May 27, 2022

Volume XII, Number 147

Advertisement
Advertisement

May 26, 2022

Subscribe to Latest Legal News and Analysis

May 25, 2022

Subscribe to Latest Legal News and Analysis

May 24, 2022

Subscribe to Latest Legal News and Analysis
Advertisement

New York Department of Financial Services Alters Effectiveness Date of New Commercial Financing Disclosure Laws

New York's Department of Financial Services (DFS or Department) has used its authority to extend a statutorily-mandated January 1, 2022, effective date.

As we previously reported in our September 30 Client Alert, the DFS issued proposed regulations on September 21, 2021, that will implement statutory requirements related to commercial financing disclosures for certain types of "small" (up to $2.5 million) commercial financing transactions (the NY DFS Proposal or the Proposal). The Proposal implements New York's Commercial Finance Disclosure Law (CFDL) which was fully enacted in early 2021.

The DFS Proposal was open for a 60-day comment period that closed on December 20, 2020. However, the Proposal stated that final rules, which are necessary to determine the Department's interpretation of a wide-ranging set of requirements, would be issued "in order to facilitate implementation of the CFDL in time for the January 1, 2022 [statutory] deadline." This would have meant that the Department would have issued (and required compliance with) new rules within an 11-day window between the close of the date on which comments were accepted and the effective date of such rules.

On December 31, 2021, Katten received a notice from the DFS that was provided to those who had commented stating that the DFS had "concluded that CDFL obligations do not arise until the Department issues final implementing regulations and those regulations take effect." This is a significant development because it ensures that those lenders affected by the Proposal will not have to modify their software and transaction origination platforms to comply with the explicit statutory provisions in the CFDL for commercial financing transactions beginning January 1, 2022 and then again when final rules are promulgated. This approach is consistent with the approach taken by the California Department of Financial Protection and Innovation in connection with its similar commercial financing disclosure rules that are still in proposed form.

©2022 Katten Muchin Rosenman LLPNational Law Review, Volume XII, Number 3
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Claudia Callaway, Litigation Lawyer, Katten Muchin
Partner

Claudia Callaway is chair of Katten’s Consumer Finance Litigation practice and co-chair of the Class Action and Multidistrict Litigation practice. She focuses her practice on the defense of state and federal class actions regarding consumer protection and consumer finance laws and representation of clients before the Consumer Financial Protection Board (CFPB), the Federal Trade Commission (FTC) and state banking agencies.

Claudia represents consumer lenders, third-party debt collectors and other consumer  financial services clients in class action suits and...

202-625-3590
Christina J. Grigorian, Banking legal Specialist, Katten Muchin Law firm
Special Counsel

Christina J. Grigorian counsels clients in all matters related to banks, bank holding companies, and state and foreign-licensed consumer and commercial lenders. Ms. Grigorian provides advice to the firm’s financial institution clients concerning structural and operational issues, including legislative developments impacting such operations, and has worked with companies and individuals in the establishment of de novo entities, including national banks, federal savings banks and state-chartered institutions, as well as state-licensed lenders. She has also counseled clients with respect to...

202-625-3541
Advertisement
Advertisement
Advertisement