Last Week, This Morning

March 24, 2026

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 March 13, President Trump issued an executive order that seeks to improve the availability and affordability of mortgage credit, with a particular focus on helping smaller banks (banks with assets of less than $100 billion) and community banks expand in the mortgage market.

Some of the key provisions of the executive order include:

• Origination and ability-to-repay ("ATR")/qualified mortgage ("QM") reform. Encourages the Consumer Financial Protection Bureau to propose amendments to Regulation Z that tailor certain mortgage lending requirements for smaller banks; replace the TILA-RESPA Integrated Disclosure timing rules with a materiality-based standard that preserves consumer clarity and reduces closing delays; exempt small mortgage loans from caps on QM points and fees or modify such caps to support affordability; update regulations regarding banks' reasonable compliance with ATR and QM underwriting requirements by removing unnecessarily burdensome elements; modernize the right to rescission for mortgage lending; streamline the requirements applicable to rate-and-term refinancing under Regulation X mortgage servicing rules; and exempt rate-and-term refinancing (including cash-out refinancing) from rescission rights. Encourages certain federal financial regulators to revise supervisory guidance to ensure that examiners evaluate mortgage lending based on the effectiveness of the lender's policies regarding a consumer's ATR and prudent underwriting, rather than the existing focus on process and technical compliance; and good faith, technical compliance errors are subject to correction-first supervisory treatment, with enforcement reserved for borrower harm or repeated misconduct.
• Modernization of Home Mortgage Disclosure Act data collection and disclosure. Encourages the CFPB to raise the asset threshold for exemption from HMDA data collection and reporting requirements.
• Capital and liquidity alignment. Encourages certain federal financial regulators to adjust bank capital and liquidity standards tied to mortgage lending.
• Appraisal modernization. Encourages certain federal financial regulators to revise appraisal rules to expand the use of alternative valuation models, desktop and hybrid appraisals, and artificial intelligence tools; simplify appraiser qualification requirements; and reduce appraisal requirements for low-risk transactions, including low loan-to-value refinancing and small balance loans.
• Digital mortgage modernization. Encourages certain federal financial regulators to standardize acceptance of electronic mortgage documents and electronic signatures.
• Enforcement. Encourages certain federal financial regulators to adopt a policy for enforcement actions for violations of consumer finance laws that discourages imposing civil monetary penalties except where the underlying violations are willful, knowing, or reckless; considers good corporate conduct, including a bank's correction of good faith or technical compliance errors; and allows institutions a reasonable opportunity for self-identification and remediation of appropriate compliance matters.

Amicus Brief(ly): Setting aside any wonderment at the administration giving the CFPB, which the administration continues to try to dissemble in practice and in litigation, an assignment like this, the focus of this executive order would be positive for consumers. It purports to extend access to credit by making compliance easier for small banks, including community banks. Reform does not come easy - a stripped-down CFPB may be able to capture all of the key provisions of the executive order in an effective rulemaking, but we'll see. Consumer advocates are likely to take exception to the idea that relaxed regulation is the best approach to ensuring access to mortgage credit (the lessons of the recession of the late 2000s still feel pretty fresh), but any rulemaking that follows this executive order will involve a comment period where both industry and consumer advocates will have a chance to weigh in. Consumers stand to gain from increased access to mortgage credit, and we all benefit from modernized regulation. We will watch with interest to see where this goes.

On March 18, New York Governor Kathy Hochul signed Senate Bill 8830, corrective legislation to amend the requirements of the New York coerced debt law. The original legislation was set to go into effect on March 20. In summary, under the coerced debt law, if the debtor notifies a creditor that a debt (or a portion of a debt) being collected is a "coerced debt" and supplies "adequate documentation" with this notice, then the creditor must cease collection activities. From there, the creditor must:

• within 10 business days, notify any consumer reporting agency to which it has furnished adverse information about the debtor that the alleged coerced debt is disputed;
• within 30 business days, complete an investigation based on the information provided by the debtor and other information available in the creditor's file; and
• within five business days of the creditor completing the investigation, inform the debtor whether it will recommence collection activity.

