Consumer Financial Services Watch – Page 31 – News and developments related to consumer financial services, litigation, and enforcement.

K&L Gates Legal Insight: Winding the Removal Clock: The Second Circuit Clarifies the Deadline for Removal Under the Class Action Fairness Act

Jun 02 2014

By: Robert W. Sparkes, III, Brian M. Forbes

When faced with a state court lawsuit, a critical consideration for any defendant is the forum in which to litigate – whether to remain in state court or, if possible, remove the case to federal court. In the case of a putative class action, proceeding in state court under state rules of procedure and other local influences could have significant impact on how the case proceeds. As such, a defendant must first consider whether the claims are removable, and, if removable, what deadline applies to the notice of removal. In assessing the timeliness of removal, a defendant should first look to the statutory deadlines set forth in 28 U.S.C. § 1446(b) (“Section 1446(b)”). However, as the United States Court of Appeals for the Second Circuit recently explained in Cutrone v. Mortgage Electronic Registration Systems, Inc., the provisions of Section 1446(b) do not provide all of the answers.

To read the full alert, click here.

K&L Gates Legal Insight: Individual Liability in CFPB Enforcement Proceedings

May 28 2014

By: Jon Eisenberg

To date, the CFPB has brought 12 cases—out of more than three dozen total CFPB enforcement cases—in which it named individuals as defendants or respondents liable for violations of consumer protection statutes. Below, we consider the standards for individual liability in CFPB cases, the actual cases that have been brought, and 10 lessons that can be drawn from these cases.

To read the full alert, click here.

Fannie Mae and Freddie Mac Revise Servicing Transfer Requirements

May 16 2014

By: Eric J. Edwardson

There has been considerable recent discussion in the mortgage servicing industry regarding the increasing hurdles to transfers of residential mortgage servicing rights. Those hurdles include additional scrutiny from the Consumer Financial Protection Bureau, Federal Housing Finance Agency, and state regulators. In the past week, each of Fannie Mae and Freddie Mac have issued updates to their servicing transfer requirements moving up the due dates for requests for approvals of servicing transfers, making it more difficult to consummate quick transfers. The new requirements don’t create new standards for approval of transfers of Fannie Mae and Freddie Mac servicing rights, but they do add a bit more procedural difficulty for such transfers. Read More

VA Issues Interim Final Rule Defining Qualified Mortgages

May 12 2014

By: Jonathan D. Jaffe, Eric Mitzenmacher

On May 9, the United States Department of Veterans Affairs (“VA”) issued an interim final rule defining which VA-guaranteed and VA-originated loans will have qualified mortgage (“QM”) status under the Truth-in-Lending Act’s (“TILA’s”) Ability to Repay (“ATR”) rule. Read More

CFPB Releases Fair Lending Report to Congress

May 05 2014

By: Melanie Brody, Anjali Garg*

*Ms. Garg is a Law Clerk and is not admitted to practice law.

CFPB (the “Bureau”) released a report to Congress on its fair lending activities on April 30, 2014. The report highlights the activities of the Office of Fair Lending and Equal Opportunity from July 21, 2012 through December 31, 2013. It provides an overview of the Bureau’s supervision activities and highlights the data collection activities of the Bureau in the areas of mortgage lending, auto finance, and other credit markets. The report explains how the Bureau uses its complaint database, along with regular supervision programs, in order to prioritize its fair lending activities. It also highlights recent CFPB bulletins on indirect auto lending and HMDA reporting.

CFPB Proposes “Points and Fees” Cure for Qualified Mortgages

May 02 2014

By: Kristie D. Kully, Eric Mitzenmacher

The Consumer Financial Protection Bureau issued a proposed rule requesting public comments on several amendments to its recent mortgage regulations under the Truth in Lending Act (“TILA,” as amended by the Dodd Frank Act). One of those amendments would, if finalized, allow creditors a limited opportunity to “cure” a loan that inadvertently exceeds the three percent limit on points and fees for qualified mortgages (“QMs”). Read More

K&L Gates Consumer Financial Services Group to Present at MBA Legal Issues Conference in San Diego

Apr 28 2014

On May 4-7, 2014 the Mortgage Bankers Association will hold its annual Legal Issues and Regulatory Compliance Conference in San Diego, CA. Several K&L Gates partners from the Consumer Financial Services Group will be presenting at the conference.

