December 2013 – Consumer Financial Services Watch

K&L Gates Legal Insight: Privacy Reform and the Financial Sector: An Overview

Dec 23 2013

Andrea Beatty, partner at K&L Gates joins BRR to discuss the new privacy reforms coming in next year and their effect on the financial sector.

To listen to the broadcast, click here.

Jacqui Scanlan: Andrea Beatty, partner at K&L Gates joins us to discuss privacy law reform in the financial sector. Andrea welcome to BRR Media.

Andrea Beatty: Thank you very much Jacqui

To read the full transcript, click here.

FDIC and OCC Issue Final Guidance on Deposit Advance Loans

Dec 16 2013

By: David I. Monteiro, Michael A. Cumming

Recently, the Federal Deposit Insurance Corporation (“FDIC”) and the Office of the Comptroller of the Currency (“OCC”) issued final supervisory guidance (FDIC guidance, OCC guidance) for financial institutions that offer so-called “deposit advance products.” By using these products, borrowers generally receive small-dollar, short-term loans and promise to repay them from the proceeds of their next paycheck (or benefit disbursement), which are direct-deposited into the borrower’s bank account. Notably, the regulators’ guidance applies to deposit advance products “regardless of how the extension of credit is structured” (e.g., as a loan or a line of credit). Read More

K&L Gates Legal Insight: The Wait is Over. The Anxiety Begins. The CFPB Issues its Final Rule to Combine RESPA and TILA Mortgage Disclosures

Dec 12 2013

By: Phillip L. Schulman, Holly Spencer Bunting

Well, the wait is over. After 16 months and much anticipation, the Consumer Financial Protection Bureau (the “CFPB” or “Bureau”) released a 1,888-page final rule on November 20, 2013 to combine mortgage disclosures required under the Real Estate Settlement Procedures Act (“RESPA”) and the Truth in Lending Act (“TILA”). With an August 1, 2015 effective date, the anxiety for lenders, title companies, and real estate brokers has just begun.

To read the full alert, click here.

K&L Gates Legal Insight: Safe Harbor Means Safe Harbor: Sixth Circuit Rejects Any Judicial Deference to HUD’s Sham Affiliated Business Guidelines

Dec 10 2013

By: Phillip L. Schulman, Irene C. Freidel, David D. Christensen

Providing clarity in an area of law that had become increasingly muddled over the last two decades, the U.S. Court of Appeals for the Sixth Circuit has issued a decision that clarifies the scope of RESPA’s safe harbor for affiliated business arrangements (“ABA”). In Carter v. Welles-Bowen Realty, Inc., the court held that ABAs need only satisfy the three requirements set forth in the statute to fall within the statutory safe harbor; they do not need to also satisfy the so-called 10-factor “sham ABA” test addressed in HUD’s 1996 policy statement (“1996 Policy Statement”).

To read the full alert, click here.

CFPB to Supervise Nonbank Servicers of Student Loans

Dec 09 2013

By: Stephanie C. Robinson

On December 3, 2013, the CFPB issued a rule allowing the Bureau to supervise certain nonbank student loan servicers. Student loans represent the second-largest consumer debt market in the country after mortgage loans, and the two industries face similar problems. For instance, many consumers are seeking student loan modifications, just as many consumers are seeking mortgage loan modifications. In fact, the most common type of consumer complaint the CFPB has received about student loan servicing relates to borrowers trying to adjust their repayment terms in times of hardship. The CFPB estimates that 7 million student loan borrowers are in default on their debt. Read More

Court Refuses to Defer to RESPA Statement of Policy Regarding Affiliated Businesses – 6th Circuit Says a Safe Harbor is a Safe Harbor

Dec 03 2013

By: Irene C. Freidel

Providing clarity in an area of law that had become increasingly muddled over the last two decades, the U.S. Court of Appeals for the Sixth Circuit held on November 27, 2013 that HUD’s 1996 policy statement setting forth a so-called “10-factor test” to determine whether an affiliated business arrangement (“ABA”) is bona fide or a sham is not entitled to deference (“1996 Policy Statement”). See Carter v. Welles-Bowen Realty, Inc., No. 10-3922 (6th Cir. Nov. 27, 2013). The Real Estate Settlement Procedures Act (“RESPA”) prohibits the payment of a fee in exchange for a referral of settlement service business. Profits generated by ABAs are exempt from this prohibition if the ABA meets the three prerequisites in RESPA’s safe harbor. Even though the plaintiff did not dispute that the ABA in Carter satisfied the three safe harbor requirements, they urged the district court to hold that the ABA nonetheless fell outside the safe harbor because, they claimed, the ABA did not satisfy a fourth requirement, namely HUD’s 1996 Policy Statement. While several district courts have otherwise concluded that an ABA must satisfy HUD’s policy statement in order to fall within the safe harbor, the theory was rejected by district judge Jack Zouhary in the Carter case. Read More

K&L Gates Presents at National Conference of Commissioners on Uniform State Law Regarding State Foreclosure Law

Dec 03 2013

On Friday, November 15, 2013, Laurence E. Platt presented at the working group meeting of the National Conference of Commissioners on Uniform State Law (the “Commission”) pertaining to the Commission’s discussion draft on the “Home Foreclosure Procedures Act” (the “Draft”). Speaking on behalf of The Securities Industry & Financial Markets Association, Platt expressed several concerns about the Draft. Among other issues, Platt emphasized the need for any uniform state foreclosure law to repeal existing state provisions that address the same issues so that the Draft does not merely serve as a “floor” for state regulations. He also asked that the Draft account for the new federal servicing regulations issued by the Consumer Financial Protection Bureau, by providing that satisfaction of the federal requirements would be deemed to satisfy the state requirements also addressing the same issues. He suggested that the Draft should make clear that loan holders and loan servicers are not obligated to offer any particular loss mitigation outcome to delinquent borrowers, such as permanent principal reductions. Platt objected to the three proposed alternatives to roll back the state “holder in due course” doctrine, each of which would permit a mortgagor to assert defenses to payment against a subsequent holder of the loan that could be asserted against the originating creditor. For a written summary of Platt’s comments, please click here. For background on the Draft, please click here.

Will Recent Auto-Dialer Decisions Help Rein In TCPA Litigation?

Dec 02 2013

By: Gregory N. Blase

Have recent judicial decisions brought much needed sanity to the discussion of what constitutes an “automatic telephone dialing system” (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”)? The short answer is: maybe.

How did we get to this point? The TCPA limits the ability to call anyone in the United States using an ATDS. The statute defines that term to include “equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” 47 U.S.C. § 227(a)(1). In recent years, companies have trended away from using dialers that dial numbers randomly or in sequential order, in favor of predictive dialers or manual dialers (i.e., those that require an agent to dial the called number by hand).

To read the full alert, click here.

Archive:December 2013