Last Week, This Morning

April 28, 2025

Below you will find several key developments in the financial services industry, including related developments in information privacy and data security, from the past week. We add an "Amicus Brief(ly)¹" comment to each item, where we briefly (see what we did there?) note for friends (and again?) of CounselorLibrary the important takeaways from the developments outlined in the email. Our legal reporters - CARLAW, HouseLaw, InstallmentLaw, PrivacyLaw, and BizFinLaw - provide more comprehensive, real-time updates of federal and state laws, regulations, litigation, and other industry items of interest. For a personal guided tour and free trial of any of these legal reporters, please contact Michael Willer at 614-855-0505 or mwiller@counselorlibrary.com.

On April 23, President Trump issued a new executive order - "Restoring Equality of Opportunity and Meritocracy" - to implement a policy that will "eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and basic American ideals." Disparate-impact liability refers to a policy or practice that may be considered discriminatory if it disproportionately affects a protected group, even if there is no clear indication of intentional discrimination.

The executive order, among other things, requires that:

• all federal agencies deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability;
• within 30 days of the date of the order, the U.S. Attorney General report to the President all existing regulations, guidance, rules, or orders that impose disparate-impact liability and detail steps for their amendment or repeal, as well report laws at the state level that impose disparate-impact liability and detail steps to address constitutional or other legal concerns;
• within 45 days of the date of the order, the U.S. Attorney General, the Secretary of Housing and Urban Development, the Director of the Consumer Financial Protection Bureau, the Chair of the Federal Trade Commission, and the heads of other agencies responsible for enforcement of the Equal Credit Opportunity Act, Fair Housing Act, or laws prohibiting unfair, deceptive, or abusive acts or practices evaluate all pending proceedings that rely on theories of disparate-impact liability and take action consistent with the policy of the order; and
• within 90 days of the date of the order, all agencies evaluate existing consent judgments and permanent injunctions that rely on theories of disparate-impact liability and take action consistent with the policy of the order.

Amicus Brief(ly): The disparate-impact theory of potential liability under the ECOA has never officially been recognized by the federal appellate courts or the U.S. Supreme Court. While the FHA addresses disparate impact directly and the Supreme Court has, in 2015, held that disparate-impact claims are cognizable under the FHA, the ECOA does not use the same language as the FHA around disparate impact. That has not stopped federal regulators from advancing the theory in examinations and investigations, but it looks like that may be about to stop. Subject to the litigation we can sense is coming to challenge yet another executive order from this young (but second) Trump administration, this executive order directs agencies, including what is left of the CFPB, to unwind pending disparate-impact actions and reevaluate regulatory and enforcement priorities that would have relied on disparate-impact theories. That curiously includes statutes like the FHA that actually address disparate-impact liability. The executive order likely marks the beginning of a new leg of the fair lending journey, not the final resting place for the disparate-impact theory of liability under the ECOA. But the near-term prospects of a federal government claim based on disparate impact, at least under the ECOA, are certainly diminished in light of this executive order.

On April 22, Maryland Governor Wes Moore signed the Maryland Secondary Market Stability Act of 2025 (House Bill 1516/Senate Bill 1026). In our February 24 issue of Last Week, This Morning, we explained that the Act provides an exemption from Maryland's licensing requirement for entities that acquire mortgage and installment loans by assignment but do not originate, service, or collect these loans on their own behalf. The exemption does not apply to a person who acquires or is assigned a loan originated under the Maryland Consumer Loan Law, Md. Code Ann., Com. Law §§ 12-301 et seq. The Act is emergency legislation, so the exemption becomes effective immediately.

The Act also establishes the Maryland Licensing Workgroup, which will study and make recommendations, by December 31, 2025, on the licensing requirements for persons that provide financial services in Maryland.

Amicus Brief(ly): Passive buyers in the secondary mortgage market in Maryland can breathe a sigh of relief now that this sensible bill has become law. The update makes clear that passive holders that do not engage in lending, brokering, or servicing do not need a license to hold loans. As most know, there is little upside (other than potentially some fee revenue) in regulating passive holder entities that do not interact with consumers - they are not engaging with consumers in any form that regulators with consumer protection responsibilities care about. It's a good, common-sense legislative reaction to the courts' and regulators' reading of the prior version of the licensing law that required any assignee of a mortgage loan to hold a license, even if the assignee was not a lender or servicer. Lenders and servicers are, as readers know, subject to licensing (unless exempt as a function of a bank or credit union charter, given their status as a government entity, or based on any other reason that often turns on the entity's status as an already-regulated company) and substantive regulation. Maryland appears to have decided that's enough.

On April 22, Maryland Governor Wes Moore signed House Bill 1018/Senate Bill 689, which require banking institutions, credit unions, and mortgage lenders to include a provision in all "conventional home mortgage loans" that allows any of the existing borrowers to purchase the property interest of another borrower on the loan in the event of an absolute divorce. The provisions of the legislation apply only to a conventional home mortgage loan that is not already required by federal or state law or regulation to be assumable in connection with the granting of an absolute divorce. Lenders must include a provision in all conventional home mortgage loans allowing a borrower to purchase the property interest of another borrower on the same loan by assuming the seller's portion of the mortgage if: (1) the assumption of the seller's portion of the mortgage is connected to a decree of absolute divorce; and (2) the lender determines that the assuming borrower qualifies for the loan.

