NDAs May Violate Whistleblower Laws

Whistleblowers are not blocked from NDAs.

The Consumer Financial Protection Bureau (CFPB) released Consumer Financial Protection Circular 2024-04, which warns that NDAs may violate whistleblower laws if they do not have appropriate carve-outs. 

A provision of the Consumer Financial Protection Act (CFPA) safeguards whistleblowers from retaliation by financial firms for reporting financial misconduct that violates the CFPA.

The CFPB’s circular noted that companies may impose NDAs on employees for permissible reasons (such as the protection of sensitive trade secrets), but they need to explicitly afford employees the freedom to communicate or cooperate with law enforcement regarding internal misconduct could disincentive whistleblowing and violate federal whistleblower laws such as the CFPA.

To read the whole circular, click here.

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Real Estate Lending Valuations Guidance

On July 18, 2024, the Consumer Financial Protection Bureau and 4 other government agencies issued guidance to financial institutions about Reconsiderations Of Value (ROVs) in the real estate lending process to avoid litigation for deficient valuations. 

ROVs are valuation reports, which includes reconsideration of appraisals, evaluations, and other means to determine the value of residential property. Specifically, ROVs are a response to a request for a follow-up valuation, after an initial valuation exists to gauge the value of real estate or loan collateral offered by a party seeking a loan. 

The guidance suggests policies and procedures for lenders to address information unconsidered in an initial valuation or identify flaws in an original valuation because accurate valuations of collateral are key to the lending process and avoiding litigation.  

A valuation may be deficient due to unlawful discrimination under both the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA). In fact, the guidance suggests that complaints of discrimination should be addressed by routing those complaints "to the appropriate compliance, legal, and appraisal review staff," in addition to processing the ROV. Such unlawful valuations can prevent the acquisition of loans lenders, blocking potential buyers from purchasing or refinancing homes. 

To read the entire guidance, click here. 

Guidance on AI Discrimination & Emerging Data in Insurance by NYS DFS

Welcome to the age of AI Discrimination Regs. Do you have an auditing program in place? 

On July 11th, 2024, the New York State Department of Financial Services (DFS) released Circular Letter No. 2024-7 about the expectations for insurers in NYS regarding the use of Emerging Consumer Data & Information Sources (ECDIS) & Artificial Intelligence Systems (AIS) in underwriting and pricing insurance policies.

The goal of these guidelines is to ensure that all insurers adopt & manage ECDIS, AIS, & other predictive models responsibly because these models come with potential systemic biases & reliability issues that could lead to unfair discrimination or adverse effects on vulnerable communities.

Keys:

• Insurers must ensure that ECDIS & AIS complies with all relevant federal / state laws & regulations.
• Use of these models should not result in unfair discrimination, which means that data sources or models do not rely on protected classes & do not produce unfairly discriminatory outcomes.
• Use of ECDIS & AIS must be supported with generally accepted actuarial standards, demonstrating a clear, statistically significant relationship between variables used & risk.
• Insurers must regularly test & document their methodologies to ensure compliance with anti-discrimination laws & to maintain transparency.
• Effective governance frameworks should be established, with senior management & board oversight to manage the risks associated with these technologies.

DFS notes that transparency is crucial with ECDIS and AIS. Insurers must disclose to consumers whether these technologies are used in underwriting or pricing decisions & provide the specific data that influenced these decisions. 

When it comes to third-party vendors, insurers are responsible for understanding & ensuring compliance of any third-party tools, ECDIS, or AIS used. This includes having contracts that allow for audits & cooperation with regulatory inquiries.

If you'd like to read DFS's Circular Letter No. 2024-7 click here. 

Foreclosure Help on the Way from CFPB

The Consumer Financial Protection Bureau (CFPB) proposed new rules on July 10, 2024 that would obligate large mortgage servicers to help homeowners/borrowers avoid foreclosure, expand access to borrowers seeking mortgage payment assistance, and strengthen communication between borrowers and servicers.

These rules would mandate servicers to do everything they can to provide payment assistance to borrowers before they can seek foreclosure while also speeding up servicers’ evaluations of borrowers’ eligibility for assistance by greenlighting such reviews once borrowers provide some documentation rather than requiring the submission of a complete application.

Further, the amendments would mandate prompt status updates on borrowers’ applications and require servicers to broadly construe what qualifies as a request for assistance.

The new provisions would also obligate servicers to communicate with borrowers in their preferred language in certain circumstances as well as to include guidance about how to obtain information about payment assistance in notices sent after missed payments.

New Law - Adult Survivors Act & Sex Offenses

On June 28, 2024, New York State Governor Kathy Hochul signed into law A6138, which clarifies that individuals bringing untimely or inadequately filed lawsuits for sexual offenses revived by the Adult Survivors Act (ASA) under three other laws are not required to file a notice of claim or notice of intention to file a claim beforehand when such suits are brought against the Government. 

While the ASA provided that sexual offenses claims can be revived even if the statute of limitations period passed or a notice of claim went unfiled, the ASA did not directly amend the specific laws such revived suits are brought under to eliminate these procedural hurdles. 

The Bill clarifies that individuals bringing procedurally flawed claims revived by the ASA under the Court of Claims Act, General Municipal Law, and Education Law, specifically, are not required to file a notice of claim or intention to file a notice of claim prior.

This clarification went into effect immediately and applies to lawsuits either pending on or brought after June 28, 2024.

Age Discrimination Law Explained: Protecting Older Workers with Attorney Andrew Lieb on Scripps News

In this interview with Scripps News, Attorney Andrew Lieb discusses the protections for older workers from discrimination under Federal and New York State laws. 

Key points include:

• Individuals aged 40-69 are fully protected and cannot be forced out of their positions due to age.
• Executives over 65 can be required to retire if they meet certain payment standards.
• In New York, everyone 18 and older has these protections and more.
• Companies can mandate physical or mental tests for employees if they are relevant to the job's essential functions and uniformly applied.

For more information, contact Lieb at Law, P.C.