The corrective legislation, which is effective immediately, significantly revises the requirements of New York's coerced debt legislation as initially adopted in December. Among other things, the corrective legislation:

• pushes the effective date of New York's coerced debt law out for another 90 days, into mid-June;
• makes the legislation prospective: only debts incurred after the new effective date will be subject to the coerced debt law's requirements; and
• exempts secured debt from many provisions of the amended law, with differing exemptions for debts secured by real property and debts secured by personal property.

The coerced debt law, as amended by the corrective legislation, supplements existing New York statutes that govern the conduct of principal creditors and their agents (including debt collection agencies and debt collectors).

Amicus Brief(ly): Kudos to New York State for these common-sense adjustments to its coerced debt law and for the extra 90 days to comply with the comprehensive statute. Governor Hochul signaled that some form of corrective legislation was coming when she signed the original bill in December, acknowledging that the legislation came to her with both technical and substantive issues to fix. The updates maintain the timing requirements for informing consumer reporting agencies about the coerced debt claim and completing an investigation, but the revised law adds detail to the definition of "coerced debt," allows creditors and servicers to send required notices during the investigation period without tripping the prohibition against "collection activities," and tries to address other concerns that industry identified in the original bill. There is a lot for creditors and servicers to unpack before the June effective date of this updated, impactful new law.

On March 11, South Dakota Governor Larry Rhoden signed House Bill 1238, which adds a new chapter to protect financial institutions taking action to prevent the financial exploitation of "consenting," "senior," or "vulnerable" adults, as defined in the bill. Under the new law, effective July 1, 2026, if a financial institution or its employee reasonably believes, or has received information from a state agency or a law enforcement agency demonstrating that it is reasonable to believe, that financial exploitation of a consenting, senior, or vulnerable adult may have occurred, may have been attempted, is occurring, or is being attempted, the financial institution or the employee may, in its discretion:

• delay or refuse a transaction with or involving the consenting, senior, or vulnerable adult;
• delay or refuse to permit the withdrawal or disbursement of funds contained in the account of the consenting, senior, or vulnerable adult;
• prevent a change in ownership of the account of a consenting, senior, or vulnerable adult;
• prevent a transfer of funds from the account of the consenting, senior, or vulnerable adult to an account owned wholly or partially by another person;
• refuse to comply with instructions given to the financial institution by an agent or a person acting for or with an agent under a power of attorney signed or purported to have been signed by the consenting, senior, or vulnerable adult; or
• prevent or change the designation of beneficiaries to receive any property, benefit, or contract rights for a consenting, senior, or vulnerable adult at death.

In addition, a financial institution or its employee may notify any third party reasonably associated with a consenting, senior, or vulnerable adult of the suspected financial exploitation, except if the institution or employee reasonably believes that the third party is, may be, or may have been engaged in the financial exploitation or if requested to refrain from making a notification by a law enforcement agency.

A financial institution and its bank holding company and any of their employees, agents, officers, and directors are immune from any liability that may otherwise exist for, in accordance with the new chapter, delaying or refusing to execute a transaction, withdrawal, or disbursement, not delaying or refusing to execute a transaction, withdrawal, or disbursement, and actions taken in furtherance of determinations made.

Amicus Brief(ly): More and more states are enacting these kinds of specific elder financial exploitation laws to complement their existing unfair and deceptive acts and practices laws and other general adult protective services rules. Whether it is a sign of the times, with the aging children of Baby Boomers looking for access to their parents' wealth or a heightened focus on financial fraud across the board, the states are increasingly empowering financial institutions to step in and slow things down when they suspect elder financial abuse. That, of course, adds to the burdens of financial institutions that already have substantial regulatory compliance obligations, but the industry does not typically react poorly to anti-exploitation laws designed to provide real protection to their vulnerable customers, like this new South Dakota statute.

On March 16, sixteen attorneys general - from Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawai'i, Illinois, Maine, Maryland, Massachusetts, Michigan, New Jersey, Rhode Island, Vermont, and Washington - filed a complaint in California federal court against the United States, the U.S. Department of Housing and Urban Development, HUD Secretary Eric Turner, and Assistant Secretary for the Office of Fair Housing and Equal Opportunity Craig Trainor, challenging actions by HUD, including threats to withhold funding from state and local fair housing enforcement agencies and attempts to impose illegal conditions on HUD funding. The AGs argue that these actions "eviscerate the federal-state partnership Congress created to enforce the Fair Housing Act ..., gut [their] ability to ensure equal access to housing nationwide, and weaken fair housing enforcement."

