Monthly Bulletin – January 2022

Proposed 2022-23 DFPI Budget

On January 10, Governor Newsom proposed a state budget that provides the Department of Financial Protection and Innovation (DFPI) with the necessary resources to continue our important work under the California Consumer Financial Protection Law, while providing additional funding for increased workload and the implementation of new laws.

The proposed budget will help in dealing with a dramatic spike in mortgage loan originator applications, provide additional resources to handle increased consumer complaints related to identity theft, and help to better manage mandatory reports relating to the financial abuse of elders and dependent adults.

In addition, these funds will allow the Department to implement a new securities exemption aimed at helping entrepreneurs and start-up small businesses raise much-needed funds from smaller investors. And a market analysis will help us provide data-informed recommendations on the feasibility of a zero-fee, zero-penalty debit account and debit card option for Californians.

The budget includes a new proposal aimed at helping student borrowers. A communications campaign and grant program will inform, educate, and assist student borrowers who in May will begin repaying their student loans after a two-year pause. The campaign will also help students working in public service understand the new eligibility guidelines under the Public Service Loan Forgiveness Waiver. The budget will also support a grant program for community-based and legal aid groups and a new website for student borrowers to provide information and links to credible and trusted resources.

DFPI Overall Budget Summary: 813 positions and $157 million ($147 million + $10 million one-time General Fund appropriation). This is an increase of 40 positions and $7.6 million.

• $10 million for Student Borrower Outreach
• $4.8 million to restore pandemic reductions
• $2.7 million to continue CCFPL & Debt Collector Implementation
• $4 million for Budget Change Proposals related to workload and new laws

California Mortgage Relief Program Now Open

Following the announcement of $1 billion in funding from the U.S. Treasury, California homeowners who have fallen behind on home payments can now apply for a grant to repay missed mortgage payments or reverse mortgage arrearages during the COVID-19 pandemic. Information on eligibility requirements and how to apply are available at CaMortgageRelief.org.

The California Mortgage Relief Program will cover past due mortgage payments in full as a one-time grant – up to a maximum of $80,000 per household – with a direct payment to the homeowners’ mortgage servicer. The program is free and the funds do not need to be repaid. The program is run by the CalHFA Homeowner Relief Corporation (CalHRC), a special-purpose affiliate of the California Housing Finance Agency (CalHFA).

Earlier this year, the DFPI issued a historic reporting requirement for residential mortgage servicing licensees to report how they would be protecting homeowners through increased mortgage relief staffing, mitigation efforts such as repayment plans, and state and federal mortgage relief funding.

All 362 DFPI licensees responded, providing a 100 percent response rate from servicers managing a total of more than 4.6 million mortgage loans amounting to $1.4 trillion. Eighty-six percent of licensees reported by December 2021 that they have appropriate policies and procedures in place to protect homeowners, with 72 percent noting that they had added sufficient staffing to help homeowners avoid foreclosure.

DFPI Commissioner Clothilde V. Hewlett discussed the historic nature of the funding in a press conference last week and implored licensees to take action. “To every lender, servicer, and sub-servicer: we thank you for your efforts,” she said. “For those who haven’t signed up to participate in the California Mortgage Relief Program, we want to encourage you to join us and make history.”

Because servicers need to be enrolled in the program for California homeowners to be eligible for funding, the DFPI asks all licensees to sign up. To participate in the Program, simply send an email to [email protected] to begin the necessary paperwork with the Homeowner Relief Corporation (CalHRC). Additional questions can be submitted to Cal HFA servicer liaison Bryan Courtney at [email protected].

Debt Collection Licensing: NMLS Backlog Advisory

The DFPI provides licensure, regulation, and oversight of California debt collection practices under the California Consumer Financial Protection Law (CCFPL) and the Debt Collection Licensing Act (DCLA). Both measures help to better protect consumers and create a level playing field for industry. The consumer protection law took effect on Jan. 1, 2021, and the debt collector law takes effect on Jan. 1, 2022. The DCLA requires debt collectors and buyers to apply for a DFPI license by Dec. 31, 2021.

The DFPI is aware of the temporary slowdown in obtaining a new Nationwide Multistate Licensing System or NMLS account. With various DFPI year-end deadlines, the NMLS team is experiencing an unprecedented volume of account requests. The DFPI acknowledges the predicament this puts entities in who have tried to comply with the new debt collector licensing requirement to apply for a license by Dec. 31, 2021. In recognition of this circumstance, the DFPI will not take any action against a debt collector solely on the basis of the temporary slowdown with NMLS. The NMLS team has provided DFPI with a list of those that had attempted to apply by December 31, 2021.

Furthermore, the DFPI will not bring an enforcement action for unlicensed activity under Financial Code section 100001 if there is a bona fide legal opinion request, or similar request submitted in good faith via [email protected], prior to and pending as of Dec. 31, 2021, regarding whether a prospective applicant is “in the business of debt collection.”

DCLA licensing requirements, and the application, are available on the NMLS website. Read more on the Debt Collections Licensee webpage. Questions about the licensing process can reach out to the DFPI at [email protected].

