Monthly Bulletin – February 2023
Volume 10, Number 7
Purvi Patel Appointed as Deputy Commissioner for Credit Unions
On Feb. 2, Purvi Patel, of Oakland, was appointed by Governor Newsom to be Deputy Commissioner for Credit Unions at the California Department of Financial Protection and Innovation (DFPI).
Patel has been Assistant General Counsel at Self-Help Federal Credit Union since 2022. She was Executive Staff at Self-Help Federal Credit Union from 2016 to 2022. Patel was a Senior Fellow at New York City Economic Development Corporation from 2015 to 2016.
She was an Associate at Buckley Sandler from 2013 to 2015. She was a Law Clerk at U.S. District Court for the District of Puerto Rico from 2010 to 2012. She was an Associate at White & Case from 2008 to 2010. She earned her Juris Doctorate at Georgetown University Law Center.
The new Deputy Commissioner will focus on key issues for credit unions, including stakeholder relations, emerging policy matters, convening the Credit Union Advisory Board and further developing the ways credit unions can support the serving the underbanked and building generational wealth, which is central to the DFPI strategic plan. Purvi will be based in the San Francisco office as of March 6.
Guidance Regarding Borrowers Affected by Severe Winter Storms, Flooding and Landslides
The DFPI has issued guidance directed to financial institutions, lenders, and mortgage servicers in California whose customers may be experiencing financial hardship as a result of recent severe winter storms, flooding, and landslides. The Department recognizes the serious impact to borrowers in communities affected by these natural disasters and encourages lenders and servicers to work with these customers to meet their financial needs.
The Commissioner encourages financial institutions, lenders, and servicers to work constructively with their customers and propose solutions to meet their lending needs as the recovery continues. Such solutions may include offering payment accommodations, such as deferrals or extensions, and loan modifications to the rate or term. Prudent efforts to modify or restructure the terms of loans will not be criticized by examiners. This guidance does not modify any existing law or regulation.
Furthermore, the Commissioner acknowledges that some licensees may experience an increase in delinquent or nonperforming loans and troubled debt restructures as a result of the financial impact to borrowers cause by the severe storm activity. The Commissioner will consider such increases in adversely classified assets within the context of the state of emergency, and supervisory responses will be measured and appropriate. The Commissioner supports and will not criticize efforts to accommodate customers in a safe and sound manner.
On January 4, 2023, Governor Gavin Newsom proclaimed a state of emergency in California as a result of the winter storms. On January 9, 2023, President Joseph Biden, Jr., declared that an emergency exists in California.
DFPI Continues Crackdown on Debt Collection Scams
On Jan. 30, the DFPI announced that it issued enforcement actions against multiple entities for unlicensed activity under the Debt Collection Licensing Act (DCLA) and unlawful and deceptive acts or practices in violation of the California Consumer Financial Protection Law (CCFPL).
The subjects of the Jan. 30 desist and refrain orders are entities representing themselves as debt collectors. The orders allege that the subjects engaged in a variety of different unlawful and deceptive practices, including:
- Engaging in debt collection in California without a license from the DFPI.
- Attempting to collect a debt that a consumer did not owe.
- Failing to provide a “validation notice” as required by federal law.
Through these five separate enforcement actions, the DFPI has ordered the subjects to pay penalties totaling $120,000 and to desist and refrain from violating consumer protection laws.
DFPI Joins $22.5 Million Multistate Securities Settlement Against Crypto Platform Nexo Capital
On Jan. 26, the DFPI announced it entered into a settlement agreement with Nexo Capital Inc. (Nexo), a Cayman Islands-based crypto asset company. The agreement resolves the DFPI’s Sept. 26, 2022, securities enforcement action in connection with Nexo’s Earn Interest Product program.
A North American Securities Administrators Association (NASAA) working group—composed of the DFPI and nine other state regulators—led a comprehensive investigation into Nexo’s Earn Interest Product program. From September through November 2022, these regulators brought actions against Nexo, concluding that Earn Interest Product accounts are securities and require investor protections, such as registration and risk disclosures, before they can be offered and sold to investors.
The NASAA working group negotiated a $22.5 million multistate settlement with Nexo on behalf of 53 United States jurisdictions. Under that settlement, Nexo has agreed to implement various investor protection procedures for the benefit of Nexo’s U.S. investors. The U.S. Securities and Exchange Commission (SEC) entered into a separate settlement with Nexo for the same penalty amount.
