Financial Services Licensing and Compliance Obligations and COVID-19As members of the financial industry prepare to meet the challenges associated with COVID-19, key government agencies have begun to offer guidance with respect to how their regulated financial institutions, including non-depositories, can meet their compliance obligations while balancing the realities of a potential pandemic event due to COVID-19. This blog summarizes the latest updates that we are aware of from state regulatory agencies as of March 12, 2020 and will be updated as additional developments occur (read the original post for the full report). While all of these offerings may not be applicable to each financial institution or non-depository licensee, the best practices and guidance offered will help instruct your institution in moving forward, and Bradley is ready to assist with any questions you have.

Massachusetts Division of Banks Issued Statement on March 11, 2020

The Massachusetts Division of Banks issued a reminder to its licensees that they must have business continuity plans in place and that they must be prepared for a pandemic in order to minimize business disruption.  Licensees should consider the following guidelines for their pandemic preparedness policy:

  • Document your strategy for responding to a pandemic that is scaled to the stages of the outbreak;
  • Ensure continuance of critical operations. Licensees should identify the systems and services that are needed to continue business remotely if necessary.
  • Have adequate communications with staff, service providers, customers, and regulators, including proper education to staff about company policies;
  • Educate employees on strategies to minimize the risk of spreading COVID-19;
  • Test the company’s pandemic planning and capabilities; and
  • Ensure sufficient flexibility in the plan to address a range of possible effects that could result from the pandemic.

The Division also will allow a “common sense” approach to working from home for licensed mortgage loan originators.  Mortgage loan originators must not advertise the home as an office and may not meet consumers at their home.  However, mortgage loan originators are permitted to work from home if they meet these requirements.  In addition, other licensees of the Division of Banks are permitted to work from home, so long as the arrangement is feasible based upon their business model and license type, that the home is not advertised as a branch office, and that the licensee does not allow for meeting consumers at the home.

Michigan Office of Insurance and Financial Services Encourages Review of Public Health-related Guidance on March 12, 2020

Pursuant to the licensing requirements relating to Michigan mortgage lenders, brokers, and servicers, branch locations are not licensed.  However, the Michigan Office of Insurance and Financial Services has made available a bulletin from the Michigan Department of Health and Human Services.  That bulletin includes interim recommendations to mitigate the spread of COVID-19.  While all information in the release are important, certain key items relating to workplaces include:

  1. Encouraging sick employees to stay home and notify the employer of illness;
  2. Communicating and reinforcing common hygiene practices, such as washing hands and covering one’s mouth during coughs and sneezes.
  3. Regularly cleaning and disinfecting frequently touched surfaces, such as doorknobs, keyboards, cell phones, and light switches.
  4. Ensuring hand hygiene supplies are available and accessible.
  5. Allowing teleworking to take place when feasible, with a particular sensitivity to those who are at risk of severe illness.
  6. Implementing social distancing measures where feasible including limiting meetings.
  7. Limiting large work-related gatherings.
  8. Limiting non-essential work travel.
  9. Canceling or postponing large gatherings, conferences, and sporting events (i.e., those with 100 or more in a shared space).
  10. Discouraging employees from eating meals in large group settings.
  11. Tailoring business continuity plans to meet the COVID-19 threat.

Alabama State Banking Department, Bureau of Loans Issued Statement on March 12, 2020

The Bureau of Loans of the Alabama State Banking Department is encouraging all licensees to remain updated about COVID-19 and asks that licensees review their business continuity plans.  Licensees should update their business continuity planning at this time if their business continuity plan is not able to address the current situation involving COVID-19.

The department asks that licensees communicate and work closely with customers that could be impacted by circumstances relating to COVID-19, including the possibility of deferring fees or other charges.

Licensees are instructed to take precautions to avoid the risk of exposure to COVID-19, and this may include relocating office locations or having employees work from home (meaning these efforts are allowed).  However, if a change of location or working from home will take place, licensees must otherwise continue to follow other laws and regulations – including data security requirements.  If licensees cannot take steps to relocate locations or work from home, they should take steps to mitigate the impact on business and customers (including proper notification and communication to consumers).