Debt Collection Licensing Regulations Now In Effect

Effective Dec. 22, 2021, the Commissioner of Financial Protection and Innovation adopted regulations setting forth the license application form and procedures for applying for a debt collection license under the Debt Collection Licensing Act (Financial Code section 100000 et seq.).

The regulations begin at section 1850, title 10 of the California Code of Regulations. Documents regarding the approved debt collection licensing regulations are available here.

The regulations set the application form and procedures for filing a license application through the NMLS website. The regulations also set forth the process for surrendering a license as a debt collector.

Questions regarding the rulemaking may be directed to the Regulations Coordinator at [email protected].

DeCarlton Kincy Selected as New Financial Services Manager for “New Covered Persons” Program

DeCarlton “Cory” Kincy has transferred to the DFPI Consumer Financial Protection Division as the new Financial Institutions Manager for the Supervision and Registration of New Covered Persons program. This position was created under the CCFPL and will help the DFPI build a new registration and examination program to oversee industries previously unregulated by the Department. Cory started on January 3.

Cory started with the Department in 2012 and most recently worked as a Financial Institutions Manager for the Credit Union Program. He possesses a Master of Business Administration degree from California State University, San Bernardino, and a Certified Fraud Examiner designation from the Association of Certified Fraud Examiners (ACFE).

Cory says he is looking forward to bringing his knowledge, experience, and talents to the New Covered Persons Program. He will be based out of the Los Angeles DFPI office.

CFL Annual Reports for Calendar Year 2021 Due March 15

All DFPI California Financing Law (CFL) licensees are required to submit an annual report on or before March 15, 2022, even if the licensee had no business activity in the calendar year 2021. The Department strongly recommends licensees start gathering the data now to ensure they can timely file their 2021 Annual Report.

The CFL annual report is required pursuant to Financial Code section 22159(a). Failure to submit the annual report by the due date will result in penalties pursuant to Financial Code section 22715(b).

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. If you have questions about your portal account, please contact the Account Administrator (Albert Mercado) at (213) 220-5140 or email [email protected].

For questions about the content of the Report or clarification on the instructions, please email [email protected] or call (866) 275-2677.

Some Escrow Reports Due Jan. 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 Sep. 30, 2021, your annual report is due Jan. 13, 2022. Please have your CPA email your report to [email protected] 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) 576-7647.

2021 Escrow Annual Liability Report – Now Available

All escrow agents licensed prior to Jan. 1, 2022, must submit an Annual Liability Report to the Commissioner. The Annual Liability Report form is now available on DFPI’s website here. The deadline to submit the Annual Liability Report electronically is Feb. 15, 2022.

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 [email protected].

Reminder: Required Lists of Bank Offices Now Past Due

Banks that did not send in the report of offices required by Financial Code section 1077 to be submitted by all commercial banks, industrial banks, and trust companies on or before January 1 should do so as soon as possible. The report must specify the type of each office listed (branch or facility, head office, but not ATMs) and its complete address.

Please note that this requirement is only for banks and does not apply to credit unions or money transmitters. Responses may be emailed to [email protected] or mailed to:

Department of Financial Protection and Innovation
Division of Financial Institutions
Attn: Licensing & Information Reporting Office
One Sansome Street, Suite 600
San Francisco, CA 94104-4428

For questions, please contact Patrick Carroll at [email protected] or (415) 263-8559.

LICENSEE ACTIVITY

Commercial Bank Activity

New Bank

New Enterprise Bank
Proposed location: 3945 Freedom Circle, Santa Clara
Correspondent: Alan Rosen
Duane Morris LLP, 865 S. Figueroa Street, Suite 3100, Los Angeles, CA 90017
Phone: 213-689-7461
Withdrawn: 12/08/21

Acquisition of Control

American Riviera Bancorp, to acquire control of American Riviera Bank
Filed: 12/27/21

Earle S. Wasserman, to acquire control of Mission Valley Bank
Approved: 12/27/21

Shaul Kopelowitz, to acquire control of Pacific Enterprise Bank
Filed: 12/10/21

Merger

First Florida Integrity Bank, Naples, Florida, to merge with and into First Foundation Bank, Irvine, California
Effected: 12/17/21

Credit Union Activity

Merger

allU.S. Credit Union, Salinas, California, to merge with and into Pentagon Federal Credit Union, McLean, Virginia
Filed: 12/07/21

Pomona Postal Federal Credit Union, Pomona, to merge with and into Credit Union of Southern California, Anaheim
Filed: 12/10/21

SafeAmerica Credit Union, Pleasanton, California, to merge with and into Pentagon Federal Credit Union, McLean, Virginia
Filed: 12/15/21

South San Francisco City Employees Federal Credit Union, South San Francisco, to merge with and into Financial Partners Credit Union, Downey
Filed: 12/20/21

Foreign (Other State) Bank Activity

New Facility

Congressional Bank
4660 La Jolla Village Drive, San Diego (Facility – insured bank)
No Objection: 7/12/21

Money Transmitter Activity

New Money Transmitter

Robinhood Money, LLC
Opened: 12/10/21

Visa Global Services Inc.
Filed: 12/16/21

Acquisition of Control

Checkout LLC, to acquire control of eMoola Inc.
Filed: 12/06/21