This settlement is a part of a larger DFPI effort to investigate companies that offer crypto interest accounts and hold them accountable when they have violated the law. It builds upon similar actions issued by the DFPI to CONST LLC, Celsius Network Inc., Voyager Digital LLC, and BlockFi Lending LLC. Celsius, Voyager, and BlockFi have filed for Chapter 11 bankruptcy.
Some Escrow Reports Due Feb. 13
Escrow agents are required to submit to the Commissioner an annual report prepared by an independent certified public accountant 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 Oct. 31, 2022, your annual report is due Feb. 13, 2023. Please have your CPA email your report to ESCAnnualReportFiling@dfpi.ca.gov by the deadline 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, Senior Financial Institutions Examiner, Escrow Law, Department of Financial Protection and Innovation, 320 West Fourth Street, Suite 750, Los Angeles, CA 90013.
Penalties for failure to file the annual report by the due date or to include required information 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 a report or to include any required information may also result in the suspension or revocation of an escrow agent’s license or a prompt an immediate examination (Financial Code section 17602.5).
For questions about the annual reports, call Sultanna Wan at (213) 248-7161.
2022 Escrow Annual Liability Report Due February 15
All escrow agents licensed prior to Jan. 1, 2023, must submit an Annual Liability Report to the Commissioner. The Annual Liability Report form is available on DFPI’s website here. The deadline to submit the Annual Liability Report electronically is Feb. 15, 2023.
Escrow licensees are required to have a registered DFPI portal account to submit the Annual Liability Report. To register for a portal account, go to DFPI’s website here.
Failure to submit the Annual Liability Report by the deadline may result in monetary penalties pursuant to Financial Code section 17408. If you have any questions, please email Escrow.Licensing@dfpi.ca.gov.
DFPI Debt Collection Advisory Committee Applications due Feb. 23
The DFPI will be soliciting applications for members to the Debt Collection Advisory Committee at the end of January. Financial Code section 100025 provides for a Debt Collection Advisory Committee:
- Appointed by the Commissioner to a two-year term.
- Seven members, including at least one representing consumers.
- No compensation or reimbursement of expenses.
- A minimum of two meetings per year.
Those interested in serving on the Debt Collection Advisory Committee will need to provide a statement summarizing their qualifications, or submit the available form. Please submit the form, or statement of qualifications, to Ryan.Rodriguez@dfpi.ca.gov no later than Feb. 23, 2023.
Current terms are expiring in April of 2023. New appointments will be announced in April of 2023 for the upcoming term. For full details please go to the DFPI Application Process webpage.
REMINDER: Banks and Credit Unions to Report Fee Income from Nonsufficient Funds and Overdraft Charges by March 1
As a result of SB 1415, state-chartered banks and credit unions are required to notify the Department of Financial Protection and Innovation (DFPI) annually of the revenue they received from fees on nonsufficient funds and overdraft charges during the calendar year.
An email with a link to complete the report online was sent to all state-chartered banks and credit unions on December 30 and a reminder was sent on January 30 to the banks and credit unions that had not completed their reports. The reports are due March 1 so the DFPI can publish the information on its website by March 31.
If you have questions about the report content, please refer to the FAQs or contact Derek Nelson at firstname.lastname@example.org (banks) or Kim-Phuong Hoang at email@example.com (credit unions) for more information.
If you have technical questions about the report link or submission, please send an email to Survey@dfpi.ca.gov.
2022 Annual Reports for CRMLA, CFL, CDDTL and SLSA Due in March
Annual reports for 2022 for DFPI Mortgage Lending (CRMLA), Finance Lenders (CFL), Payday Lenders (CDDTL), and Student Loan Services (SLSA) are due in the coming weeks.
California Residential Mortgage Lending Act (CRMLA)
Licensees under the California Residential Mortgage Lending Act (CRMLA) must file their 2022 annual report electronically by March 1 through the DFPI self-service portal. All CRMLA licensees must file the report by March 1. No extensions will be granted. Missing the deadline may result in penalty assessments. Failure to file constitutes grounds for license revocation. Email any questions to CRMLA.Licensing@dfpi.ca.gov.
California Financing Law (CFL)
All DFPI California Financing Law (CFL) licensees are required to submit an annual report on or before March 15, even if the licensee had no business activity in the calendar year 2022. The form and instructions for submitting the annual report are available on the DFPI’s website here. Annual reports must be submitted electronically through the DFPI portal account. To sign in to or register for a portal account, go to the DFPI’s website. For questions about the content of the report or clarification on the instructions, please email CFLAnnualReport@dfpi.ca.gov or call (866) 275-2677.
