Posts filed under ‘New York State’

What the CDC’s Announcement Means for Your Credit Union

The CDC’s announcement that it was altering its guidance to encourage vaccinated individuals to wear masks indoors in areas with substantial and high transmission rates may very well result in your credit union having to refine its workplace policies and procedures. The Governor issued a statement indicating that the state is reviewing the announcement. In the past the state has used CDC guidance to establish the baseline expectations for businesses in New York. Here is what we know for sure.

The state lifted its mask mandate for fully vaccinated individuals because, as of June 15th, 70% of New Yorkers had received at least one dose of the vaccine. What’s changed? The Delta variant of the virus has proven to be particularly tenacious and evidence is emerging that even fully vaccinated individuals can transmit the disease. Plus there are still a substantial number of individuals reluctant to get vaccinated. As can be seen from this map issued by the CDC, New York State has substantial numbers of new COVID cases.

The surging virus has forced employers to reconsider legal options when it comes to keeping their workplace safe. For example, the Veterans Administration announced that it was mandating that some of its employees get vaccinated and New York City is taking similar steps. The shift to a more aggressive posture reflects the mounting number of administrative rulings and judicial decisions which have reinforced that employers can mandate employee vaccinations provided they are mindful of genuine and sincere religious objections as well as the need for ADA accommodations.

One bellwether case that the legal community is watching is Bridges v. Houston Methodist Hospital, 2021. The case involves a nurse who was fired by the hospital after refusing to get vaccinated. The case is one of the first in which a federal court has directly addressed an argument, popularized on the internet, which contends that since the vaccines were approved on an emergency basis by the Secretary of Health and Human services they can’t be mandated by employers. The plaintiff also contends that the status of the vaccines mandates that employers explain the potential benefits and risks of taking the vaccine.

The district court swiftly rejected this argument. According to the court, federal law permits the Secretary of Health and Human services to authorize the vaccines on an emergency basis. Crucially, according to the court, “it neither expands nor restricts the responsibilities of private employers; in fact, it does not apply at all to private employers like the hospital in this case.”  This case is currently up on appeal before the Fifth Circuit.  If this case doesn’t give employers confidence to mandate vaccinations, the Secretary of Health is expected to approve the vaccine on a non-emergency basis sometime in the fall.

In addition to this case, in May the EEOC issued guidance authorizing employers to mandate vaccinations consistent with Federal Civil Rights Law.

And then of course there is New York State’s Hero Act. At this point the law requires nothing more than for employers to have an infectious airborne disease plan in place by August 5th. The plan only needs to be activated in the event that the Commission of Health issues a declaration that an airborne infectious disease presents a serious risk of harm to the public health. No such announcement has been made but recent events underscore the need to make sure you are ready to comply with NY’s law.

July 28, 2021 at 9:40 am Leave a comment

NCUA to CUs: Don’t Forget About New CFPB Foreclosure Regs

Yours truly is back from a recent visit to God’s country (aka Long Island) and this morning I have credit cards, mortgage regulations and class action lawsuits on my mind.

The NCUA has sent out this letter to credit unions reminding them that new regulations have been issued by the CFPB requiring mortgage servicers to take additional steps to ensure that individuals impacted financially by COVID-19 are vetted for potential loan modifications. These new amendments take effect on August 31st. As I explained in a previous blog, among other things these new regulations apply to homeowners who suffer a financial hardship due, directly or indirectly to the national emergency for the COVID-19 pandemic declared on March 13th 2020.

This announcement got me thinking about one of my favorite topics: The interplay between compliance and litigation, particularly for you bigger guys out there.

NCUA’s announcement is more than just a reminder of what needs to be done on your compliance to-do-list; it is in fact a warning that when you go to foreclose on someone for years to come both borrower attorneys and class action lawyers will be scrutinizing your compliance with these regulations to argue that but for your credit union’s failure to properly comply with these regulations, your member would still own their house.

