Mayer Brown’s Legal Update.

The U.S. Federal Housing Finance Agency’s (“FHFA”) draft strategic plan, which we discussed in an earlier post, sets forth FHFA’s goals and objectives for the next four years. Unsurprisingly, FHFA’s recent focus on fair lending issues is reflected in the plan. Over the course of the past year, FHFA has made numerous strides in advancing its fair lending efforts, such as entering into a collaborative agreement with HUD, requiring Fannie Mae and Freddie Mac (the “Enterprises”) to submit Equitable Housing Finance Plans (which we previously discussed here), and issuing a fair lending policy statement and advisory bulletin. It also took steps to expand access to credit, announcing last summer that positive rental payment history can be included in Fannie Mae’s underwriting process.

According to the plan, one of the agency’s three strategic goals is to foster housing finance markets that promote equitable access to affordable and sustainable housing. Specific objectives include promoting sustainable access to mortgage credit, advancing equity in housing finance, serving as a reliable housing market information source, facilitating availability of affordable housing, and supporting leveraging of technology in mortgage processes. The strategic plan identifies a variety of means the FHFA plans to utilize in order to achieve these objectives, many of which involve monitoring and oversight of the Enterprises. For example, FHFA proposes to oversee the Enterprises’ implementation of Equitable Housing Finance plans, and conduct equity and fair lending assessments and targeted examinations on the regulated entities’ policies, products, and initiatives. FHFA would also monitor the Enterprises’ efforts to increase and preserve sustainable mortgage purchase and refinance credit for all qualified borrowers, with additional focus on low- and moderate-income families, communities of color, rural areas, and other underserved populations.

Based on the objectives in this strategic plan, it is possible we will begin to see more changes in the mortgage underwriting process, as the plan signals that FHFA will explore opportunities to leverage non-traditional data, alternative approaches, and new technology. We also can expect to see FHFA publishing more data and analysis on fair lending, fair housing, and equity topics in the future.

On February 9, 2022, the U.S. Federal Housing Finance Agency (“FHFA”) released its Draft FHFA Strategic Plan: Fiscal Years 2022-2026 (the “2022 Strategic Plan”) for public input.

This year, FHFA added a novel objective to this plan – to identify options for incorporating climate change into FHFA’s governance of the entities it regulates.

According to FHFA Acting Director Sandra L. Thompson, the 2022 Strategic Plan provides a roadmap for FHFA to promote sustainable and equitable access to mortgage credit and protect the safety and soundness of the U.S. housing system. While not a statutory requirement, the FHFA uses its strategic planning process to set priorities based on important stakeholder input. Typically, FHFA releases a strategic plan every few years, outlining the agency’s priorities for the supervision and regulation of the Federal Home Loan Banks, and of Fannie Mae and Freddie Mac (the “Enterprises”). The agency sets forth those priorities through strategic goals and objectives to achieve those goals.

The 2022 Strategic Plan appears to replace the one FHFA released as recently as 2021. The Draft 2022 Strategic Plan differs from the 2021 Strategic Plan in some significant respects. One key change is climate change.

The Draft 2022 Strategic Plan addresses climate change in objective number 1.4: “Identify options for incorporating climate change into regulated entity governance.” The 2022 Strategic Plan states that FHFA will achieve that objective by conducting research on the risks and effects of climate change on the housing finance system, building on experiences with natural disaster response to ensure prioritization of climate change at FHFA and the regulated entities, and improving climate data collection, analysis, and reporting. The 2021 Strategic Plan did not include a climate change objective, or mention climate change at all.

Prioritizing climate change, among other aspects of the Draft Strategic Plan in general, may reflect the shift in administration at FHFA. The prior administration was keenly focused on recapitalizing the Enterprises and removing them from conservatorship. For example, Objective 1.3 in the 2021 Strategic Plan was to responsibly end the conservatorships of the Enterprises. In contrast, Objective 1.3 in the 2022 Strategic Plan is to preserve and conserve Enterprise assets while managing the conservatorships.

