MBA State Relations Committee Update State Highlights

Virginia Governor Youngkin Vetoes Artificial Intelligence Legislation; Bill Would Have Provided a Safe Harbor for IMBs and other Member Companies: Last Monday, Virginia Governor Glenn Youngkin vetoed HB 2094, which would have required risk assessments, disclosures, and an appeals process for the use of artificial intelligence (AI). In his veto statement, Governor Youngkin described HB 2094 as a burdensome and rigid AI framework. While the Governor expressed his support for responsible AI governance, he recognized that there are “many laws currently in place that protect consumers and place responsibilities on companies relating to discriminatory practices, privacy, data use, libel, and more.” HB 2094 is very similar to Colorado’s enacted AI law, SB 24-205, and included exemptions supported by MBA for key industry technology that has been approved, authorized, cleared, or developed by federal agencies or the GSEs – like credit scoring models and automated underwriting systems. Additionally, unlike Colorado, Virginia’s proposed bill included independent mortgage banks and savings associations along with banks and credit unions in their exemption for those entities in compliance with similar standards found in other state or federal law or regulation. Though many state policymakers are considering legislation or regulation, Colorado remains the only state to enact risk assessment standards and disclosures specific to artificial intelligence. However, it is important to note that Colorado’s framework is untested, as its attorney general has not yet proposed regulations to help businesses understand their obligations under this law. MBA will continue to work with its state partners to counter any claims that the industry’s use of technology is unregulated and to ensure proper exemptions for MBA members are included in any bill or rule being considered.

Mississippi Enacts Remote Work Consistent with MBA Model: Mid-March, Mississippi Governor Reeves signed SB 2508, which authorized remote work for mortgage loan originators (MLOs). SB 2508’s language follows MBA’s model state law and regulation to allow remote work flexibilities as well as provides the Department of Banking and Consumer Finance the necessary fee increases it says are needed to ensure appropriate funding to continue supervision with this change. For new MLOs the initial licensing fee increases from $200 to $300, and renewals increase from $100 to $150. New mortgage lender licensing increases from $1,500 to $2,000, while renewals increase from $1,000 to $1500. Initial Branch licensing increases from $300 to $500, while renewals increase from $100 to $350. Now, 31 states and D.C. have enacted policies aligned with MBA’s model to permanently allow MLOs to work from a remote location. MBA will continue to work with its partner state associations to support remote work policies consistent with the association’s model.

MBA, CMBA Respond to CA Carbon Emissions Requirements Proposal: On Friday, March 21, MBA and the California MBA (CMBA) responded to a request for comment from the California Air Resources Board (CARB) on carbon emissions disclosures. Pursuant to several laws passed in California, CARB is seeking information on how to implement disclosures for companies operating in the state. CARB proposes requiring companies doing business in California to meet certain thresholds to report on their Scope 1, 2, and 3 emissions, climate risks, and voluntary carbon offsets. MBA and CMBA’s response urged flexibility in reporting requirements, and for limited requirements for Scope 3 emissions. Scope 3 emissions (or indirect greenhouse gas emissions) are still an evolving concept, and such emissions information is likely to add little to no value in providing decision-useful information about a company’s climate-related risk. MBA will continue to advocate for flexible reporting requirements that do not unduly burden lenders.

Maryland Legislature Passes Bills to Address Trust Licensing Issue; Advocacy Continues to Resolve Remaining Issues: On Monday, March 17, two MBA-supported bills (SB-1026 and HB-1516) passed their respective chambers of introduction ahead of a critical procedural deadline. The bills aim to address the Maryland Office of Financial Regulation's (OFR) January 10, 2025, guidance and emergency regulations stemming from the Estate of Brown v. Ward court ruling. The legislation is supported by OFR, which extended the enforcement deadline to July 6, 2025, following efforts by an MBA-led coalition. The OFR's initial policy interpretation significantly expanded the court's opinion to include mortgage trusts, raising urgent concerns for secondary mortgage market participants. The proposed legislation would create necessary licensing exemptions in state law. Mortgage Action Alliance (MAA) members in Maryland have been actively urging their representatives to expedite the consideration and enactment of this legislation. Also, an industry coalition submitted a letter to OFR in January, strongly encouraging the rescission of its guidance and regulations. There continues to be discussion with policymakers regarding the scope of the licensing exemptions, and MBA and the Maryland Mortgage Bankers and Brokers Association (MMBBA) are working with member companies and industry association partners to advocate for a swift completion of these discussions and final approval before the end of the 2025 legislative session – currently scheduled for April 7th. This will likely require amendments to the bill that necessitate reconsideration by each chamber. If you are a Maryland MAA member please take action here.