Additional CARES Act Guidance
to Assist Mortgage Servicers

The Consumer Financial Protection Bureau and Conference of State Bank Supervisors have issued joint guidance to mortgage servicers to assist in complying with CARES Act provisions granting a right to forbearance to consumers impacted by the COVID-19 pandemic.

Servicers of federally backed mortgages must grant up to two consecutive 180-day periods of forbearance to borrowers with pandemic-related hardships. Additional interest, fees, or penalties beyond the amounts scheduled or calculated also should be waived with no negative impact to a borrower’s mortgage contract during the forbearance. Federally backed mortgages include loans supported by Fannie Mae or Freddie Mac, as well as loans issued by the departments of Housing and Urban Development, Veterans Affairs, and Agriculture.

Mortgage servicers could violate the CARES Act or other applicable law and cause consumer harm if they require documentation to prove financial hardship, do not grant properly requested forbearance, or mislead or steer borrowers away from forbearance.

DBO Launches Financial Education
and Empowerment Grant Program

On May 19, the DBO announced the launch of CalMoneySmart, a new $4 million grant program to support financial education and empowerment programs for unbanked and underbanked consumers.

CalMoneySmart will award $1 million a year in grants of up to $100,000 to nonprofit organizations that submit the best proposals to develop or provide free financial education designed to help consumers access lower-cost financial services, establish or improve their credit, increase savings, or reduce debt.

Many low-income consumers struggle with limited access to basic financial resources such as checking accounts, online banking and electronic bill payments. According to the Federal Deposit Insurance Corporation (FDIC), up to 25 percent of consumers in the U.S. are unbanked or underbanked, which can make it more difficult to manage often-tight personal finances.

The grant program was created when Governor Gavin Newsom signed SB 455 by Sen. Steven Bradford, D-Gardena, in October 2019. The bill established a $4 million Financial Empowerment Fund from which the CalMoneySmart program will award grants for four years.

To be eligible for a grant, an applicant must be a nonprofit organization. Grant funds can be used for:

• Free classroom or web-based financial education and empowerment content to help consumers access lower-cost financial products and services, establish or improve their credit, increase savings, or reduce debt.
• Individualized financial coaching.
• A financial product or service intended to help consumers identify and access responsible financial products and services, establish or improve their credit, increase their savings, or lower their debt.

The DBO is now accepting grant applications for fiscal year 2020-21. All applications must be submitted by July 3. The DBO expects to announce grant recipients and disburse the first grant funds in September.

Additional information can be found at https://dbo.ca.gov/calmoneysmart/. For questions, comments, or help, please contact CalMoneySmart@dbo.ca.gov.

On May 27, the DBO announced an order to ban from the PACE industry an Encino company that allegedly engaged in a pattern of fraud that included peddling PACE as a “free government program,” forging signatures on contracts, and impersonating homeowners on contract confirmation calls. A Desist and Refrain Order was issued against Eco Technology, Inc. (Eco Tech) demanding the company discontinue its illegal practices and stop soliciting PACE contracts, which finance energy-efficient home improvements through property tax assessments.

A week earlier, the DBO also issued an alert about misleading mailers that companies have sent to homeowners with PACE financing. These mailers falsely inform consumers they are behind on payments and facing foreclosure. The entities providing these notices may be in the business of buying properties in foreclosure or providing foreclosure rescue services. The mailers often include a document from Retran Foreclosure Listing Service that falsely states a consumer is behind on their PACE financing payments. It appears that Retran Foreclosure Listing Service sells false documents to the companies that mail notices to consumers.

A June 12 deadline is approaching to submit public comment on proposed modifications of pending amendments to regulations under the California Financing Law (CFL).

On October 25, 2019, the DBO issued a notice of rulemaking to amend the regulations to require applicants and licensees to transition onto the Nationwide Multistate Licensing System & Registry (NMLS) and set forth licensure requirements for PACE program administrators. The regulatory changes also propose transitioning all licensees under the California Financing Law to NMLS, a national licensing database for providers of financial services and products.

After consideration of public comments, the DBO is proposing additional changes to the proposed amendments. The proposed revisions are posted on the DBO website and have been made available to the public in accordance with Government Code section 11346.8(c).

Some Escrow Annual Reports Due June 15

Each escrow agent licensee is required to submit to the Commissioner of Business Oversight an annual report prepared by an independent certified public accountant (CPA) or an independent public accountant (Financial Code section 17406) within 105 days after the close of the escrow agent’s fiscal year. The annual report includes audited financial statements and required supplemental information.

If your fiscal year ended on Feb. 29, your annual report is due June 15.  Please have your CPA email your annual report to ESCAnnualReportFiling@dbo.ca.gov by June 15 using a secured encrypted delivery system. The use of a secured dropbox is also acceptable. If your CPA is unable to submit the annual report electronically, it can be mailed to Sultanna Wan, Specialist, Escrow Law, Department of Business Oversight, 320 West Fourth Street, Suite 750, Los Angeles, CA 90013.

Penalties for failure to file the annual report by the due date, or failure to include any information required in the report, are $100 per day for the first five days a report is late and $500 per day thereafter (Financial Code section 17408). Failure to file the report or to include any required information may also result in a license suspension or revocation and/or prompt an immediate examination (Financial Code section 17602.5).

For questions about the annual report forms, call Sultanna Wan at (213) 576-7647.