As the country grapples with the impacts of the COVID-19 pandemic, financial service providers should hold fast to the adage that those who forget the past are destined to repeat it. The last financial crisis centered in large part on the mortgage industry, both in its inception and its slow climb to stabilization. Like the last crisis, a growing percentage of homeowners are not able to make their mortgage payments, requiring loan servicers to employ various loss mitigation tools to reduce individual’s financial hardships. While the COVID-19 pandemic is impacting nearly all sectors of the economy, the mortgage industry can look back to past experiences to help mitigate present and future risks. If past is prologue, one risk likely to increase in the coming months is class action litigation.Read More
Federal Judge Enjoins Enforcement of Massachusetts Attorney General’s Debt Collection Ban Under First Amendment
In response to the COVID-19 emergency, the Massachusetts Attorney General’s Office (“AGO”) issued a set of emergency regulations  intended to broadly prohibit certain debt collection activities in Massachusetts, including prohibitions against initiating debt collection calls or lawsuits, during the pendency of the COVID-19 emergency.  On May 6, 2020, U.S. District Judge Richard Stearns enjoined the AGO’s enforcement of those regulations as an unconstitutional restraint on commercial free speech. The court found that the AGO’s broad prohibitions violated the constitutional rights of creditors and debt collectors in Massachusetts without providing any meaningful protections to consumers greater than those afforded by existing state and federal consumer protection laws.  Read More
On 27 April 2020, Massachusetts Governor Charlie Baker signed Senate Bill 2645, “An Act Providing for Virtual Notarization to Address Challenges Related to COVID-19” (the Act) into law. With the enactment of this law, Massachusetts joins the other five New England states—Connecticut, Maine, New Hampshire, Rhode Island, and Vermont—in temporarily permitting remote notarization through the use of videoconferencing technology . Like the remote notarization provisions in effect across the region, the Act allows individuals and businesses to get documents notarized while complying with social distancing and other health and safety guidelines.Read More
The CARES Act’s Impact on Furnisher Liability Under the Fair Credit Reporting Act
As part of the federal government’s efforts to provide relief from the economic impact of the COVID-19 pandemic to consumers, Congress took aim at financial services companies that provide consumer account information to credit reporting agencies (CRAs). The reporting activities of those companies, which are known as “furnishers” and include, among others, creditors, mortgage loan servicers and credit card account servicers, are governed by the Fair Credit Reporting Act (FCRA).  The Coronavirus Aid, Relief, and Economic Security (CARES) Act,  enacted on March 27, 2020, expressly amends FCRA and alters the duties of furnishers when reporting the status of accounts provided with COVID-19-related payment relief.  Despite the potential exposure carried by a violation of FCRA generally—either through private civil litigation, most notably class actions, or government enforcement—key defenses remain in place for furnishers to mitigate FCRA liability.Read More
On Monday April 20, 2020, Massachusetts Governor Charlie Baker signed into law an emergency act that will temporarily ban almost all eviction and foreclosure proceedings statewide during the COVID-19 pandemic. That law, H4647 (the “Act”), will significantly impact the rights of financial services companies to enforce mortgage loans through foreclosure in the Commonwealth. Mortgagees need to be aware of many new restrictions and obligations to avoid missteps as the crisis unfolds.Read More
The rapid spread of the Coronavirus Disease 2019 (“COVID-19”) has caused unprecedented disruptions to the U.S. economy, both at the state and national levels.
On March 10, 2020, the Governor of Massachusetts declared a State of Emergency, imposed stringent social distancing measures, and ordered all “non-essential” businesses to cease in-person operations. While these measures were intended to mitigate the impact of COVID-19, they also have caused many Massachusetts residents to experience significant financial hardships.Read More
Among the dilemmas facing companies trying to conduct business through the COVID-19 crisis is the question of how to notarize documents while complying with social-distancing guidelines. As offices adapt to remote work and businesses are ordered to reduce person-to-person contact wherever possible, documents must still be notarized for many traditional commercial activities to continue. In response to COVID-19 and related governmental actions, some states are temporarily easing their notarization requirements to permit remote notarization through the use of videoconferencing technology. Consequently, individuals seeking to have a document notarized no longer need to appear in person before a notary in these states for the duration of the COVID-19 crisis.Read More
On March 27, 2020, the President signed into law the historic Coronavirus Aid, Relief, and Economic Security Act (“CARES Act” or “Act”), a $2.2 trillion stimulus package designed to mitigate the widespread economic effects of the novel coronavirus (“COVID-19”). The Act includes several temporary modifications to chapter 7 and chapter 13 of the U.S. Bankruptcy Code. This alert details these modifications.Read More
While the full extent of damages caused by Hurricane Harvey is unknown at present, the storm has already caused unprecedented damage in Texas. That damage arises in the midst of pending legislative change that may affect significantly losses governed by Texas law.
Specifically, for losses governed by Texas law, a recent change in Texas law thrusts an immediate decision upon policyholders. The Hailstorm Bill signed into law earlier this year and effective September 1, 2017, will thereafter apply to all first-party claims under a policy providing coverage for real property or improvements to real property that “arises from damages to or loss of covered property caused, wholly or partly, by forces of nature, including …a hurricane.” While the Hailstorm Bill contains many substantive changes, a notable change is the reduction in the 18% penalty under Chapter 542 of the Texas Insurance Code (the “Prompt Payment Statute”) if an insurer fails to timely pay a covered claim. Any claim made before September 1, 2017, however, is governed by the current law, including the 18% penalty in the Prompt Payment Statute. Thus, for claims governed by Texas law, policyholders must file a claim on or before Thursday, August 31, in order to benefit from the current 18% penalties (and other provisions) provided under pre-September 1, 2017 Texas law.
As policyholders begin to evaluate their losses, careful consideration will need to be given not only to direct damage or destruction of insured property, but also from the interruption of business resulting from that property damages, contingent business interruption caused by damage to the property of important suppliers, customers, and other business partners; extra expenses incurred to resume normal operations; lack of access to property due to damage to buildings, roads, docks, etc.; interrupted electric, gas, and water services; and other circumstances depending on the particular business involved.