Category: Litigation & Enforcement Actions

1
The Massachusetts Supreme Judicial Court Issues Its Long-Anticipated Eaton Decision
2
DOJ Doubles Down on Disparate Impact, Settles Discriminatory Pricing Case with SunTrust Mortgage
3
U.S. Supreme Court Ends the RESPA Section 8(b) Debate: It Takes Two to Tango
4
Tenants’ Rights under the Global Foreclosure Settlement Agreement
5
National Mortgage Foreclosure Settlement Tackles “Dual Tracking” of Foreclosure and Loan Modification
6
Protecting the Protectors – the Global Settlement Agreements’ SCRA Provisions
7
Global Servicing Settlement Requires Single Points of Contact (“SPOCs”)
8
How the Global Foreclosure Settlement Agreement Impacts Servicing Fees
9
Freeman v. Quicken Loans to Decide Whether Undivided Unearned Fees Violate RESPA
10
MERS and Foreclosure Law in Massachusetts: Culhane v. Aurora Loan Services

The Massachusetts Supreme Judicial Court Issues Its Long-Anticipated Eaton Decision

By: Phoebe S. Winder

In a long-anticipated decision, the Massachusetts Supreme Judicial Court (“SJC”) ruled in Eaton v. Federal National Mortgage Ass’n, 2012 WL 2349008 (June 22, 2012) (“Eaton”) that when conducting a non-judicial foreclosure in Massachusetts, a foreclosing entity must not only hold the mortgage – it also must hold the note or be authorized to act on behalf of the note holder. But if the goal of consumer advocates was to void a large volume of foreclosures, then they failed in that goal, and Eaton should be seen as a victory for those who have foreclosed, or who are seeking to foreclose, on mortgage loans in Massachusetts. Read More

DOJ Doubles Down on Disparate Impact, Settles Discriminatory Pricing Case with SunTrust Mortgage

By: Melanie Hibbs BrodyDavid G. McDonough, Jr.

The Department of Justice recently announced a $21 million settlement with SunTrust Mortgage over allegations that SunTrust’s neutral and non-discriminatory policy of granting loan originators discretionary pricing authority somehow resulted in loans to minority borrowers to be priced higher than loans to White borrowers. DOJ based its case on the disparate impact theory of discrimination; as such, the Department did not allege that SunTrust treated minority borrowers in a disparate or discriminatory manner. Instead, the case follows DOJ’s practice of filing fair lending cases solely on statistical analyses of loan data and without alleging that any person treated a borrower differently because of race or ethnicity. Read More

U.S. Supreme Court Ends the RESPA Section 8(b) Debate: It Takes Two to Tango

By: Holly Spencer Bunting, Phillip L. Schulman

The split in the federal Circuit Courts over the interpretation of Section 8(b) of RESPA has been resolved, and the result is that it takes two to tango for a Section 8(b) violation. In a decision made on May 24, 2012 in Freeman v. Quicken Loans, Inc., the U.S. Supreme Court held that a charge for settlement services must be divided between two or more persons to constitute a violation of Section 8(b). This is welcome news for settlement service providers, who can rest assured that their own prices, whether as part of a mark-up of a third-party fee or their own unilateral charges, cannot violate Section 8(b) of RESPA. Read More

Tenants’ Rights under the Global Foreclosure Settlement Agreement

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

Buried deep in the 40-plus pages of “Servicing Standards” that are part of the recently announced global foreclosure settlement agreement (the “Agreement”) are two bullets on a topic that could impact thousands: tenants’ rights.

Specifically, the Agreement requires subject servicers to: (1) comply with all applicable state and federal laws governing the rights of tenants living in foreclosed residential properties; and (2) develop and implement written policies and procedures to ensure compliance with such laws. Read More

National Mortgage Foreclosure Settlement Tackles “Dual Tracking” of Foreclosure and Loan Modification

By: Stephanie C. Robinson,  Kerri M. Smith

At what point is it appropriate after a borrower defaults to initiate foreclosure proceedings? As soon as the borrower defaults? Few, if any, servicers follow this rule. During a review of loss mitigation options? During a trial modification? Servicers long have felt that the extraordinary delays in completing foreclosures based on some state laws weigh in favor of starting the foreclosure process as soon as possible. Of course, the servicer always can call off the foreclosure if the loss mitigation option succeeds, but a decision to delay the initiation of foreclosures can result in investor claims. On the other hand, borrowers who think they are in the running for a loan modification often are angry and dismayed when the foreclosure notice arrives. The national foreclosure settlement between the country’s five largest residential mortgage loan servicers and the federal government and 49 state attorneys general places a number of restrictions on the controversial but common practice of “dual tracking” foreclosures and loan modifications. Read More

Protecting the Protectors – the Global Settlement Agreements’ SCRA Provisions

By: Jonathan D. Jaffe

Given the reported violations of the provisions of the Servicemembers Civil Relief Act (“SCRA”) by some servicers, and the attendant enforcement and civil actions against those servicers, state and federal regulators clearly felt compelled to impose significant SCRA-related requirements on the nation’s five largest residential mortgage loan servicers (the “Servicers”) in the recent global settlement agreements (the “Agreements”) entered into between those regulators and Servicers, described here. Read More

Global Servicing Settlement Requires Single Points of Contact (“SPOCs”)

By: Kristie D. Kully

The servicing standards imposed on the five largest mortgage loan servicers by the recent global settlement agreement with state and federal regulators, described here, continue to pile on the “SPOC” requirements. “SPOC” stands for a single point of contact – a knowledgeable and accessible person a troubled borrower may contact to receive information and assistance in the loss mitigation, loan modification, and foreclosure process. SPOCs may do little to resolve the foreclosure documentation irregularities that sparked state and federal regulators to initiate their investigation. However, they have been touted as key to the efforts for national servicing standards, and are an inevitable adjunct to the global settlement agreement.

Read More

How the Global Foreclosure Settlement Agreement Impacts Servicing Fees

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

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

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

MERS and Foreclosure Law in Massachusetts: Culhane v. Aurora Loan Services

By: Andrew C. Glass, Gregory N. Blase, Roger L. Smerage

A Massachusetts federal court recently confirmed MERS’s ability to assign mortgages under Massachusetts law and approved MERS’s practices in doing so.

In Culhane v. Aurora Loan Services, — F. Supp. 2d —-, 2011 WL 5925525 (D. Mass. Nov. 28, 2011), a borrower sued her loan servicer to prevent foreclosure. The court granted summary judgment for the servicer, addressing two principal issues. First, the court examined whether Massachusetts law requires that the same entity hold both the note and mortgage before initiating the foreclosure process. Predicting how the Massachusetts Supreme Judicial Court may rule in a pending appeal, Eaton v. Federal National Mortgage Association, SJC-11041 (argued Oct. 3, 2011), the federal court concluded that under Massachusetts law, the mortgagee must either be the noteholder, or the servicer of the noteholder acting pursuant to authority from the noteholder, to foreclose on property pursuant to the power of sale. Read More

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