Last Week, This Morning

June 16, 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 June 9, Acting Comptroller of the Currency Rodney E. Hood released a letter in response to a letter from the Conference of State Bank Supervisors requesting that the Office of the Comptroller of the Currency rescind its 2011 preemption regulations in light of recent executive orders that direct federal agencies to rescind unlawful and anti-competitive regulations. The CSBS's letter claims that the OCC's preemption regulations are unlawful because they are not consistent with the best reading of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Acting Comptroller Hood concludes that the OCC's preemption regulations are consistent with the Dodd-Frank Act, Supreme Court precedent, and the recent executive orders. In the letter, Hood states: "[T]he OCC reviewed its preemption regulations following Dodd-Frank's enactment. The OCC considered the relevant statutory language, legislative history, and judicial precedent and concluded that Dodd-Frank codified the conflict preemption standard in Barnett Bank of Marion County, N.A. v. Nelson, including the antecedent cases it cited. This conclusion is consistent with the Supreme Court's subsequent decision in Cantero v. Bank of America, N.A., which rejects arguments that Dodd-Frank created a new preemption standard and instead notes that 'Dodd-Frank adopted Barnett' and that Barnett 'was also the governing preemption standard before Dodd-Frank.' The OCC applied this same standard when it identified certain preempted and non-preempted state laws in its regulations in 2004 and again when it reviewed the regulations in 2011."

Hood also rejected the CSBS's suggestion that the OCC's preemption regulations are anti-competitive, stating that "[f]ederal preemption is a cornerstone of the dual banking system, under which federally and state-chartered banks operate alongside one another." "Federally chartered banks, many of which operate across state lines, therefore may rely on preemption to remove barriers and achieve efficiencies associated with a uniform set of rules. Thus, federal preemption has helped to foster the development of national products and services and multi-state markets, which have benefited individuals and businesses in every state and powered this Nation's economy."

Amicus Brief(ly): No bluster or nonsense here. This short document confirms the OCC's preemption provision - again. The state bank supervisors were taking a shot here with their letter to the OCC, but the outcome in Acting Comptroller Hood's letter was both predictable and appropriate. The OCC went through its required rulemaking process back in 2011 and reviewed its preemption regulations through the Barnett lens back then with detailed Supplementary Information describing how its regulations adhered to the standards outlined in the Barnett preemption case. This is a good result for national banks relying on National Bank Act authority to preempt certain state laws under a national lending program.

Nevada Governor Joe Lombardo recently signed Assembly Bill 192, which enacts the Uniform Mortgage Modification Act. For a mortgage modification to which the Act applies: (1) the mortgage continues to secure the obligation as modified; (2) the priority of the mortgage is not affected by the modification; (3) the mortgage retains its priority even if the modification is not recorded in the land records of a jurisdiction in which the property is located; and (4) the modification is not a novation.

The Act applies to the following categories of modifications: (1) an extension of the maturity date of an obligation; (2) a decrease in the interest rate of an obligation; (3) certain changes in the methods of calculating interest that do not result in an increase as calculated on the date the modification becomes effective; (4) a capitalization of unpaid interest or other unpaid monetary obligation; (5) a forgiveness, forbearance, or other reduction of principal, accrued interest, or other monetary obligation; (6) a modification of a requirement for maintaining certain escrow or reserve accounts; (7) a modification of a requirement for acquiring or maintaining insurance; (8) a modification of an existing condition to advance funds; (9) a modification of a financial covenant; and (10) a modification of the payment amount or schedule resulting from another modification to which the Act applies.

The Act does not apply to any of the following modifications: (1) a release of, or addition to, property encumbered by a mortgage; (2) a release of, addition of, or other change in an obligor; or (3) an assignment or other transfer of a mortgage or an obligation.

The Act does not affect existing law governing the required content of a mortgage, statutes of limitations, recording, priority of certain tax liens or other governmental liens, certain electronic transactions, or the priority of certain future advances.

Amicus Brief(ly): The Uniform Mortgage Modification Act is a 2024 development from the Uniform Law Commission. Only Wyoming adopted it before Nevada, but West Virginia has also introduced it. The model law codifies good mortgage loan modification practices for a variety of common modifications that mortgage servicers and consumers agree to in the ordinary course of working out mortgage loan payment troubles. As with all model laws coming out of the ULC, states are not compelled to adopt the model law, and, if they do, they can modify it to suit their legislative priorities. It remains to be seen whether this model law will catch on over the next few years, but for now it is the law in Nevada and Wyoming.

On June 10, Nevada Governor Joe Lombardo signed Assembly Bill 296. The new law provides that, if the Nevada Department of Motor Vehicles provides the ability to register or renew the registration of vehicles through an electronic branch office, the DMV is required to contract with a person who is licensed in Nevada to make installment loans to allow the person, through the electronic branch office, to offer installment loans to vehicle owners to pay the applicable fees and taxes that are due for the initial or renewal registration of a vehicle. The installment lender with whom the DMV contracts: (1) must furnish to the DMV, at the time of the initial or renewal registration of a vehicle, the entire amount of the fees and taxes owed by the vehicle owner to whom an installment loan is provided; (2) may not charge the vehicle owner an annual percentage rate with respect to the loan; (3) may not charge the vehicle owner any fee or combination of fees for the installment loan in excess of 15 percent of the total amount financed; (4) may only provide an installment loan if the total amount financed is $250 or more; and (5) may not roll over or refinance any installment loan into any other loan provided to the vehicle owner.