Melanie Brody will address “A Look Ahead: HMDA and Fair Lending” on Sunday, May 4, at 4:35 pm.

Krista Cooley will participate on a panel on Tuesday, May 6, at 3:15 pm, entitled “False Claims, Indemnifications, Repurchases and Rescissions.” She will discuss how the False Claims Act is affecting participants in HUD’s Federal Housing Administration loan program.

Andrew Glass will speak on Sunday, May 4, at 1:50 pm in the Litigation Forum on Fair Lending, explaining the status of fair lending/servicing litigation, and specifically the status of challenges to the disparate impact rule, the status of the municipal lawsuits against banks for “predatory” lending, and the HUD complaints by NFHA challenging the maintenance of properties held in REO.

Paul Hancock will address fair lending issues on Tuesday, May 6, at 1:30 pm.

Kris Kully will discuss Dodd-Frank Act amendments to RESPA and TILA on the ever-popular “Essentials: Alphabet Soup of Federal Laws,” on Sunday, May 4, at 1:50 pm.

Larry Platt will speak on Monday, May 5, at 3:15 pm on the “Deep Dive” panel for QRM, the Future of the Secondary Market, and GSE Reform.

Phil Schulman will participate on the panel entitled “A Look Ahead: TILA/RESPA,” on Sunday, May 4, at 3:15 p.m., and then will continue the discussion on the integrated disclosure forms on Monday, May 5, at the “Deep Dive: RESPA/TILA” panel at 3:15 pm.

Nanci Weissgold will present on two panels at the conference. On Sunday, May 4, at 12:30 pm, Nanci will present on a panel entitled “Essentials: Servicing Rule,” focusing on the basics of the CFPB’s Mortgage Servicing Rules. Nanci also will provide more insights into the national servicing standards on the “Deep Dive: Servicing: New Rules, New Developments” panel to be held Monday, May 5, at 1:30 pm.

We look forward to seeing you in San Diego!

5th Circuit Applies HUD Discriminatory Effects Rule to Fair Housing Act Case

Apr 23 2014

By: Melanie Brody, Anjali Garg*

*Ms. Garg is a law clerk and is not admitted to practice law.

On March 24, 2014, the Fifth Circuit issued an opinion in Inclusive Communities Project, Inc. v. Texas Department of Housing and Community Affairs applying HUD’s discriminatory effects rule and burden-shifting analysis to a Fair Housing Act claim. This is the first circuit court to apply the rule since it took effect on March 18, 2013. Read More

Beyond Credit Reporting: The Extension of Potential Class Action Liability to Employers under the Fair Credit Reporting Act

Apr 14 2014

By: Brian M. Forbes, Mark D. Pomfret, Robert W. Sparkes, III

Do not be fooled by its title: the Fair Credit Reporting Act (“FCRA”) reaches far beyond the realm of credit reporting and governs a broad spectrum of industries. Indeed, the provisions of FCRA apply to any business entity that seeks to use a “consumer report” – which broadly includes anything from a credit report to a criminal or even motor vehicle background check – for any “employment purposes” (among other purposes). This includes the use of such reports to evaluate an individual for potential employment, as well as to evaluate a current employee for promotion or termination. The consequences of a FCRA violation can be substantial; the statute provides for a civil private right of action and permits recovery of actual damages, statutory damages, punitive damages, and attorneys’ fees and costs. Read More

Federal Agencies Propose AMC Minimum Standards

Mar 28 2014

By: Nanci L. Weissgold, Morey Barnes Yost

The April 9 Federal Register contains the announcement for which the appraisal management industry has been waiting for months: the federal banking and finance regulatory agencies’ proposal of minimum standards for appraisal management companies (“AMCs”). Section 1473 of the Dodd-Frank Act requires the agencies – the OCC, FRB, FDIC, NCUA, CFPB, and FHFA (the “Agencies”) -to adopt standards for states to apply in their registration and supervision of AMCs.