According to the AGs' complaint, the federal government is undermining the Fair Housing Assistance Program - a partnership between HUD and state and local agencies - that was created to enforce the FHA and state fair housing laws. Through the FHAP, which receives HUD funding, HUD refers allegations of housing discrimination to state and local partner agencies for investigation and enforcement.

The AGs state that, in September 2025, HUD issued guidance to state and local FHAP agencies threatening to decertify them from the program and cut off complaint referrals and funding unless they stop enforcing protections against housing discrimination based on sexual orientation, gender identity, language, criminal records, and source of income. The AGs also claim that the guidance bars agencies from pursuing claims targeting housing practices based on a disparate impact theory. The AGs note that this guidance followed HUD's reduction of its workforce and the number of housing discrimination cases it charges and the firing of employee whistleblowers.

The AGs claim that the federal government "lack[s] authority to restructure Congress' civil rights enforcement scheme, suppress enforcement of housing discrimination protections, or coerce states to weaken or disregard their own laws as a condition of receiving funds appropriated to enforce the FHA" and assert that the government's "actions violate the Administrative Procedure Act ... and the United States Constitution, and threaten to dismantle a crucial mechanism for combatting housing discrimination in the United States."

Amicus Brief(ly): The battle over executive authority in DC rages on with yet another case where the states are challenging the administration over its capacity to act without Congress. The practice of testing relative authority has been persistent with the administration, which is willing to use funding as leverage and to litigate its position in pursuit of the administration's policy agenda. It is hard not to see that this particular guidance, if it remains in place, will negatively impact consumers who rely on FHA loans for affordable mortgages. It is also difficult to reconcile the guidance at issue in this litigation with the substance of the administration's recent executive order, referenced above, that purports to enhance access to affordable mortgages. When Congress has acted, it should take an act of Congress to change a law. Congress is not getting much done these days, so the administration is doing its thing, and the affected states are reacting. The process is becoming familiar (wash, rinse, repeat).

On March 17, New York Attorney General Letitia James announced that she sued Attyx, a major home improvement company with operations across the country, along with its CEOs and lending partners, for allegedly defrauding New York homeowners with false promises of free home repairs and solar panel installations. According to an investigation by the AG's office, Attyx targeted consumers - including many low-income individuals and seniors on fixed incomes - with promises of free or reduced-price home solar power systems, roof repairs, and other home improvement projects through government "incentives," "programs," and tax credits. In reality, according to the AG, consumers were misled into electronically signing sales and loan contracts to pay tens or even hundreds of thousands of dollars, generating nearly $275 million for Attyx in New York alone.

The AG claims that Attyx's lending partners, including Solar Mosaic and WebBank, further defrauded Attyx's customers by hiding their fees within the high prices the consumers were supposedly paying to Attyx for their solar systems, thereby unlawfully understating the loans' total costs and interest rates and overstating the amounts financed.

The AG also alleges that Attyx falsely marketed its services under the name of LGCY Power to deceive both consumers and the New York Public Service Commission. Last year, the PSC ordered Attyx to cease its marketing of solar energy systems to New York consumers, but Attyx instead continued its operations under a different name.

Amicus Brief(ly): Not that we needed it, but this lawsuit by the New York AG is another reminder that when AGs get wind of allegations of deceptive sale and financing tactics, they will take action. The allegations in this case are familiar to observers who have read about state AG cases alleging unfair and deceptive acts and practices - the provider baited consumers with promises that were not reflected in contracts they were presented, told consumers they would be eligible for tax credits that were not available, and told consumers they were signing applications when they were allegedly signing contracts and credit agreements. The AG also alleges that the provider's lending partners contributed to some of the alleged consumer deceptions by allowing the provider to hide fees and costs, leading consumers to misunderstand the actual cost of the loans they obtained to pay for their solar equipment and services. Whether or not the AG can prove the allegations in this case, the lawsuit ensures that UDAP issues related to sales and financing tactics remain on compliance professionals' collective radars.

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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.