For example, this morning Law360 reported on how a federal judge in California has increased the number of persons eligible for settlement money from a lawsuit alleging that Wells Fargo failed to properly evaluate borrowers for eligibility in the HAMP program. You may recall that the federal government responded to the mortgage meltdown which started a little over a decade ago by creating the Home Affordable Modification Program (HAMP) under which delinquent borrowers could seek modifications of their mortgage loans. Wells Fargo used a computer program that miscalculated eligibility requirements leading to hundreds of persons either losing their homes or spending more money than they otherwise would have had to. In other words, this is a classic example of how a compliance failure leads to a litigation mess.

Where New Yorkers Stands With Credit Card Debt

Here’s an interesting factoid for you: New Yorkers have among the most sustainable credit card debt in the country with median credit card balances of $1,854 and a median income of $54,588 with which to pay off that debt. These are among the findings of this report issued by WalletHub Today.

See you tomorrow, enjoy your day.

July 27, 2021 at 9:32 am Leave a comment

Why This Week is an Important One For Your Credit Union

This is not your average July week, especially for those credit unions located in the great state of New York.

July 15th is the target date for eligible members to start receiving child tax credits under the American Rescue Plan (ARP). That means that your credit union may already see federal government ACH payments being sent to your member’s accounts. This also means that your credit union has to decide both operationally and on a policy level how it is going to handle these payments.

In March, President Biden signed the American Rescue Plan. The Act increased the child tax credit from $2,000 to 3,000 and raised the age limit from 16 to 17. This year the tax credits will come in the form of advance monthly payments. Unlike the previous round of stimulus funding, Congress passed this measure using budget reconciliation and could not exempt these funds from Levy and restraint as a matter of federal law.

In March, New York State passed a law (S5923-A) that exempted federal stimulus check payments as well as tax refunds, recovery rebates, refundable tax credits, and any advances of tax credits for under the ARP from Levy and restraint under NYS law. The law does not protect child support payments. The language is intentionally written broad enough to include the tax credits that some of your members are going to begin to receive this week. In addition, the law prohibits state chartered financial institutions from the right of set off against these funds.

Against this backdrop, neither federal nor state credit unions have the legal authority to Levi or restrain these funds on behalf of third parties. In addition, state chartered credit unions don’t have the authority to set off these funds to satisfy delinquencies. Since federal credit unions have explicit authority under federal law to exercise a right of set off then they can set off these funds. Whether it’s smart to do so is an entirely different question.

The anticipated payments also underscore NACHA’s concern with the availability of payments under its existing rules. As I explained in this recent blog, financial institutions frequently receive ACH credits days before the sending entity wants the credits posted for payments. Right now, however, there are no penalties imposed against receiving institutions which make money immediately available to account holders. Later this week comments are due to NACHA about whether or not the existing regulations should be changed. The association would love to get your feedback on this issue.  

July 12, 2021 at 9:56 am Leave a comment

New Requirements Finalized for Delinquent COVID-19 Homeowners

Hello Folks,

For those of you who do mortgage lending, your summer just got a little busier.  The CFPB has issued highly nuanced amendments to its existing regulations dealing with delinquent borrowers that have to be in place by August 31st.

For months the CFPB has expressed concern that as federal and state laws protecting individuals from foreclosure end, there will be a huge increase in foreclosures that will disproportionately impact minority communities. As originally proposed, the regulations put forward by the CFPB would have had the practical effect of preventing most foreclosures through the end of this year. These final regulations don’t go that far but they impose nuanced amendments for dealing with homeowners impacted by Covid-19 which your policies and procedures will have to reflect. Remember every box you don’t check off represents one more potential delay in a foreclosure.

I will be getting into the weeds in future blogs, but for now, among the most important things to keep in mind is that the regulations implement a streamline loan modification process under which mortgages that meet certain conditions can be evaluated for potential modifications by a servicer who has not received a completed application. Additionally, the regulations prescribe specific information which must be provided to delinquent borrowers. For instance, a servicer must inform a borrower that there are programs for individuals having difficulty making payments because of the Covid-19 emergency; list and describe the applicable programs and tell the borrower of at least one way they can find contact information for homeownership counseling services.

