Consumer Financial Services Watch

News and developments related to consumer financial services, litigation, and enforcement.

 

1
The CFPB Mortgage Servicing Examination Procedures Fail to Harmonize – Isn’t it Ironic?
2
When Trying Title Becomes Trying: The Impact of Bevilacqua v. Rodriguez on Massachusetts Foreclosure Law
3
CFPB to Host Town Hall in Minneapolis on October 26
4
CSBS/AARMR Order Up State Loan Originator Compensation Examination Guidelines – But Go Easy On The Guidance!
5
CFPB Shares Company Portal Manual with Industry
6
CFPB Official Hints at Disclosure Requirements for Checking Accounts
7
California Governor Vetoes Burdensome Payroll Card Bill
8
Is the CFPB a Step Closer to Having a Leader?
9
And the Plot Thickens: the CFPB Issues a Quartet of Interim Final Rules Laying Out Its Investigatory and Enforcement Procedures
10
Bureau Asks for Help Deciding Whom to Supervise

The CFPB Mortgage Servicing Examination Procedures Fail to Harmonize – Isn’t it Ironic?

By: Jonathan D. Jaffe, Steven M. Kaplan, David I. Monteiro, David A. Tallman

The Bureau of Consumer Financial Protection (the “Bureau” or the “CFPB”) was designed to provide a single, integrated federal approach to consumer financial protection. But with the October 13, 2011, release of its new Mortgage Servicing Examination Procedures (the “Procedures”), the CFPB appears to leave it up to scores of individual examiners to decide in their subjective judgment whether a company’s loan servicing practices raise “unfair, deceptive, or abusive acts or practices” (“UDAAP”) concerns. A federal government that is supposed to sing in one voice has not yet harmonized its employees.

To view the complete alert online, click here.

When Trying Title Becomes Trying: The Impact of Bevilacqua v. Rodriguez on Massachusetts Foreclosure Law

By: R. Bruce Allensworth, Andrew C. Glass, Roger L. Smerage

The Massachusetts Supreme Judicial Court (“SJC”) has ruled that Massachusetts property owners may lack standing to establish title to their property where there is a void foreclosure sale in the chain of title. The Massachusetts “try title” statute permits a holder of “record title” in possession of property to file a petition to force adverse claimants to defend their purported interest in the property. In Bevilacqua v. Rodriguez, the SJC held that a third-party purchaser of foreclosed property did not hold record title where no assignment of mortgage to the foreclosing entity had occurred at the time of foreclosure. Absent such an assignment, the foreclosure sale was invalid, and the foreclosing entity had nothing to convey to the third-party purchaser. Taking nothing from the foreclosing entity, the third-party purchaser lacked standing to maintain a try title action against the original mortgagor. Nonetheless, the scope of the ruling is likely limited to Massachusetts and jurisdictions where a mortgagee or its assigns must initiate foreclosure and where the party bringing the foreclosure action did not obtain an assignment of the mortgage until after the commencement of the foreclosure process. Moreover, because the Bevilacqua decision simply applies the law as already articulated by the SJC in its January 2011 U.S. Bank, N.A. v. Ibanez  opinion, its impact on current and ongoing foreclosure practices appears limited. Massachusetts foreclosure attorneys are likely to have already altered their assignment practices in light of Ibanez.

To view the complete alert online, click here.

CFPB to Host Town Hall in Minneapolis on October 26

By: Rebecca Lobenherz

The CFPB, which has regularly reached out to consumers online through its blog posts and its consumer complaint portal, is also seeking consumer input the old-fashioned way – in person. On October 26, Raj Date, Special Advisor to the Secretary of the Treasury for the CFPB, who previously spoke with consumers in Philadelphia, will be headed to Minneapolis, Minnesota to discuss the Bureau’s upcoming initiatives directly with consumers. The Bureau has plans on holding more events aimed at consumers throughout the country in the upcoming months.

Read More

CSBS/AARMR Order Up State Loan Originator Compensation Examination Guidelines – But Go Easy On The Guidance!

By: Kris D. Kully

The CSBS/AARMR Multistate Mortgage Committee (MMC) released a set of examiner guidelines to assist state regulators in implementing the Federal Reserve Boards loan originator compensation restrictions. Unfortunately, those guidelines provide very little guidance for examiners in determining whether state-regulated mortgage lenders or brokers have complied with those restrictions, or for the lenders or brokers seeking to comply. Like the children’s game of Hot Potato, the Federal Reserve Board issued the rulemaking, and then handed it over to the Consumer Financial Protection Bureau, but so far has left interpretation and/or enforcement of the rule to other federal and state agencies. While there are many significant questions that remain in understanding and implementing the loan originator compensation restrictions, the new state CSBS/AARMR examination guidelines do not (and cannot really be expected to) provide those answers. This client alert highlights certain aspects of the guidelines and describes the limited take-aways provided for state-regulated mortgage lenders, brokers, and loan originators.