While the FHFA is prioritizing climate change, the 2022 Strategic Plan really only commits to studying the effects of climate change. The Plan and its objectives do not shed light on whether and how FHFA or the Enterprises will address the risks climate change may pose to the U.S. housing finance system. It is still unclear what actions FHFA will take , if any. Any action FHFA does take would need to be consistent with the agency’s and Enterprises’ statutory mandates — to provide stability to the secondary mortgage market, provide ongoing assistance to that market, and promote access to mortgage credit.

In addition to its objective to study climate change, FHFA acknowledged that climate change may shock the financial system in the future. Specific to the Enterprises, FHFA noted that natural disasters could increase their credit risk and credit-related expenses, and otherwise stress the Enterprises or their key business counterparties, including mortgage servicers and insurers. FHFA highlighted that natural disasters tend to disproportionately affect affordable housing. Rebuilding such housing may be significantly difficult if economic conditions result in high labor and materials costs.

The addition of a climate change objective also signals that the Enterprises, mortgage servicers, and insurers may at least partially bear some of the risk from climate change. One of the strategic goals in the 2022 Strategic Plan is to foster housing finance markets that promote equitable access to affordable and sustainable housing. (In a follow-up post, we will address those equitable housing goals in greater detail.) Although FHFA recognized that natural disasters tend to disproportionally affect affordable housing, the agency did not indicate whether or how it will address those related risks.

Prioritizing climate change is consistent with FHFA’s prior actions over the past two years. Recently, FHFA added resiliency to climate risk as one of its assessment criteria in its 2022 Scorecard for the Enterprises, which we addressed in a prior blog post.

The FHFA expects to finalize its 2022 Strategic Plan in the near future, with the draft comment period ending on March 11, 2022. Typically, the FHFA also outlines its strategic goals and objectives in its Annual Performance Plan for the next fiscal year. The Annual Performance Plan usually outlines more specific measures, means, and strategies to accomplish each objective outlined in the Strategic Plan, as well as ways to validate and verify each objective. Accordingly, we may learn more details on FHFA’s plans related to climate change when the agency releases that plan later this year.


In an extraordinary announcement yesterday, the US Consumer Financial Protection Bureau (CFPB or Bureau) unveiled a broad expansion of its supervisory procedures to include examining supervised entities for discriminatory conduct that the agency alleges could constitute unfair practices in violation of the Dodd-Frank Act. Going forward, it appears that every exam for unfair, deceptive or abusive acts or practices (UDAAP) is likely to include an assessment of a company’s antidiscrimination programs as applied to all aspects of all consumer financial products or services, regardless of whether that company extends any credit or would otherwise be subject to the Equal Credit Opportunity Act (ECOA). In recent months, the Bureau has been laser focused on issues of fair lending and racial equity in the consumer credit market, including redlining, pricing and algorithmic bias, among others. With this change, the CFPB will be broadening its racial equity focus to cover every aspect of the consumer financial services sector. Continue Reading CFPB Announces It Will Seek to Extend ECOA-Like Antidiscrimination Provisions Broadly to All Consumer Finance Activities

Mayer Brown and the Mortgage Bankers Association (“MBA”) invite you to the 2022 Mortgage & Housing Summit: The Outlook for Issuers and Investors, hosted in-person at Mayer Brown’s New York office.

The event will take place on March 17 from 12:00 to 5:00 pm EDT.

Formerly known as the annual Mortgage REIT Summit, this year’s event will focus on the housing market and public policy issues, the state of capital markets and M&A opportunities, securitization transactions and trends, and tax developments.

Mayer Brown and the MBA will be joined by guest speakers for four panels, including:

  • A market & macroeconomic overview;
  • Capital markets regulation: SEC areas of focus, corporate governance, ESG matters, and tax developments;
  • Housing market and public policy trends; and
  • Securitization developments.

See the full agenda

Guest Speakers:

  • Steven Abrahams, Senior Managing Director, Head of Strategy, Amherst Pierpont Securities LLC
  • Michael Fratantoni, Chief Economist and Senior Vice President of Research and Industry Technology, MBA
  • Jennifer Fuller, Managing Director, Investment Banking, Keefe, Bruyette & Woods, Inc.
  • Sasha Hewlett, Director, Secondary & Capital Markets, MBA
  • Chrissi Johnson, Chief Executive Officer, Alinement Advisors
  • Cara Newman, Managing Director & Head of Structured Finance, Redwood Trust, Inc.
  • Tanya Rakpraja, Head of Corporate Responsibility and Government Relations, Annaly Capital Management, Inc.