A.B. 296 also revises the applicability of certain provisions governing the licensing of installment lenders to a lender that contracts with the DMV.

Amicus Brief(ly): This new law ensures both that the state gets paid to register vehicles and that drivers have a means of paying the registration costs with a loan from a licensed lender if they are short of funds at the time of registration. Lenders that contract with the DMV will be able to recover fees for making funds available, but the state is careful to limit lenders to a 15% recovery of fees that do not include periodic interest (referenced in the bill as an APR). The extension of its "electronic branch office" program beyond the pilot period suggests that the program has been working for Nevada. With these updates to the "electronic branch office" framework, it appears that Nevada is building out the program a little more for the benefit of the state and its drivers.

On June 10, Connecticut Governor Ned Lamont signed Senate Bill 1336, which reduces the statute of limitations for foreclosing "zombie" second mortgages and makes changes to the mortgage discharge by possession process.

The new provisions regarding "zombie" mortgages are intended to address mortgages on residential real property where a lender stops sending billing statements for a long period of time before attempting to foreclose and the borrower mistakenly believes that the mortgage debt was forgiven or satisfied. S.B. 1336 provides that a foreclosure action cannot be commenced following the earlier of: (1) 10 years from the date fixed for the making of the last payment or the maturity date set forth in the mortgage, note, or other obligation secured by the mortgage, unless the date was formally extended in writing; or (2) 10 years from the date on which the last payment was made by the borrower or on the borrower's behalf.

The new provisions do not apply to: (1) any mortgage that: (a) was recorded before January 1, 2026, and was first in priority at the time it was recorded, including, but not limited to, any such first mortgage that was recorded subsequent to a mortgage that has been satisfied but not yet released; or (b) regardless of when such mortgage was recorded, was subordinate to a first mortgage at the time such subordinate mortgage was recorded and is held by the original mortgagee, the original mortgagee's subsidiary or affiliate, or any successor of the original mortgagee; or (2) any action commenced under section 49-30 of the general statutes.

Finally, S.B. 1336 provides that if title to real property remains encumbered by any undischarged mortgage, and the mortgagor has been in undisturbed possession of the property for at least 10 years (previously 20 years) after the expiration of the time in the mortgage for the full performance of the conditions thereof, or for at least 40 years from the recording of the mortgage if the mortgage does not disclose the time when the note or indebtedness is payable or the time for full performance of the conditions of the mortgage, then the mortgage will be invalid as a lien against the real property.

Amicus Brief(ly): This may be a reaction to recent news stories about debt buyers picking up defaulted junior lien mortgages, or it may just be a function of Connecticut's legislature staying active in the review and updating of its consumer protection laws. Either way, lenders and buyers of defaulted mortgage loans will have to update procedures for mortgages recorded after January 1, 2026 (the prospective application makes sense and is a relief to current holders of defaulted mortgage loans) to monitor loans for the new statute of limitations. The new law allows lenders to extend the statute of limitations in writing with a consumer, which should prevent foreclosure actions lenders would otherwise take for non-payment to avoid losing rights against the property that secures the loan because the limitations period has run. Connecticut mortgage lenders will be sure to incorporate that agreement into their loss mitigation and foreclosure procedures to use with consumers who seek to stay in the property and avoid foreclosure but who have not been in the property long enough to qualify for the provisions that make a mortgage lien invalid.

The Wisconsin Department of Financial Institutions, Division of Banking, recently issued guidance regarding whether licensees under Section 138.09 of the Wisconsin Statutes may permit remote work by employees. Section 138.09 governs licensed lenders that make, take assignment of, collect payments from, or otherwise enforce consumer loans with finance charges that exceed 18 percent per year.

The guidance states that licensed lenders may permit employees to engage in remote work from home if certain conditions are satisfied, including:

• the licensee's proposed remote work policy is pre-approved by the DOB;
• work-from-home activities are limited to "back office" operations (such as account maintenance or bankruptcy claim processing) or call center functions (such as fielding customer questions or collecting delinquent payments). Remote work may not include activities directly related to the origination or refinancing of consumer loans, in-person meetings with customers, or the receipt of customer mail at an employee's home;
• safeguards are implemented to keep customer information secure and private;
• written policies and procedures are established relating to remote work, which must include provisions addressing cybersecurity and compliance with the Gramm-Leach-Bliley Act and the Safeguards Rule; and
• work-from-home employees are appropriately monitored and overseen by the licensee.

Amicus Brief(ly): The remote work limitations that the Wisconsin DFI is imposing on lenders licensed under the Licensed Lenders Law are sensible and consistent with the requirements and limitations that other states have imposed for remote work. Critically, the rules make clear that remote employees should not be doing in-person business with customers from home. Once it looks like a remote work location is identifiable as an official "branch office" of a licensed business, the more likely a state will be to prohibit remote work from that location without a branch office license. The information security and data safeguarding rules should be consistent with the practices of every company subject to the GLBA and should come as no surprise to licensees that allow employees to work remotely. We appreciate it when states issue guidance like this because it gives licensees a clear picture of whether, and under what circumstances, they can provide some flexibility to employees to work remotely.

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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.