2013 – Page 7 – Consumer Financial Services Watch

Massachusetts Attorney General Issues Guidance on Debt Collection Regulations

Feb 21 2013

By: Nanci L. Weissgold , Sean P. Mahoney , Gregory N. Blase

On January 24, 2013, the Massachusetts Office of the Attorney General (“AG”) issued guidance to the industry interpreting its debt collection regulations (“Regulations”) that became effective March 2, 2012. The AG took this unusual step as it recognized that the Regulations raise unique compliance issues for servicers of consumer debt. The AG promulgated the Regulations pursuant to the rulemaking authority conferred by the Massachusetts Consumer Protection Act (“Chapter 93A”), “to establish standards, by defining unfair or deceptive acts or practices, for the collection of debts from persons within the Commonwealth of Massachusetts.” 940 C.M.R. 7.01. Although there is no private right of action, a violation may, nevertheless, constitute “an unfair or deceptive act or practice under Chapter 93A.”

New Cybersecurity Executive Order to Impact Financial Services Sector

Feb 19 2013

By: David A. Tallman , Michael A. Cumming

On February 12, 2013, President Obama signed an executive order (“Order”) aimed at enhancing the cybersecurity of the nation’s “critical infrastructure” (generally defined as those “systems and assets” whose incapacity “would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters”). An accompanying policy directive designates the financial services sector as one of sixteen “critical infrastructure sectors” and, among other things, directs the Commerce Department’s National Institute of Standards and Technology (“NIST”) to collaborate with industry representatives in order to create a voluntary “cybersecurity framework.” The framework must be “technology neutral” and focused on “cross-sector security standards and guidelines applicable to critical infrastructure.” Read More

Proposed Massachusetts Regulations Address Mandatory Modification Review

Feb 12 2013

By: Gregory N. Blase , Nanci L. Weissgold , Kerri M. Smith

Do regulations recently proposed by the Massachusetts Division of Banks disregard servicers’ duties under servicing agreements when considering borrowers for a modification under the Commonwealth’s new mandatory modification review statute? Read More

Ginnie Mae Goes Electric

Feb 05 2013

By: Phillip L. Schulman , *Nathan Pysno
*Mr. Pysno is not admitted to the D.C. Bar; currently admitted to the Maryland Bar.

Beginning January 1, 2013, issuers of Government National Mortgage Association (“Ginnie Mae”) mortgage-backed securities must submit their insurance and annual audited financial statements electronically. From June 1, 2012 through December 31, 2012, issuers had the option to submit their documents electronically or by mail in paper form. Before June 1, 2012, Ginnie Mae only accepted submissions in paper form. Documents that must be submitted electronically include annual audited financial statements, including required supplemental reports, fidelity bond insurance renewal forms, and errors and omissions insurance renewal forms.

Additional information on filing procedures, file-naming formats, and other instructions is available in Ginnie Mae’s Mortgage-Backed Securities Guide 5500.3 Rev. 1, Appendix VI-20 and in All Participant Memorandum (APM) 12-09: Electronic Submission of Issuers’ Insurance and Annual Audited Financial Documents. Both of these documents are available on the Issuer Resources page of Ginnie Mae’s website.

FHA Investing Mortgagees No Longer Required to Provide Compliance Report

Feb 05 2013

By: Phillip L. Schulman, *Nathan Pysno
*Mr. Pysno is not admitted to the D.C. Bar; currently admitted to the Maryland Bar.

A recent change to the HUD Office of the Inspector General Audit Guide has removed the requirement that all FHA investing mortgagees submit reports on internal controls and compliance.

An investing mortgagee or lender may purchase, sell, and hold FHA-insured mortgages but cannot originate or fund FHA loans. An investing mortgagee may service FHA loans with approval of the HUD Secretary. Read More

Appraisers’ Customary and Reasonable Fees – Louisiana’s Power Grab

Feb 04 2013

By: Nanci L. Weissgold , Morey Barnes Yost , *Christopher Smith
*Mr. Smith is a law clerk, currently admitted to the New York Bar.

Author’s Note: In response to the publication of the below post, a representative for the Louisiana Real Estate Appraisers Board advised us that the version of the proposed rules discussed in our original post are being withdrawn. A revised version of the proposed rules, based on comments received from appraisal management companies in response to the Board’s original proposal, is scheduled for publication in the Louisiana Register on or about February 20. We will update our analysis after the revised proposed rules are published, when they will be open for further comment.

A recently proposed Louisiana Real Estate Appraisers Board (“Board”) rule has created uncertainty in the Louisiana appraisal market regarding appraiser compensation. In proposing a rule that creates obligations inconsistent with those existing under federal law and rules, the Board has ignored the intent of the federal rule, caused conflict between state and federal law, and likely increased compliance costs for appraisal management companies (“AMCs”) – costs that may be passed along to lenders and consumers.

FHA Annual Recertification Attestation

Jan 11 2013

By: Phillip L. Schulman

Each year, an FHA-approved mortgagee’s principal, chief executive or in-house general counsel signs an attestation as part of the Federal Housing Administration’s annual certification process that accompanies payment of the mortgagee’s yearly verification fees. Some administrative assistant puts the attestation in front of the mortgagee’s president or executive vice-president and sometimes without thinking, the executive casually attests that the company complies with all HUD-FHA regulations and no state or federal agency lifted its license during the past year. In fact, the attestation is quite expansive and mortgagees have been finding themselves hauled before the HUD Mortgagee Review Board and its executives threatened with debarment proceedings for failing to read the fine print. Read More

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