2013 – Page 2 – Consumer Financial Services Watch

The CFPB Signals Revolutionary Changes to the Collection Industry

Nov 22 2013

By: Nanci L. Weissgold, Christopher G. Smith

For Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) followers, the Bureau’s advanced notice of proposed Regulation F seeking comment on potential rules under the Fair Debt Collection Practices Act (“FDCPA”) should come as no surprise. The breadth of the planned rulemaking, however, could fundamentally change how third-party debt collectors, first-party creditors collecting consumer debts, debt buyers, and vendors providing material assistance to collectors (such as payment system or technology providers) collect mortgage, credit card, student loan, auto, medical, and other consumer debt.

To read the full alert, click here.

RESPA/TILA Combined Mortgage Disclosure Forms Remain Largely Unchanged

Nov 21 2013

The wait is over. The anxiety begins. On Wednesday, November 20, 2012, the CFPB released its final regulations requiring combined mortgage disclosure forms under the Real Estate Settlement Procedures Act and the Truth in Lending Act. With an effective date of August 1, 2015, mortgage companies and settlement companies have 20 months to implement new Loan Estimate and Closing Disclosure forms that will forever replace the GFE, initial and final TIL statements, and HUD-1. Read More

2014 U.S. Congressional Calendar

Nov 21 2013

The K&L Gates Public Policy and Law group is pleased to provide you with the 2014 U.S. Congressional Calendar.

This calendar is a one-page compilation of the House and Senate draft schedules in a color-coded format showing periods when the House and Senate are expected to be in session next year. The calendar is a planning tool to help those who interact with the Congress.

Please click here to download the Congressional Calendar.

What’s Old is New: CFPB Claims Captive Reinsurance Arrangements Violate RESPA

Nov 19 2013

By: Phillip L. Schulman, Andrew L. Caplan

Last week, the CFPB announced the filing of a complaint and proposed consent order with a North Carolina-based private mortgage insurer, Republic Mortgage Insurance Corporation (“RMIC”), which echoes previous enforcement positions taken years ago by HUD and state regulators. In this most recent enforcement action, the CFPB alleges that RMIC violated Section 8 of RESPA (the “anti-kickback” provision) through participation in captive reinsurance programs with mortgage lenders. These business arrangements are once again under scrutiny in 2013, as last week’s complaint and proposed consent order with RMIC marks the fifth such enforcement action this year. Read More

HUD Issues Self-Reporting Guidance

Nov 18 2013

By: Krista Cooley

Last Thursday, HUD issued Mortgagee Letter 2013-41 to clarify its self-reporting requirements for FHA-approved lenders. The Mortgagee Letter updates HUD’s prior guidance regarding an FHA-approved lender’s obligation to self-report instances of fraud, material misrepresentations, and material findings identified in connection with the origination, underwriting, or servicing of FHA-insured loans. New guidance set forth in this Mortgagee Letter includes direction on the timeframes to which lenders must adhere in reporting findings to senior management and to HUD, as well as clarification regarding what constitutes a “mitigated” finding in connection with the self-reporting requirements. Read More

Proposed Castle & Cook Settlement on Alleged Loan Originator Compensation Violations

Nov 07 2013

By: Kristie D. Kully

The Consumer Financial Protection Bureau has proposed a settlement with Castle & Cook Mortgage and two of its officers. The CFPB brought an action against Castle & Cook and those officers, alleging that they violated the prohibition against loan-term based compensation under the Dodd-Frank Act and its regulations. On November 7, 2013, the parties to the action proposed a settlement to the federal court in Utah for the payment by the company and the officers of over $9 million for redress to affected consumers, plus a $4 million civil money penalty. The company and officers would also be permanently enjoined from paying compensation to a loan originator in violation of the applicable regulations, and would have to retain evidence of their compliance. According to the proposed settlement, although it would resolve the issue with the CFPB, consumers’ rights to seek redress on their own behalf against the company and/or the officers would not be limited. Read More

K&L Gates Partner Laurence E. Platt Testifies before the Committee on Senate Banking, Housing, and Urban Affairs

Nov 04 2013

By: Laurence E. Platt

Larry Platt testified at a hearing held by the Senate Banking Committee on Tuesday, October 29, considering standards for mortgage loan servicers, particularly in connection with loss mitigation activities. The hearing was one of several designed to examine housing finance reform and the essentials of a functioning housing finance system in the Committee’s continuing deliberations over the fate of Fannie Mae and Freddie Mac and other provisions in the proposed Housing Finance Reform and Taxpayer Protection Act of 2013. Read More

2014 U.S. News-Best Lawyers® Rankings

Nov 04 2013

For a fourth consecutive year, K&L Gates has been ranked among the top two law firms with the most first-tier rankings in the annual U.S. News-Best Lawyers® “Best Law Firms” survey. Earning more than 200 first-tier rankings in offices and practices across the United States, K&L Gates also received the publication’s national “Law Firm of the Year” distinction, given to only one firm in each national practice area, for Securities Regulation and for Criminal Defense: White Collar. Read More

HUD Extends Foreclosure Timeframes with Mortgagee Letter 2013-38

Nov 01 2013

By: Krista Cooley, Kathryn M. Baugher

On October 28, 2013, with the publication of Mortgagee Letter 2013-38, HUD provided a much-needed update to the schedule of claimable attorney fees and reasonable diligence timeframes for prosecuting a foreclosure on loans insured by the FHA. These updates expressly apply to both forward mortgages and Home Equity Conversion Mortgages (“HECMs”).

As FHA servicers are aware, with respect to foreclosure on FHA-insured loans, HUD sets limits on the attorney fees that servicers can claim and requires servicers to prosecute foreclosure in a specific amount of time, referred to as the “reasonable diligence timeframe.” In light of the substantial changes in state foreclosure requirements in recent years, HUD’s guidance on fees and reasonable diligence timeframes, which was last updated in 2005, presented significant challenges for FHA servicers striving to meet reasonable diligence timeframes and recoup actual attorney fees expended in prosecuting foreclosures in connection with FHA-insured loans. The updates announced in Mortgagee Letter 2013-38 bring welcome increases for both claimable attorney fees and reasonable diligence timeframes in many jurisdictions.

New York Campaign Against Out-of-State Online Lenders Survives a Battle in the SDNY

Nov 01 2013

By: David L. Beam, Christopher Shelton*
*Mr. Shelton is a law clerk and not admitted to the practice of law.

The Internet has been with us for about two decades, and financial service companies have been offering products over the Internet for nearly as long. One would have thought that there would be final resolution by now on the question of whether, and under what circumstances, a state may regulate an online lender with no physical presence in the state. However, this issue continues to be a thorny one.

A recent decision by the United States District Court for the Southern District of New York touches on this issue. In Otoe-Missouria Tribe of Indians v. New York State Department of Financial Services, 2013 U.S. Dist. LEXIS 144656, 2013 WL 5460185 (S.D.N.Y. Sep. 30, 2013), the State of New York successfully argued that it can regulate online loans made by Native American tribes to New York residents. The case primarily involved the question of whether a state could regulate an enterprise owned by a Native American tribe located in another state. But the decision potentially has implications for other situations where a company offers financial services over the Internet. Moreover, it is part of a wider campaign by New York authorities to target online lenders for alleged usury.

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