California Deferred Deposit Transaction Law (CDDTL)
All California Deferred Deposit Transaction Law (CDDTL) licensees must submit a 2022 Annual Report and Industry Survey to the DFPI by March 15. The Annual Report and Industry Survey must be completed online through the DFPI self-service portal. If you have questions, or need clarification on the instructions, please email RespondToCDDTL@dfpi.ca.gov.
Student Loan Servicing Act (SLSA)
Pursuant to Financial Code section 28146(a) of the Student Loan Servicing Act (SLSA), student loan servicers are required to file an annual report with the Commissioner of Financial Protection and Innovation by March 15. Annual reports must be completed on the DFPI’s website via your self-service portal account labeled Student Loan Servicing Annual Report under the “Your Reports” section. Paper or mailed submissions will not be accepted. The Commissioner may impose a financial penalty if a licensee fails to submit a report on time. Licensees with questions about the Student Loan Servicing report should send an email to firstname.lastname@example.org.
Mortgage Lending Holden Act Reports Due March 31
Mortgage lending licensees must file their Residential Mortgage Loan Report for calendar year 2022 (Holden Act Report) no later than March 31.
The Holden Act Report must be filed by all State-licensed residential mortgage lenders that do not report the data to a federal or State regulatory agency as provided by the Home Mortgage Disclosure Act of 1975.
Licensees should consult with their internal compliance officers regarding whether they are required to file the report. Instructions and reporting forms may be found at the DFPI website here.
Completed reports may be scanned and emailed on or before March 31st to Holden.Inquiries@dfpi.ca.gov. Information regarding the report may be obtained by calling (866) 275-2677.
DFPI Launches New Consumer Resources Webpage
The Department of Financial Protection and Innovation (DFPI) is focused on promoting a fair and honest financial marketplace, and helping Californians make informed financial decisions. With that goal in mind, the DFPI has launched a new Consumer Resources webpage to better connect people to valuable financial education content, and consumer events and services.
Visit www.dfpi.ca.gov/consumers for important consumer alerts and insights, information on consumer rights and on the industries DFPI regulates, free consumer events, and more! You’ll also find guidance on filing a complaint with DFPI and verifying financial service providers.
BCSH’s 2022 End of the Year Report
The Business, Consumer Services and Housing (BCSH) Agency’s 2022 End of the Year Report is now available online (BCSH – End of Year Report (ca.gov)). The report highlights the successes in 2022 for programs and projects under the jurisdiction of the BCSH as well as reporting on the DFPI and 11 other departments, agencies, and boards.
DFPI Hosting First of Financial Education Webinar Series on February 15
As the first of the DFPI’s new, monthly Financial Education Webinar Series, the DFPI will be hosting their Budgeting to Financial Success webinar on February 15 at noon.
In this free 30-minute webinar, viewers will learn how to build a personal budget to achieve their financial goals and how to deal with the emotions behind budgeting. This webinar features special guest speaker Anita R. Johnson from Money Wisdom for Women and everyone who registers will get a link to the video recording and slides. Space is limited, so register today: https://tinyurl.com/webinar21523!
Commercial Bank Activity
Purchase of Partial Business Unit
First Northern Bank of Dixon to acquire the banking business of three branch offices of Columbia State Bank
Premium Finance Company Activity
New Premium Finance Company
Atlas Premium Finance Inc.
660 Newport Center Drive, Newport Beach
Elite Premium Finance, Inc.
600 West Broadway, San Diego
Acquisition of Control
Summit Acquisition Inc. to acquire control of CPF Columbia Pacific Finance
Voluntary Surrender of License
Discovery Premium Finance, Inc.
Foreign (Other State) Bank Activity
Juniper Trust Company
18575 Jamboree Road, Irvine, Orange County (Facility – non-insured)
500 Ygnacio Valley Road, Walnut Creek (Insured facility)
Stifel Bank & Trust
500 Ygnacio Valley Road, Walnut Creek (Insured facility)
Money Transmitter Activity
Tango Card, Inc.
Acquisition of Control
AFX HoldCo Corp. to acquire control of AscendantFX Capital USA, Inc.
Green Check Verified, Inc. to acquire control of PayQwick, Inc.
Voluntary Surrender of License
DFS GSD Corp.
CLOTHILDE V. HEWLETT Commissioner, Department of Financial Protection and Innovation
The February 2023 Monthly Bulletin covers the month ended January 31, 2023.
It is issued pursuant to Financial Code section 376.
The Monthly Bulletin is available at no charge via e-mail.
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