Maryland Legal Alert for Financial Services

In this issue:

• REMITTANCE TRANSFER EXAMINATION PROCEDURES
• USA PATRIOT ACT: SHARING INFORMATION WITH OTHER FINANCIAL INSTITUTIONS
• RENEW MARYLAND MORTGAGE LENDER LICENSES NOW
• BANKRUPTCY COURT'S POWER TO STRIP OFF VALUELESS LIEN IS LIMITED

REMITTANCE TRANSFER EXAMINATION PROCEDURESThe CFPB's remittance transfer rule became effective October 28, 2013 and, as far as we know, the sky hasn't fallen yet. Helpfully, the CFPB has issued Examination Procedures that providers can use as a compliance check. CFPB examiners will be looking at whether providers are providing required disclosures, following proper error resolution procedures and offering refund and cancellation rights to consumers. Importantly, peppered throughout the Examination Procedures are the various internal policies and procedures that the CFPB expects a provider to have, including policies for providing oral disclosures when permitted, other disclosure procedures, the policy for providing the long form error resolution and cancellation notices, the policy and procedures regarding estimated disclosures, and the policies and procedures on error resolution and cancellation and refund of transactions. If you have questions about the remittance transfer rule, please contact Carla Witzel.

USA PATRIOT ACT: SHARING INFORMATION WITH OTHER FINANCIAL INSTITUTIONSWe regularly advise depository clients on the proscriptions found in Maryland's Confidential Financial Records Act and common law against sharing financial records and other non-public financial information. Recently FinCEN published a reminder and fact sheet describing the USA Patriot Act section that allows financial institutions to share certain information directly with other financial institutions. This federal law preempts the Maryland law restrictions on sharing financial information but only if the financial institution complies with federal regulatory requirements. These federal requirements include, among others, that the financial institution file an annual notification with FinCEN, that the financial institution only share information with other financial institutions that also have filed the notification with FinCEN, and that the information shared relate to specified unlawful activities concerning terrorism or money laundering. More detail about specified unlawful activities relating to money laundering can be found here. While FinCEN's reminder appears to be a call to action, depository institutions in Maryland need to pause and remember that sharing financial information with other financial institutions pursuant to Section 314(b) of the USA Patriot Act is permitted only if in complete compliance with applicable federal regulations. Please contact Margie Corwin or Carla Witzel if you would like to discuss this subject further.

RENEW MARYLAND MORTGAGE LENDER LICENSES NOWThe Office of the Commissioner of Financial Regulation is strongly encouraging Maryland licensees to perform necessary licensing "housekeeping" and then apply for renewal Mortgage Lender Licensing as soon as possible. Please see the Commissioner's Mortgage Licensing Update issued October 4, 2013. If you have any questions, please contact Margie Corwin.

BANKRUPTCY COURT'S POWER TO STRIP OFF VALUELESS LIEN IS LIMITEDOur friend, Ralph Wutscher, brought to our attention a recent decision of interest. In an issue of first impression among federal appellate courts, the United States Court of Appeals for the Fourth Circuit recently addressed the question of whether a bankruptcy court can refuse to "strip off" a "valueless lien" against certain real property that a debtor owned with his spouse as tenants by the entireties. The spouse was not a bankruptcy debtor. The Court upheld a decision by the United States District Court for the District of Maryland, which held that, although a bankruptcy court in a typical Chapter 13 proceeding generally has "the authority to strip off a completely valueless lien", such authority does not extend to liens on tenants by the entirety property when only one spouse has filed for bankruptcy. If you have any questions about this decision or about bankruptcy proceedings in general, please contact David Musgrave.