There is much more but for now, I want to make sure you start delving into this regulation if you haven’t done so already.

It’s Back!

New York Congresswoman Carolyn Maloney kicked off the holiday weekend by introducing the “Overdraft Protection Act of 2021.” If enacted, the bill would restrict overdraft fees by, among other things, requiring that such fees be “reasonable and proportional” to the cost of processing these transactions and limiting the number of overdraft fees that can be imposed on any one consumer. Expect an even bigger push to get the legislation done this year.

July 6, 2021 at 9:45 am 1 comment

DFS Issues Ransomware Guidance

Good afternoon folks, if you are like yours truly you may physically be working but your mind is drifting away in anticipation of a three day weekend: Snap out of it!

Yesterday the DFS issued ransomware guidance; the guidance applies to state chartered credit unions and CUSO’s.  That being said, federally chartered credit unions would be well-advised to also take a look at what DFS has to say, because the Department has a disproportionate influence when it comes to establishing industry standards regarding cyber security.

First, the DFS wants to justifiably scare the heck out of any institution, large or small, that hasn’t taken the time to address the ransomware threat.  I don’t believe it is overstating the situation the financial industry faces when it says that “a major ransomware attack could cause the next great financial crisis.” 

Against this backdrop, it is issuing this guidance while putting everyone on notice that it may be making additional changes to its existing regulations.  Furthermore, the Department expects all institutions, irrespective of their size, to address these issues.  Among the precautions the Department expects institutions to implement if they haven’t done so already, are:

  • Email Filtering and Anti-Phishing Training
  • Vulnerability/Patch Management
  • Multi-Factor Authentication
  • Disable Remote Desktop Protocol Access
  • Password Management
  • Privileged Access Management
  • Monitoring and Response
  • Tested and Segregated Backups
  • Incident Response Plan

Nothing on this list should surprise you; the reality is however, that many of the most devastating ransomware attacks directly result from failing to take these basic steps.  That means that it is not enough to have pristine policies and procedures; you need to periodically test whether or not they are actually being put into practice.  For example, how soon after your credit union receives notice of a new patch update does it integrate the patch?  Every minute that goes by is one more minute hackers can take advantage of a programming defect that is now known to a large portion of the IT industry.

On that happy note, enjoy the rest of the afternoon.

July 1, 2021 at 2:40 pm Leave a comment

What The End of New York’s State of Emergency Means For Your Credit Union

When you specialize in compliance, even good news can keep you up at night. So it goes with Governor Cuomo’s announcement that he was ending the state of emergency he imposed on March 7th 2020 in response to this thing called COVID-19.

On the one hand, this is of course great news; on the other hand almost immediately, the Association started receiving phone calls about what effect this would have on existing policy and procedures put in place during the pandemic. With the caveat that this is not intended as a definitive list, here is what we know so far:

The executive orders authorized notaries to notarize documents over the internet. This authority has ended. The Department of State issued this memo informing us that effective June 24th, this authority came to an end. Clearly this prohibition is intended to apply prospectively but for those of you who do mortgages don’t be surprised if title insurers raise questions about the validity of your notarizations. They are a nervous a lot. The good news is that the legislature passed a bill to permanently authorize remote notarization.  Perhaps this will spur quicker action on that bill.

An executive order had extended the expiration date of licenses. I know credit unions have relied on this authority when opening up new accounts for members. This authority also came to an end on June 24th 2021. You may want to put a note in your files so that future employees and examiners reviewing account documentation understand that appropriate procedures were used.

Lending was of course another area where the executive orders had a big impact. But many of those early executive orders issued by the Department of Financial Services have been superseded by laws passed by the Legislature. Most importantly § 9-X of the Banking Law which mandates loan forbearance periods for individuals impacted by COVID-19 applies between March 7th 2020 and the latter of December 31st 2021, or the end of the emergency orders. In addition, pursuant to law, New York’s foreclosure moratorium remains in effect until August 31st 2021.

