Author - nkolen

1
Massachusetts Supreme Judicial Court Rejects Municipal Foreclosure Ordinances
2
FHA Announces Annual Mortgage Insurance Premium Reductions
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“Start Spreading the News”: Recent New York Regulations Impact Debt Collection and Default Servicing
4
K&L Gates Launches Global Employer Solutions
5
Cybersecurity Lessons Learned From the FTC’s Enforcement History
6
Eminent Enabler: Congress Prohibits HUD and Ginnie Mae from Facilitating Local Government Seizure of Mortgage Loans
7
Section 363 Sale Order Enjoining Successor Liability Claims Not Subject to Subsequent Attack by State Agencies
8
Removing a Barrier: The Supreme Court Holds That, Under CAFA, Notices of Removal Need Not Include Evidence Supporting the Amount in Controversy
9
New York Department of Financial Services Unveils “New Cyber Security Examination Process”: Five Key Takeaways
10
Class Certification Trends in Consumer Data Breach Litigation—Individualized Damages Theories May Preclude Certification

Massachusetts Supreme Judicial Court Rejects Municipal Foreclosure Ordinances

By: Gregory N. Blase, David D. Christensen, Matthew N. Lowe

Can a Massachusetts municipality impose ordinances on banks that are more onerous than existing statewide law? In a recent landmark decision, the Massachusetts Supreme Judicial Court (“SJC”) answered “no.” In Easthampton Savings Bank v. City of Springfield,[1] the SJC held that two ordinances, through which the City of Springfield (“Springfield”) sought to make foreclosures more difficult, were preempted by the Massachusetts Constitution. The Easthampton Savings Bank decision should serve to curtail municipalities’ attempts to impose regulations that are more stringent than those imposed by statewide law and—in welcome news to banks and investors—restore a degree of consistency in conducting foreclosures in Massachusetts.

To read the full alert, click here.

FHA Announces Annual Mortgage Insurance Premium Reductions

By: Krista Cooley, Kara M. Ward

Last week, President Barack Obama announced that, at the end of this month, the U.S. Department of Housing and Urban Development (“HUD” or “Department”) will implement a 50-basis-point reduction in the annual mortgage insurance premium (“MIP”) borrowers pay to obtain a Federal Housing Administration (“FHA”) insured loan. On Friday, HUD released Mortgagee Letter 2015-01, as well as instructions on FHA Case Number assignments, which include details about the timing and scope of the annual MIP reduction. Below, we summarize these events.

FHA Annual Premium Reduction

In Mortgagee Letter 2015-01, HUD announced revised annual MIP rates for most FHA-insured, Title II forward mortgages. Specifically, for FHA-insured loans with terms greater than 15 years, the Department will reduce the annual MIP rate by 50 basis points. Depending on the loan amount and loan-to-value (“LTV”) ratio, the new annual MIP rates will range from 80–105 basis points. For example, for an FHA-insured loan with a term greater than 15 years, a base loan amount less than or equal to $625,500, and an LTV ratio greater than 95%, the annual MIP rate will be reduced from 135 to 85 basis points. The reduced annual MIP rates will apply to FHA-insured purchase-money loans, as well as FHA-insured refinance loans with loan terms greater than 15 years. The annual MIP rates for FHA-insured loans with terms of 15 years or less remain unchanged. HUD also did not make any changes to the upfront MIP paid by borrowers at the closing of FHA-insured loans at this time.

Mortgagee Letter 2015-01 contains a notable exclusion from the annual MIP rate reduction announcement. Pursuant to a policy implemented in 2012 that was designed to encourage borrowers with existing FHA-insured loans to refinance into a lower rate loan without incurring a higher annual MIP rate, the annual MIP rate for single-family streamlined refinance transactions that refinance existing FHA-insured loans that were endorsed on or before May 31, 2009, has remained at 55 basis points. When HUD increased annual MIP rates in 2013, it excluded this specific subset of FHA streamlined refinance transactions from those increases. Similarly, Mortgagee Letter 2015-01 excludes this limited subset of streamlined refinance transactions from the Department’s most recent announcement, to provide borrowers with existing FHA-insured loans endorsed on or before May 31, 2009, the continued opportunity to refinance into another FHA-insured loan while maintaining an annual MIP rate of 55 basis points. Mortgagee Letter 2015-01 also excludes loans insured under Section 247 of the National Housing Act from the most recent annual MIP reduction announcement.