Licensees must immediately notify the department if there are any circumstances that require the closure, relocation, or remote work program and any efforts that the licensee will undertake to work with consumers.

Idaho Department of Finance Provides Guidance for Various Licensees on March 12, 2020

The Idaho Department of Finance issued Temporary Regulatory Guidance, effective through June 30, 2020, for entities that hold the following licenses: mortgage broker/lender, mortgage loan originators, regulated lender, title lender, payday lender, and collection agency licensees and registrants.  The department will allow licensees, registrants, and their employees to work from home even if the home is not licensed as a branch.

In order to be eligible to work from home, an individual and their residence must meet the following criteria:

  1. Data security must be in place, so that the employee must access company data either from the use of a VPN or another system that requires passwords or identification authentication. The company is responsible for delivering any updates that are required to keep the data secure.
  2. Neither the employee nor the company may commit any act that would indicate that the employee is conducting business from an unlicensed location. Such acts include:
    • Advertising in any form, including business cards or social media that would include the address, landline phone number, or facsimile number associated with an unlicensed residence;
    • Meeting with consumers at the employees’ unlicensed residential location;
    • Holding out the residence in any manner, directly or indirectly, that would suggest or convey to the consumer that the residence is a licensed location.
  3. Employees and companies must safeguard company and consumer data, including paper and electronic records. Employees must guard against unauthorized or accidental access, use, modification, duplication, destruction, or disclosure of consumer information.

Nebraska Updates Guidance Regarding COVID-19 on March 12, 2020

The Nebraska Department of Banking and Finance provided guidance on mortgage banker and mortgage loan originator temporary branch relocations.  This guidance is effective through December 31, 2020 but is subject to change or withdrawal by the director.  Under the guidance, mortgage loan originators (MLOs) may work from an unlicensed branch location, including a home office.  The sponsoring company must provide notice of the temporary branch location and the department must approve the notification. The department has created a form to provide the required information needed for the approval of these arrangement.

The new temporary branch location cannot store any physical business records.  MLOs who work from home or an unlicensed location must be able to access their employer’s secure loan origination system through a VPN that requires a password or other forms of authentication.  Additionally, MLOs may not meet consumers in the unlicensed branch location.

Montana Department of Banking and Financial Institutions Issues Guidance Regarding Working from Home on March 12, 2020

The Montana Department of Banking and Financial Institutions will temporarily allow Montana-licensed mortgage loan originators to work from home, whether within Montana or outside the state, even in circumstances where the home is not a licensed branch location.  All other aspects of Montana law must be met if an employee will work from a non-licensed residence.  Mortgage loan originators working at non-licensed home locations may not meet with consumers at their home.

Oregon Division of Financial Regulation Issued Work From Home Guidance to Multiple License Types on March 12, 2020

The Oregon Division of Financial Regulation (DFR) has authorized Oregon-licensed mortgage loan originators to work from home when certain conditions are met.  In addition, other employees of Oregon-licensed mortgage lenders, mortgage loan servicers, consumer finance companies, payday/title lenders, and manufactures structure dealers may work from home when certain conditions are met.  Provided that the conditions are met, the DFR will not take action against any company or individual that works from home in order to prevent the spread of COVID-19.

In instances where an individual’s home is not a licensed location, an individual will be permitted to conduct business at home if a licensed company meets the following criteria:

  • The company must provide prior notice to the DFR of the intent to permit employees to work from home to prevent the spread of COVID-19. Notice should be sent to
  • The company must have appropriate policies and procedures in place to supervise the activities of loan originators and employees working from home, including data security measures to protect the personal information of consumers.
  • No physical business records may be kept at the home of an employee. Such records only must be kept at a licensed location.
  • Consumers may not visit the home of an employee working from home unless it is licensed.
  • If the company implements temporary policies and procedures related to working at home in response to COVID-19, the company must provide copies to

The aforementioned position is effective until April 30, 2020.