Lenders must disclose the assumption provision in writing to a loan applicant before the completion of the loan application. The legislation's provisions apply retroactively to any conventional home mortgage loan entered prior to the legislation's effective date, October 1, 2025.

The legislation defines "conventional home mortgage loan" to mean any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or residential real estate on which a dwelling is constructed or intended to be constructed. The term includes a loan in which funds are advanced through a shared appreciation agreement but does not include a loan that is insured or guaranteed by the federal government.

Amicus Brief(ly): The ability of one of the joint obligors on a loan to assume the obligation of the other after divorce is important. For one thing, spouses are not all created financially equal, and the reality of married life is that one spouse will typically earn more wages than the other, creating both an unequal financial burden on the higher earner and an unequal ability to pay for the spouse who earns less. That economic reality (among other things) can inhibit the lower-earning spouse's financial prospects after divorce. Coupling the potentially diminished ability to qualify for lower-cost credit with a dynamic interest rate environment - where the interest rate available to a newly divorced homeowner who would want to refinance a mortgage to take full responsibility for the payment obligation could be significantly higher than the interest rate that applies to the existing loan - creates obstacles to continued ownership of the home. Government-insured loans are typically assumable for that reason, but conventional mortgages are not. Maryland lenders will have some documentation updates and process changes to perform as a result of this law, but Maryland homeowners going through a divorce get an important win at a time in their lives when they can probably use one.

On April 22, Maine enacted Senate Bill 261, which prohibits depository institutions and their affiliates and subsidiaries from charging fees to customers for receiving paper statements.

Section 9420(1) of Maine's Uniform Electronic Transactions Act provides that, except as authorized by federal law and regulation, a customer of a person may not be penalized for opting out of receiving from the person a billing statement by electronic record rather than in paper form. A person may offer an incentive to a customer to accept a billing statement from the person by electronic record rather than in paper form. Subsection 2 provided an exemption for depository institutions and their affiliates and subsidiaries that are regulated by a state or federal banking agency. SB 261 repeals this exemption.

Amicus Brief(ly): What's good for the Maine goose is now good for the Maine gander. This new law puts all creditors on an even footing with respect to the requirement to send a paper statement without charge to consumers who cannot or choose not to receive electronic statements. Recall that, under the Truth in Lending Act's Regulation Z, subject to certain exceptions, a creditor on an open-end account must send consumers a periodic statement after any billing period at the end of which an account has a debit or credit balance of more than $1 or on which a finance charge has been imposed. Reg. Z acknowledges that creditors may deliver the required disclosures in compliance with the E-Sign Act, but they have to provide the disclosures to consumers in a form they can keep. Compliance-wise, creditors have to deliver required statements to consumers. Since 2011, Maine's UETA has allowed some creditors the option to charge consumers for opting out of electronic billing statements. With this update, no creditor doing business in Maine can charge a fee for delivering required statements to consumers in paper form or otherwise.

The U.S. Court of Appeals for the Eighth Circuit recently held that that a consumer sufficiently alleged that she suffered a concrete injury sufficient for Article III standing purposes under the Fair Debt Collection Practices Act where she spent money on an envelope ($.08) and postage ($.60) to mail an allegedly FDCPA-violative collection letter to her attorney (in the hopes that her attorney could stop the debt collector's improper collection efforts). For Article III standing, a plaintiff must allege that he or she suffered concrete, particularized, and actual or imminent injury. The appellate court noted that the mailing of the allegedly violative collection letter was "an act caused by the FDCPA violation and that was necessary to allow reassertion of [the consumer's] right not to be contacted directly while represented by counsel." Accordingly, the appellate court reversed the trial court's dismissal of the consumer's FDCPA claims and remanded the case.

Amicus Brief(ly): Since the U.S. Supreme Court's Ramirez case in 2021, the outcome of some of the all-too-common technical "gotcha" FDCPA cases made more sense - plaintiffs had to be able to allege some kind of "concrete injury" that would confer standing to sue in federal courts under theories of federal law. But the Missouri district court in the original litigation that led to this appellate decision dismissed the plaintiff's case after finding that she had not alleged facts sufficient to establish concrete injury. In a short reversal opinion following its de novo review of the case, the Eighth Circuit made the fair but surprising observation that the plaintiff's (de minimis) expenses incurred in sending a letter to her lawyer enclosing the defendant collection agency's settlement offer, received after the Legal Aid lawyers she hired sent a representation letter to the collection agency, was enough evidence of a concrete injury to let the case proceed. The collection agency may ultimately prevail on the facts and the law as the litigation wears on, but the consumer's $0.68 expense for the envelope and postage gave her an opportunity to litigate the case past the standing arguments.

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¹ For the unfamiliar, an “Amicus Brief” is a legal brief submitted by an amicus curiae (friend of the court) in a case where the person or organization (the “friend”) submitting the brief is not a party to the case, but is allowed by the court to file the brief to share information or expertise that bears on the issues in the case.