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“Start Spreading the News”: Recent New York Regulations Impact Debt Collection and Default Servicing

By: Steven M. Kaplan, Gregory N. Blase, Christopher E. Shelton

Last month, the New York Department of Financial Services (“DFS”) finalized a regulation with a number of novel requirements affecting debt collection (including servicing delinquent loans) in New York. Previously, debt collection in New York was subject to (1) relatively limited requirements set by New York statute and several municipal ordinances, and (2) the federal Fair Debt Collection Practices Act (“FDCPA”). While parts of the new DFS regulation are modeled on the FDCPA, other requirements depart drastically from the federal framework. Areas of novel regulation include disclosures to consumers regarding statutes of limitations and charged-off debts, as well as restrictions on sending emails to consumers. The Consumer Financial Protection Bureau (“CFPB”) is drafting a debt collection regulation to supplement the FDCPA, and it remains to be seen whether the New York regulation becomes a bellwether of changes at the federal level or by other states.

To read the full alert, click here.

K&L Gates Launches Global Employer Solutions

With more than 200 million people throughout the world now employed by multinational enterprises and their affiliates, law firm K&L Gates LLP has established Global Employer Solutions, a comprehensive cross-disciplinary team of lawyers helping entities with operations and staff across numerous countries and wide-ranging jurisdictions meet the challenges of their global business needs and comply with an array of local laws and regulations. Global Employer Solutions includes more than 200 lawyers throughout K&L Gates’ global platform collaborating across borders and practices and drawing from deep experience in areas such as employment, workplace safety, immigration, benefits, tax, executive compensation, compliance, and investigations.

Global Employer Solutions will assist clients in identifying and mitigating risks, ensuring compliance, and coordinating personnel policies focusing on global employment strategies, including downsizing, acquisitions, and integrations; transactional due diligence and post-merger integration; protection of confidential information; global contracts, employee handbooks, and safety standards and policies; and cross-border compliance issues, as well as a variety of relocation and immigration matters, including visa applications, document transfers, and temporary and permanent employment visa options.

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Cybersecurity Lessons Learned From the FTC’s Enforcement History

By: Soyong Cho, Andrew L. Caplan

In 2014, cybersecurity and data breach incidents regularly made the headlines, with the reported breaches becoming increasingly large and complex. As in the past, these data breaches have inevitably been followed by a flurry of class actions and government investigations. But amid this flurry of activity, one federal regulator in particular, the Federal Trade Commission (the “FTC” or “Commission”), has unquestionably been the most prominent and active cybersecurity enforcer.

To read the full alert, click here.

Eminent Enabler: Congress Prohibits HUD and Ginnie Mae from Facilitating Local Government Seizure of Mortgage Loans

By: Laurence E. Platt

At least for the next year, Congress has materially impaired the ability of local governments to seize underwater residential mortgage loans through eminent domain by cutting off federal insurance or guarantees to refinance the seized mortgages and then securitize the refinancings. Without this federal “take out” through mortgage insurance provided by the Federal Housing Administration (“FHA”), and guarantees of mortgage-backed securities by the Government National Mortgage Association (“Ginnie Mae”), local governments will have to find private sources of long-term funding to pay for loans that they attempt to seize.

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Section 363 Sale Order Enjoining Successor Liability Claims Not Subject to Subsequent Attack by State Agencies

By: Charles A. Dale III, David A. Mawhinney

Bankruptcy Courts in the United States are now well-recognized as a marketplace for the purchase and sale of distressed businesses. “Section 363 sales” in particular, named for the Bankruptcy Code section that authorizes such transactions, enable purchasers to acquire a financially troubled business “free and clear” of a wide range of fixed and contingent debts, including potential claims based on successor and product liability theories. In a noteworthy decision on December 1, 2014, the United States District Court for the Southern District of New York reinforced the authority of a bankruptcy court to interpret the scope of its prior sale orders under Section 363, and to enforce those orders against creditors that violate them, even against governmental agencies that may otherwise be protected from scrutiny under non-bankruptcy law. This decision sends a reassuring message to strategic and financial investors who are considering the acquisition of a troubled company through a bankruptcy court process.