Then there are of course the HR issues. You still have an obligation under both New York law and general OSHA standards to protect your employees against the spread of COVID. This means that you still have to address issues such as mask mandates and vaccination requirements.

All this means that, as my man Winston Churchill would say, “Now, this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

On that note, enjoy your day.

June 28, 2021 at 10:14 am Leave a comment

Juneteenth Creates Compliance Glitch For Mortgage Lenders

The passage of legislation making Juneteenth a national holiday resulted in a compliance glitch which the CFPB could, and hopefully will, fix as early as today.

This issue sent me back to the preamble to the 2013 final TRID regulations. As the CFPB explained, neither RESPA nor TILA defines the term “business day.” As a result, for reasons that have never been clear to me, Regulation X which implements RESPA and Regulation Z which implements TILA contain separate definitions of a business day.

Most importantly, Regulation Z applies a definition of business days which includes calendar days except Sunday and legal public holidays specified in § 5 USC 6103. This is the section of law amended by Congress last week. As a result, from a strict compliance standpoint, June 19th was a national holiday and not a business day for disclosure purposes. This means that your credit union runs the risk of making loans that are out of compliance with federal regulations.

Yours truly is hopeful that common sense will prevail. Hopefully the CFPB will issue guidance clarifying that for purposes of complying with federal regulations. Lenders will not be deemed to be out of compliance for counting Juneteenth as a business day in 2021.

NY to Release Diversity and Inclusion Document to State Regulated Institutions

The Department of Financial Services will shortly release a memorandum to state chartered institutions explaining the department’s expectations as it relates to diversity and inclusion in the workplace. This publication is similar to one issued last October related to climate change initiatives. Its purpose is not to impose specific mandates at this time but to begin a discussion about the requirements that should be imposed on banks, credit unions, and mortgage lenders. When it comes to the efforts they are making to bring more diversity to middle and upper management. Stay tuned.

June 21, 2021 at 9:33 am Leave a comment

Updated COVID Guidance To Which Your Credit Unions Should Pay Attention

On June 10th, OSHA published updated guidance called for by the Biden administration intended as general workplace recommendations for employers and industries not subject to specific OSHA mandates.

The most important line in the document is that “Unless otherwise required by federal, state, local, tribal, or territorial laws, rules, and regulations, most employers no longer need to take steps to protect their fully vaccinated workers who are not otherwise at-risk from COVID-19 exposure. This guidance focuses only on protecting unvaccinated or otherwise at-risk workers in their workplaces (or well-defined portions of workplaces).” In other words, you have a continuing obligation to protect individuals who are not vaccinated.

For many of us the last year has been a crash course in OSHA regulations. Federal law requires all employers to provide workers with a safe and healthy workplace “free from recognized hazards that are causing or likely to cause death or serious physical harm.”  The pandemic falls into this category. Some industries, such as healthcare, are subject to specific health and safety regulations implemented by OSHA. The guidance to which I am referring is a generic guidance issued for the benefit of all industries not subject to those more specific requirements.

For example, it stresses that “employers should take steps to protect unvaccinated or otherwise at risk workers in their workplaces from the continuing risk posed by COVID. Such steps may include but are not limited to measures we are all very familiar with at this point such as granting paid time off for vaccinations, which is a legal requirement in NYS, and implementing physical distancing for unvaccinated workers in all communal work areas.

The issuance of this regulation raises further questions as to the need for a new law passed in New York which requires employers to adopt workplace health and safety standards for protections against airborne infectious diseases. Employers will have the option of adopting sample policies to be provided by NYS. It’s not clear to me how these policies will be much different than the suggested OSHA guidelines. Then again, New York’s law has a lower standard for imposing legal liability against employers who violate these policies and requires that employers with 10 or more employees give their employees the option of creating workplace safety committees.

On that note, enjoy your weekend. If you’re looking for something to do this morning I will be hosting a webinar looking back at some of the key legislation passed in the recently concluded legislative session.