In addition, the following Mayer Brown partners will participate in the panel discussions:

David Freed, Haukur Gudmundsson, Brian Hirshberg, Kris Kully, Paul Jorissen, Andrew Olmem, Lauren Pryor, Susannah Schmid, Holly BuntingRemmelt Reigersman, and Jon Van Gorp.

We hope to welcome you and your colleagues, in-person, on March 17, 2022. Check-in for the event will begin at 12:00 p.m. EDT.

Register here!

Mortgage loan servicers have a wide range of responsibilities. However, does everything servicers do constitute “servicing”? Or do servicers do some things that are not “servicing”?

The answer is important because the Real Estate Settlement Procedures Act and its Regulation X impose strict obligations on servicers to respond to certain borrower communications related to “servicing,” but not to nonservicing. The courts, including two recent federal courts of appeals, are drawing fine lines between the two.

RESPA requires a mortgage loan servicer to respond in a timely manner to a borrower’s request to correct errors relating to “allocation of payments, final balances for purposes of paying off the loan, or avoiding foreclosure, or other standard servicer’s duties.” Section 1024.35 of Regulation X specifies that a servicer must acknowledge, investigate, and respond to a borrower’s “notice of error” within strict timeframes, so long as the notice is in writing and provides enough information for the servicer to identify the account and the asserted error. In addition, after receipt of a notice of error, a servicer is prohibited, for 60 days, from furnishing adverse information to a consumer reporting agency regarding any payment that is the subject of the notice.

Section 1024.35 then provides a list of covered errors that are subject to those requirements. The list includes errors that could arise in typical servicing activities – errors related to the acceptance, application, or crediting of borrower payments; and to disbursing amounts for taxes, insurance premiums, or other charges. The list of covered errors also includes those that could arise in default servicing – errors related to providing information regarding loss mitigation options, making foreclosure notices or filings, moving for foreclosure judgments or orders of sale, or conducting foreclosure sales.

Then, the Consumer Financial Protection Bureau (“CFPB”) included a catch-all provision to section 1024.35, such that a covered error includes “any other error relating to the servicing of a borrower’s mortgage loan.”

Courts have been considering the scope of those responsibilities since even before the CFPB issued that list in 2013. Recently, two circuit courts of appeals have indicated that some activities of servicers do not constitute “servicing,” particularly where loan modifications are involved. Continue Reading Mortgage Servicing “Notices of Error” – Does The Catch-All Catch It All?

On February 23, 2022, the US Consumer Financial Protection Bureau (“CFPB” or “Bureau”) took the first step in an eventual rulemaking by publishing an outline of proposals and alternatives under consideration to prevent algorithmic bias in automated valuation models (AVMs). AVMs are software-based tools used to determine the value of real estate as an alternative or supplement to traditional appraisals. The CFPB’s proposals are part of the mandate to promulgate interagency regulations under section 1125 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), which the Dodd-Frank Act added. Section 1125 sets quality control standards for AVMs and requires the CFPB, Federal Reserve Board (Board), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA) to promulgate regulations to implement these quality control standards.

Read more in Mayer Brown’s Legal Update.

The upshot, for busy people:

  • The Consumer Financial Protection Bureau (CFPB) can sue companies in federal court or in its in-house administrative proceedings. Although the CFPB regularly announces settlements styled as administrative proceedings, it has rarely held administrative trials or other contested enforcement proceedings in that forum.
  • On February 22, 2022, and without an accompanying press release, the CFPB published in the Federal Register a number of changes to its in-house adjudication procedures. Some changes are administrative—how to count days, etc.  But others clarify and expand the powers Director Rohit Chopra has to shape proceedings, including to bifurcate remedial and liability determinations and to decide all dispositive motions.
  • These procedural changes don’t alter any of the CFPB’s substantive rules. But these changes do signal that the agency may start bringing enforcement cases in-house, where Director Chopra will decide what does and does not violate the law.

Continue Reading CFPB Issues Revised Administrative Litigation Procedures, Signaling Possible Increase in In-House Adjudications