2012 – Page 5 – Consumer Financial Services Watch

Global Foreclosure Settlement Servicing Standards: Customer Complaint Provisions

Mar 20 2012

In many financial service relationships, dissatisfied customers can solve ongoing customer service deficiencies by simply taking their business to a competing provider. Mortgage borrowers, however, are generally stuck with the company that services their loan, unless they are willing and able to refinance. This inability to “fire” loan servicers for poor performance, combined with the fact that mortgage servicing errors can cause serious harm – up to and including the loss of a home – has motivated government officials to impose loan servicing complaint resolution requirements whenever an opportunity arises. Read More

How the Global Foreclosure Settlement Agreement Impacts Servicing Fees

Mar 19 2012

By: Nanci L. Weissgold, Morey E. Barnes Yost

As scrutiny of default servicing practices provided significant impetus for the recently announced global foreclosure settlement agreement (the “Agreement”), it is no surprise that the Agreement prescribes extensive standards to resolve issues with these practices. Based upon the Servicing Standards announced as part of the Agreement, one major area of focus will be the fees that mortgage loan servicers charge in connection with servicing loans. Read More

New SAFE Act Examination Guidelines for State Regulated Entities: Spring Cleaning May Be Required

Mar 12 2012

By: Nanci L. Weissgold

The Multistate Mortgage Committee’s (“MMC”) new SAFE Act Examination Guidelines (“SEGs” or “Guidelines”) leave little doubt that nondepository institutions should expect more detailed and intrusive examinations of their mortgage loan originator (“MLO”) hires and policies by state regulators. The MMC, a 10 state representative body formed under the CSBS/AARMR Nationwide Cooperative Protocol and Agreement for Mortgage Supervision, is responsible for developing a process for multistate mortgage examinations. Although created under the guise of multistate examinations, the intent of the MMC is to provide state regulators with a uniform examination process to determine SAFE Act compliance and to provide those same tools to in-house compliance and audit departments. Read More

Global Foreclosure Settlement: The Success of Herding Cats

Mar 12 2012

By: Laurence E. Platt, Michael J. Missal

Whether one thinks the terms of the historic federal-state civil loan servicing settlement are too much, too little or about right, two conclusions are indisputable. First, an incredible amount of good faith effort from all concerned contributed to the final settlement—simply synchronizing the differing interests of the various governmental and private parties in over a year of negotiations seemed to require a computer program. Second, while the settlement terms are likely to contribute to the future housing recovery, the federal and state governments appear intent to continue to pursue enforcement actions for prior conduct.

To view the complete alert online, click here.

K&L Gates Files Federal Pro Bono Action to Challenge Foreclosure Rescue Scheme

Mar 12 2012

By: Paul F. Hancock, Carol Elder Bruce, John L. Longstreth, Melissa S. Malpass

On March 6, 2012, K&L Gates LLP filed a federal lawsuit challenging an allegedly discriminatory and otherwise unlawful foreclosure rescue scam targeted to Hispanic homeowners in Northern Virginia. The National and Washington Lawyers’ Committees for Civil Rights are co-counsel with us in this pro bono effort.

To view the complete alert online, click here.

FDIC Issues a Quick Guide for Consumers on Credit, Debit, and Prepaid Cards

Mar 08 2012

By: Andrew L. Caplan*
*Mr. Caplan is admitted to practice in NY (not admitted in DC); supervised by Nanci Weissgold, a member of the DC bar

As Gertrude Stein once wrote, “a rose is a rose is a rose.” However, as indicated in a recent Federal Deposit Insurance Corporation (“FDIC”) consumer guide, a card is not a card is not a card.

On March 5, 2012, the FDIC issued A Quick Guide for Consumers on Credit, Debit, and Prepaid Cards (“the Guide”) to help consumers appreciate the differences among credit cards, debit cards, and prepaid cards. As indicated in a recent FDIC press release, “[t]he guide is intended to help consumers who routinely use cards to pay for goods and services but who don’t always understand the differences in how these cards work or the applicable consumer protections.”

CFPB Plans Small Business Review Panel for Combined RESPA and TILA Disclosures and Hints at Possible Regulatory Changes

Mar 05 2012

By: Holly Spencer Bunting

If you are on the edge of your seat waiting for the combined RESPA/TILA proposed regulations and disclosure forms, we have our first glimpse into the changes being contemplated by the Consumer Financial Protection Bureau (“CFPB” or “Bureau”). On February 21, 2012, the CFPB announced its plan, in accordance with the Small Business Regulatory Enforcement Fairness Act, to solicit feedback from a group of small business mortgage and settlement companies that will be directly impacted by new and combined RESPA and TILA disclosure forms. In addition to describing the purpose and process for a Small Business Review Panel (“Panel”), and publishing a list of questions and issues for small business representatives to discuss at the upcoming Panel, the Bureau released an outline of the proposals currently under consideration for combined RESPA and TILA regulations. At this point, the outline is a list of issues that will allow the CFPB to measure whether the regulations under development could have a significant economic impact on a substantial number of small entities, but it gives us a first glance at the changes that could be coming for mortgage disclosures under RESPA and TILA. Read More

FinCEN Extends Anti-Money Laundering Program and Suspicious Activity Reporting Requirements to Non-Bank Residential Mortgage Lenders and Originators

Feb 29 2012

By: András P. Teleki, Kathryn S. Williams

Residential mortgage lenders and originators (RMLOs — known as “mortgage companies” and “mortgage brokers” but not individual loan originators) now are subject to the Bank Secrecy Act’s (BSA) anti-money laundering regime pursuant to a long expected new regulation published in the Federal Register on February 14, 2012 by FinCEN, a part of Treasury that implements the U.S.’s anti-money laundering regime. Under the new rules, RMLOs are required to develop and implement an anti-money laundering program (AML Program) and begin suspicious activity reporting (SAR Filings) by August 13, 2012. Read More

Treasury Offers Triple Investor Incentives for Principal Reductions

Feb 24 2012

By: Eric J. Edwardson, Kerri M. Smith

In January, Treasury announced significantly enhanced payments to encourage investors to consider or expand principal reduction modifications under HAMP. To effectuate this change, Treasury issued Supplemental Directive 12-01 on February 16, 2012, tripling the investor incentives that can be earned for permanent modifications under HAMP’s Principal Reduction Alternative Program, known as PRA, for loans with trial period plan effective dates on or after March 1, 2012. Few of the existing HAMP incentives have enjoyed the market success desired, and only time will tell whether this initiative is more fully embraced. Read More

Freeman v. Quicken Loans to Decide Whether Undivided Unearned Fees Violate RESPA

Feb 24 2012

By: Phillip L. Schulman

To split an unearned fee or not to split an unearned fee in order to violate the Real Estate Settlement Procedures Act (RESPA) – that is the question. Rather, that was the question on February 21, 2012 when the Supreme Court heard oral argument in the case of Freeman v. Quicken Loans, Inc. The case is intended to settle a dispute among the federal circuit courts regarding the statutory interpretation of Section 8(b) of RESPA which prohibits giving or accepting “any portion, split, or percentage” of any charge for settlement services “other than for services actually performed.” Read More

Archive:2012