June 18, 2021 at 9:18 am Leave a comment

Bank Preemption Takes Center Stage

There is currently a case before New York’s Court of Appeals for the Second Circuit that could have a direct impact on your credit union’s bottom line even if you don’t have the great fortune of living in New York. The issue is whether or not federally chartered banks are subject to a New York law mandating that lenders provide interest payments to borrowers with mortgage escrow accounts. If the court upholds two lower court rulings, federally chartered credit unions should be prepared to also provide interest payments. NCUA preemption standards are less stringent than those typically exercised by the OCC.  The cases being appealed are Hymes et al. v. Bank of America NA, case number 21-403, and Cantero v. Bank of America NA, case number 21-400, in the U.S. Court of Appeals for the Second Circuit.

I have blogged about these cases before, and I just wanted you to know that I am not the only one paying attention.  Law360 reported that the OCC has weighed in with an amicus brief.   The issue is the applicability of New York General Obligation law 5-601 which requires banks and credit unions to pay interest on mortgage escrow account balances. The statute has been around for decades, dating to the early 80’s when high inflation rates chipped away at member’s savings. But since the law’s inception, courts have ruled that its provisions don’t apply to federally chartered institutions.  The OCC argued that in refusing to preempt New York’s law, the lower courts adopted a legal standard which violates long standing precedent.

If you think you got it bad…

If you’ve been obsessing about your credit union’s influx of cash, you are not alone.

Yesterday, the FDIC released this report detailing the impact that the unprecedented influx of cash has had on banks. The report was required as part of a restoration plan that had to be imposed on banks after they fell below their statutory deposit baseline.

What struck me about the report is just how much financial institutions have riding on the assumption that this glut of money is a short-term phenomenon.  Obviously, if people start spending money again now that the COVID restrictions have been lifted, the savings glut will be a short-term glitch that we can reminisce about over drinks when we look back at the pandemic. But what happens if inflation continues to rise and consumers are weary to spend too much money as the economic outlook remains uncertain? Hopefully we will not have to find out.

June 16, 2021 at 10:09 am Leave a comment

NY’s POA Changes Have Taken Effect: Now What?

The changes to New York’s Power Of Attorney laws officially took effect on June 13th marking one of the most important operational changes that NY credit unions have seen in a number of years. In my previous blogs on the subject I have emphasized the fact that the changes are designed to encourage acceptance of POAs. This goal is accomplished by mandating that institutions accept POAs that “substantially conform” to New York State Law and allowing courts to award attorney fees to individuals who have to go to court to prove that a POA is valid. In this blog yours truly wants to point out that there are still steps you can take to protect both the credit union and your members.

Under the old Power Of Attorney, certain banking transactions could only be carried out by an agent if a POA was accompanied by a Statutory Gift Rider. Remember that this rule still applies to POAs created before June 13th. The amendments eliminate the requirement that POAs contain a separate SGR form. But, when it comes to making changes to existing accounts such as changing the title on the account or adding a new joint tenant, the authority to makes these changes has to be included in the modifications section of the new form. In other words, the modification requirements are being used in much the same way as the SGR requirement previously was (NY general obligation law section 5-1502D).

Let’s say a relative of one of your members comes in with a POA they pulled off the internet. Under the new law a person that is asked to accept an acknowledged Power Of Attorney may request “an opinion of counsel as to any matter of law concerning the power of attorney if the person making the request provides in a writing or other record the reason for the request.”

And remember, even with these changes there are still grounds for denying a POA. A list of examples in New York State Law where such reasonable grounds would exist includes the refusal to provide the credit union with an original Power Of Attorney document or certified document and a good faith referral of the principal and the agent to the local adult protective services unit [New York general obligation law 5-1504(2)].

The bottom line is that your credit union still has the ability to assure itself that a POA is a valid document. That being said, given the changes to the law and the increased risk of noncompliance, decisions on whether or not to accept POAs should not be made by frontline staff.  They should instead reflect a uniform application of your updated Policies and Procedures.

June 15, 2021 at 9:18 am Leave a comment

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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