Archive:12 July 2013

By: Phillip L. Schulman, Krista Cooley

The use of statistical sampling to evidence compliance violations without actually performing loan level reviews is at the center of a new enforcement regime that the U.S. Department of Housing and Urban Development (“HUD” or “Department”) announced on Tuesday it is considering to monitor and sanction Federal Housing Administration (“FHA”) approved mortgagees. The announcement, published as a Notice in the Federal Register, raises a host of questions, not the least of which is how HUD will implement these proposed enforcement efforts given the potential draconian consequences for FHA program participants. Those who already perceive that the risks of doing business with the federal government are increasingly excessive, should sit up and take notice. HUD has offered lenders 60 days to comment on the Notice, and lenders would be wise to carefully consider the changes and make their voices heard.

 To read the full alert, click here.

By: Thomas H. Petrides , John L. Longstreth

In a victory for the Mortgage Bankers Association (“MBA”), a federal Court of Appeals has vacated an “Administrator’s Interpretation” issued in 2010 by the U.S. Department of Labor Wage and Hour Division (“DOL”) regarding the non-exempt status of mortgage loan officers. This court decision reinstates a prior Opinion Letter issued by the DOL in 2006 that had concluded loan officers in the mortgage banking industry generally may qualify as exempt from overtime under the administrative exemption of the federal Fair Labor Standards Act (“FLSA”). MBA had challenged the contrary 2010 Interpretation because it had been issued by the DOL without first conducting the “notice and comment” rulemaking process required under the Administrative Procedure Act (“APA”). The Appeals Court agreed with the MBA, but took no position on the merits of whether mortgage loan officers may in fact qualify under the administrative exemption to be exempt from the payment of overtime wages. Thus, the DOL may subsequently readopt the 2010 Interpretation after conducting the proper rulemaking procedures. In the interim, however, mortgage industry employers may choose to rely on the 2006 Opinion Letter to potentially escape overtime liability regarding their loan officers if they follow the guidance of that letter.

To read the full alert, click here.