Banking Law

OCC to Reconsider CRA Final Rulemaking

By Devin P. Leary-Hanebrink, McGlinchey Stafford, PLLC

On May 18, 2021, the Office of the Comptroller of the Currency (OCC) announced that it will reconsider its June 2020 final rulemaking. The OCC has confirmed that, during this period, it will not object to banks suspending or postponing development and implementation of systems upgrades designed in anticipation of the final rule’s phased compliance dates of January 1, 2023, and January 1, 2024. However, the OCC will continue to implement the provisions that had an October 1, 2020, compliance date, which were explained in detail in OCC Bulletin 2020-99. In addition, the OCC does not plan to finalize its December 4, 2020, proposed rule requesting comment on proposals for determining new benchmarks, test thresholds, and community development minimums under the June 2020 final rule.

The June 2020 Community Reinvestment Act (CRA) final rulemaking, published under the guidance of the previous Administration, had an October 1, 2020, effective date, with a phased compliance timeline of October 1, 2020; January 1, 2023; and January 1, 2024. The intent of the 100-page final rule was to “strengthen and modernize the CRA by: (i) clarifying and expanding the activities that qualify for CRA credit; (ii) updating where activities count for CRA credit; (iii) creating a more consistent and objective method for evaluating CRA performance; and (iv) providing for more timely and transparent CRA-related data collection, recordkeeping, and reporting.” (see 85 Fed. Reg. 34734).

During this reconsideration period, the OCC will not implement or rely on the final rule’s evaluation criteria pertaining to: (i) Quantification of qualifying activities; (ii) Assessment areas; (iii) General performance standards; (iv) Data collection; (v) Recordkeeping; and (vi) Reporting. However, the OCC is reminding banks that they are still responsible for maintaining appropriate documentation for CRA examination purposes as required under OCC Bulletin 2020-99, including the qualifying criteria met by the activity, the area or areas served by the activity, and the date and amount of the activity.

Consumer Finance 

Wyoming Amends UCCC Licensing and Notification Requirements

By David Darland, Hudson Cook, LLP

Wyoming House Bill 8, effective July 1, 2021, amends the state’s Uniform Consumer Credit Code requirements in a number of important respects. Most noteworthy, the existing supervised lender license requirement will be done away with and replaced by a new (as yet unnamed) license that will apply to all consumer loans of $75,000 or less, except purchase-money, first-lien mortgage loans. Previously, the supervised lender license was required only if the loan finance charge rate exceeded 10% per year. The legislation expressly exempts supervised financial organizations (depository institutions) from this new license, as well as existing notification filing and sales finance company licensing requirements.

Also of note, the legislation does away with the concept of consumer-related credit sales and consumer-related loans, thus clarifying that commercial credit sales and loans are not subject to the UCCC.

Third Circuit Finds No Article III Standing for TCPA Call Recipient Who Suffered No Injury-In-Fact

By Ke Liu, Pilgrim Christakis LLP

On May 19, 2021, the Third Circuit issued a non-precedential opinion affirming the district court’s entry of summary judgment in favor of Defendant Bank of America, finding that Plaintiff Mark Leyse lacked Article III standing.

This long-standing TCPA case originated from a phone call in 2005. Leyse was previously found to lack standing to be a “called party” under the TCPA. After several visits to the Second and Third Circuits, in 2015, Leyse, as the subscriber of the phone line and the actual recipient of the call, was ultimately found to fall within the “zone of interests” protected by the TCPA.

In March 2020, the District Court of New Jersey once again dismissed the case for lack of Article III standing. On summary judgment, the Court noted that “Plaintiff does not assert, nor has he put forward any evidence to show, that he suffered nuisance, annoyance, inconvenience, wasted time, invasion of privacy, or any other such injury.” Rather, Leyse was an investigator who worked for an attorney to investigate unwanted telemarketing calls, and “welcomed such [unsolicited] calls” for purposes of the investigations. In fact, in this particular instance, Leyse placed more than 20 return calls to find out more information about the call, and refused to be added to a Do-Not-Call list on two occasions. Accordingly, the District Court found Leyse did not, and could not, show any concrete harm resulting from the unsolicited call.

On appeal, Leyse argued that “Article III standing does not require any allegations of harm beyond the statutory violations themselves.” The Third Circuit disagreed. It acknowledged that under Spokeo, Inc. v. Robbins, 136 S. Ct. 1540 (2016), certain intangible harms may be considered legally cognizable injuries. However, this “does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right.” As such, the unanimous Third Circuit declined to adopt Leyse’s proposed “absolute rule of standing with respect to the TCPA,” and affirmed the district court’s finding that Leyse made no showing of injury-in-fact.

Tax Law

1099-C Discharge without Debt Cancellation Not Consumer Protection Law Violation

By Douglas W. Charnas and Emily Honsa Hicks, McGlinchey Stafford, PLLC

In Gericke v. Truist, et al, the United States District Court for the District of New Jersey Camden Vicinage held that the lender’s issuing of an IRS Form 1099-C, which stated that the lender essentially was discharging the debt because of a “decision or policy to discontinue collection” did not result in the debt being cancelled. In this case, the lender provided clear evidence that the borrower was aware that the lender provided the Form 1099-C solely to satisfy its obligations under the income tax regulations, and that the underlying debt was not cancelled or actually discharged. 

The borrower alleged that the lender violated certain state consumer protection laws and argued that the lender’s failure to cancel the debt after issuing the Form 1099-C was an unlawful act in violation of those consumer protection laws. The borrowers’ underlying position was that a lender should not issue a Form 1099-C unless the debt is actually cancelled by the lender. However, the lender argued that it was required by the Internal Revenue Code to issue the Form 1099-C, and that compliance with IRS reporting obligations did not force it to cancel the debt. 

The court, having been presented with no evidence that the lender committed any unlawful practice or violated any clearly established legal rights, rejected the borrower’s argument and found for the lender because of a well-established (but often misunderstood) distinction between two terms: “discharge” for purposes of IRS reporting and “actual discharge,” representing the cancellation of an underlying debt.



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