Georgia Department of Banking and Finance Requires Anti-Money Laundering Program and Updates Mortgage Servicer Regulations

Georgia’s Department of Banking and Finance issued a final rulemaking on June 27, 2018, requiring loan or finance companies to maintain an anti-money laundering program and updating various regulations to follow federal guidance issued by the Consumer Financial Protection Bureau. Licensees under the Georgia Residential Mortgage Act (GRMA) are affected by the new rules.  The rules went into effect July 17, 2018.

Mortgage lenders and brokers defined as a loan or finance company under the Bank Secrecy Act must develop and implement an anti-money laundering program and comply with the requirements set forth in the Bank Secrecy Act.  Failing to maintain an anti-money laundering program or failing to comply with the Bank Secrecy Act will result in a fine of $1,000 for each instance of non-compliance.  GRMA licensees that refuse to submit to an examination after two attempts by the Department to schedule the examination will have their license or registration revoked and face a fine of $5,000.

Provisions regulating closed-end mortgage loan servicers were also revised.  Similar to federal mortgage servicing rules, closed-end mortgage loan servicers must evaluate a borrower’s “complete loss mitigation application in the event the complete loss mitigation application is received after a foreclosure process has been commenced and more than 37 days before the foreclosure sale” or the servicer cannot conduct the foreclosure sale.  The servicer must provide notice that the loss mitigation application was not timely or evaluate the mitigation application.  Covered servicers must have an appeal process for loss mitigation disputes using independent personnel or provide an option for borrowers to mediate mitigation disputes “if the loss mitigation application was received 90 days or more before a foreclosure sale.”  These loss mitigation rules do not apply to a servicer who has previously complied with certain requirements and where a complete loss mitigation application is submitted by a borrower that has been delinquent at all times since submitting the application.  However, the “servicer must either notify the borrower that the loss mitigation application was duplicative or evaluate the loss mitigation application.”  If the person making the loan to the borrower provides an initial disclosure at settlement to the borrower that complies under the final rulemaking, closed-end mortgage servicers are not required to provide those disclosures for any assignment, sale, or transfer of servicing.

Finally, a bank must provide the Department notice of its intent to utilize a federal power, preclusion, or preemption.  Notice is incomplete until all information is provided to the satisfaction of the Department.  A bank must cure any deficiencies in any notice within 30 days after being notified by the Department that the notice was incomplete.  The Department reserves the right to challenge use of federal power within 45 days after the issuance of an official acceptance letter and may extend its decision-making process an additional 45 days by providing the bank with written notice. The final rulemaking also allows a financial institution and its employees to disclose information related to Department examination reports to other internal employees or external persons if certain requirements are met.  Additionally, financial institutions must follow federal requirements for detecting and reporting any suspicious activities and must file a suspicious activity report if the Department requests.  The rulemaking also revises recordkeeping requirements and lengths for financial institutions.

Georgia’s final rulemaking is available here.