To read the full alert, click here.

Removing a Barrier: The Supreme Court Holds That, Under CAFA, Notices of Removal Need Not Include Evidence Supporting the Amount in Controversy

By: Irene C. Freidel, Ryan M. Tosi, Matthew N. Lowe

On December 15, 2014, the United States Supreme Court held in Dart Cherokee Basin Operating Co., LLC v. Owens that a class action defendant need only allege the requisite amount of controversy “plausibly” in the notice of removal and need not provide evidence supporting the amount in controversy unless challenged by the plaintiff or questioned by the court.[1]The Court’s holding is consistent with the requirement that a notice of removal contain only a “short and plain” statement setting forth the bases for removal. The decision resolves a significant circuit split regarding the pleading requirements imposed on removing defendants under the Class Action Fairness Act (“CAFA”).

Prior to Dart Cherokee,[2] the majority of the circuits had either expressly held that a defendant need not present evidence of the amount in controversy with its notice of removal[3] or that evidence of the amount in controversy submitted in opposition to a motion to remand would be considered even if it had been not presented in the notice of removal.[4] The Tenth Circuit, however, declined Dart Cherokee’s petition for review of the district court’s decision, which had refused to consider evidence Dart Cherokee offered in response to a motion to remand based upon its holding that a defendant is required to submit evidence in support of removal at the time a notice of removal is filed.

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New York Department of Financial Services Unveils “New Cyber Security Examination Process”: Five Key Takeaways

By: András P. Teleki, Andrew L. Caplan

On December 10, 2014, Superintendent Benjamin Lawsky of the New York Department of Financial Services (the “DFS”) announced a “New Cyber Security Examination Process” (the “New Examination Process”) for New York-chartered and licensed banking institutions (“Regulated Entities”). Pursuant to the New Examination Process, the DFS will expand its information technology (“IT”) examination procedures to focus more attention to cybersecurity, and will schedule these IT/cybersecurity examinations following each institution’s comprehensive risk assessment. Even if you are not a financial institution regulated by the DFS, the key takeaways discussed below provide insight into the types of questions regulators are asking with respect to cybersecurity practices and offer practical guidance for assessing the framework of a cybersecurity compliance regime.

The New Examination Process includes both sample examination topics and information requests that the DFS will use in future examinations. A review of these topics and information requests provides understanding of the DFS’ cybersecurity expectations for Regulated Entities, as well as practical cybersecurity considerations for financial institutions not regulated by DFS. Below we discuss five key takeaways related to the New Examination Process.

To read the full alert, click here.

 

Class Certification Trends in Consumer Data Breach Litigation—Individualized Damages Theories May Preclude Certification

By: Nicholas Ranjan and James P. Angelo

In the last two years, there has been a proliferation of class action lawsuits filed in response to high-profile data breaches compromising the personally identifiable information of customers of various companies. Major corporations including Target, Coca-Cola, and Michaels have all fallen victim to such suits. In many cases, a single data breach event has spawned dozens of class action lawsuits (for example, Target, at one point, faced over 100 such suits in a number of jurisdictions, which have since been consolidated in an MDL).

Although a number of class actions in the data-breach context have been filed, there have been relatively few class certification decisions at this point. However, as the pending cases make their way to the class certification stage, two recent decisions may prove useful for defendants in attempting to defeat class certification—principally, on the basis of Federal Rule of Civil Procedure 23(b)(3)’s “predominance” requirement. That is, In re Hannaford Bros. Co. Customer Data Sec. Breach Litig., 293 F.R.D. 21 (D. Me. 2013) and Comcast v. Behrend, 133 S.Ct. 1426 (2013), suggest that class certification may be difficult in certain types of data breach cases due to the existence of individualized damages issues, which may undercut the predominance of common questions necessary to pursue a class action.

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