To view the complete alert online, click here.

CFPB Shares Company Portal Manual with Industry

By: Kathryn M. Baugher

In the months ahead, the CFPB will be expanding the coverage of its consumer complaint portal to include products such as mortgages and student loans. Consumers have been able to submit credit card complaints through a portal on the CFPB web site since July 21st. In addition to providing a consumer portal through which consumers can submit and check on the status of their complaints, the CFPB now provides a company portal through which companies can view and respond to consumer complaints. The CFPB recently met with industry representatives to show them how the new system works. Read More

CFPB Official Hints at Disclosure Requirements for Checking Accounts

By: David L. Beam

Raj Date recently issued a statement on the CFPB’s web site which suggests that the Bureau is considering a standardized disclosure form for checking account fees. The “problem,” Mr. Date said, “is that checking accounts often come with a wide variety of unexpected costs that can quickly add up for consumers.” One bank might call the fee one thing, while another bank calls it something else. And the circumstances under which banks charge the same fee might be different. Read More

California Governor Vetoes Burdensome Payroll Card Bill

By: David L. Beam, Steven M. Kaplan, Kathryn M. Baugher

The effort to impose demanding new requirements on payroll cards in California just lost some steam. On Sunday, October 9, California Governor Jerry Brown vetoed a bill that would have imposed an onerous set of requirements and restrictions on employers who want to pay employees by payroll card (and, by extension, the financial institutions that provide payroll card programs to employers). The provisions of the Bill were vastly more burdensome than the requirements imposed by federal law and many other state wage and hour laws. Fortunately, Governor Brown recognized that the Bill went too far.

To view the complete alert online, click here.

Is the CFPB a Step Closer to Having a Leader?

By: Stephanie C. Robinson

Richard Cordray’s nomination to become the director of the Consumer Financial Protection Bureau will be in the hands of the full Senate now that the Senate Banking Committee has approved his nomination along a 12-10 party-line vote. But will the CFPB ever have an official leader in place? Not at this rate.

It has been fourteen months since Congress passed the Dodd-Frank Act, and the new government agency still has no formal leader. Read More

And the Plot Thickens: the CFPB Issues a Quartet of Interim Final Rules Laying Out Its Investigatory and Enforcement Procedures

By: Melanie Hibbs Brody, Paul F. Hancock, David G. McDonough, Jr., Stephanie C. Robinson

The powerful new Consumer Financial Protection Bureau (the “Bureau” or “CFPB”) is up and running, and is expected to soon begin investigating and prosecuting claims against covered persons under the Consumer Financial Protection Act (the “CFPA” or “Act”).

To this end, on July 28, 2011, the Bureau issued four interim final rules setting out procedures governing: (i) Bureau investigations of possible violations of federal consumer financial law; (ii) the Bureau’s use of administrative adjudications to enforce compliance with the Act, rules issued under the Act, and any other federal law or regulation the Bureau is authorized to enforce; (iii) how the Bureau will handle confidential information obtained from persons over which it exercises its authority; and (iv) the process by which state officials must notify the CFPB of actions or proceedings they take under the Act.

To read the complete alert online, click here.

 

Bureau Asks for Help Deciding Whom to Supervise

By: David L. Beam, Stephanie C. Robinson

Debt collectors, consumer lenders, money transmitters, and prepaid card issuers, be forewarned: The Consumer Financial Protection Bureau (the “Bureau”) thinks it might need to send some examiners to your offices to see if you are complying with consumer protection laws.

The Dodd-Frank Act requires the Bureau to examine large banks, thrifts, credit unions, and their affiliates. The Act also allows the Bureau to conduct routine examinations of nonbank covered personsin the residential mortgage lending, private education lending, and payday lending markets, among others. Nondepository covered persons such as these will be subject to a risk-based supervision program that is designed to assess the covered person for compliance with Federal consumer financial law, obtain information about its activities, and assess risks to consumers and to the consumer financial markets. They may also have to register with the Bureau to help support the implementation of its supervision program.

To read the complete alert online, click here.

 

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