2014 – Page 7 – Consumer Financial Services Watch

Non QM Lending Facilitated by New Fitch Ratings Criteria

Mar 18 2014

Non-QM lending received a big boost this week when Fitch Ratings issued its criteria for analyzing residential mortgage-backed securities (“RMBS”) under the Ability to Repay (“ATR”) and Qualified Mortgage (“QM”) rules issued by the Consumer Financial Protection Bureau. It announced that it would apply a relative “credit enhancement” adjustment (i.e., extra collateralization) to non-QM loans pooled to back RMBS, but the level of credit enhancement reflects its belief that the risk of massive losses on such loans is relatively slight. In reliance upon required third-party due-diligence reviews, Fitch said that it would assume the accuracy of an originator’s designation of loans as “safe harbor” QM loans, higher-priced QM loans or non-QM loans. Read More

CFPB Criticized For Failure to Provide Information Related to Indirect Auto Lending Activities

Mar 10 2014

By: Melanie Brody, Tori K. Shinohara

On Friday, the Chairman of the House Financial Services Committee wrote a letter to Director Cordray chastising the CFPB for its continued refusal to provide meaningful responses to Congressional requests for information about the Bureau’s supervision and enforcement activities related to indirect auto lending. In the letter, Chairman Hensarling cites five instances of Congressional requests for information related to the CFPB’s indirect auto activities over the past year that have been not been satisfied. He criticizes the Bureau’s “pattern of obfuscation” related to Congressional requests for information and contends that the CFPB has created “unnecessary uncertainty” within the auto lending market. Read More

K&L Gates Legal Insight: We’ve Only Just Begun–Lessons from the CFPB’s First 35 Enforcement Cases

Mar 06 2014

By: Jon Eisenberg

Few agencies have generated as much controversy as the Consumer Financial Protection Bureau. The brainchild of Senator Elizabeth Warren when she was still a professor and the product of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the agency is charged with being the cop on the beat for consumers much like the SEC is the cop on the beat for investors. Among its goals are preventing consumers from being subject to “deceptive,” “unfair,” and “abusive” practices and holding alleged wrongdoers accountable by bringing enforcement cases against those the CFPB believes have violated consumer financial protection laws. Consumers have flooded it with over 300,000 complaints since the agency began operations less than three years ago, and those have already proven to be a fertile source of information for its examination and enforcement programs.

To read the full alert, click here.

DOL Seeks Supreme Court Review of the Invalidation of its Mortgage Loan Officer Overtime Ruling

Mar 05 2014

By: Thomas H. Petrides, John L. Longstreth

On February 28, 2014 the Department of Labor, represented by the Solicitor General, petitioned for Supreme Court review of an appellate decision invalidating a 2010 DOL administrative ruling that determined mortgage loan officers generally do not qualify for the administrative exemption from overtime under the Fair Labor Standards Act. The U.S. Court of Appeals for the D.C. Circuit held last July that a prior administrative ruling issued in a 2006 DOL Opinion Letter was established law and that DOL was therefore required to use notice and comment rulemaking to change it. The 2006 Opinion Letter had previously determined that loan officers could qualify for the administrative exemption and therefore would be ineligible for overtime pay based on that exemption. The Solicitor General argues that requiring notice and comment for an interpretive rule in any circumstances is inconsistent with the Administrative Procedure Act, which exempts interpretive rules from notice and comment requirements, and therefore the 2010 interpretation should be reinstated. The petition also argues that the D.C. Circuit decision is inconsistent with the rulings of at least two other federal appeals courts. Read More

CFPB Continues to Target Mortgage Servicing

Feb 27 2014

By: Soyong Cho, Kerri M. Smith

At the Mortgage Bankers Association’s National Mortgage Servicing Conference & Expo last week, CFPB Deputy Director Steven Antonakes issued a strongly-worded warning that the CFPB will continue to vigorously monitor and investigate the mortgage servicing industry. Deputy Director Antonakes stated that the CFPB will rely on its newly adopted Mortgage Servicing Rules (the “Rules”) and Sections 1031 and 1036(a) of the Consumer Financial Protection Act (“CFPA”), which prohibit unfair, deceptive or abusive acts or practices (“UDAAP”). In his speech, Deputy Director Antonakes recounted problems that had been observed in mortgage servicing and admonished that “the fundamental rules have changed forever” and that “business as usual has changed in mortgage servicing.” Specifically, the Deputy Director explained the CFPB’s expectations of servicers: Read More

Global Government Solutions® 2014 Annual Outlook

Feb 24 2014

K&L Gates is pleased to announce the publication of its Global Government Solutions® 2014 Annual Outlook.

Our seventh edition of the Global Government Solutions® series highlights increased government involvement in global commerce and provides the latest regulatory information corporate leaders need to navigate the intersection of business and government. The K&L Gates Global Government Solutions® 2014 Annual Outlook is a collection of 50 insightful articles to help you do just that, including:

Former U.S. Congressmen Bart Gordon and James T. Walsh on congressional deadlock
The European Union as a business partner
A more aggressive Securities and Exchange Commission
New hedge fund regulations
International trade negotiations
Resources nationalism in emerging nations
Tax reform
Competition and compliance risks for government contractors

To view the report, click here. For more information on our Global Government Solutions® practice, please visit our website.

The CFPB Defines Foreign Remittance Transfer “Larger Participants”

Feb 24 2014

By: David L. Beam, Christopher G. Smith

The Dodd-Frank Act provided the CFPB with examination authority over, among others, “larger participants” of consumer financial product and service markets. Almost three years ago, the CFPB issued an Advance Notice of Proposed Rulemaking targeting various industries whose larger participants it was eyeing for regular examination, including money transmission. In January 2014, the CFPB issued a proposed larger participants rule for a subset of money transmitters – those engaged in foreign remittances. Read More

CFPB Publishes New Mortgage Servicing Exam Procedures

Feb 18 2014

By: Nanci L. Weissgold, Kerri M. Smith, Christopher Shelton*

*Mr. Shelton is not admitted to the practice of law in the District of Columbia.

The CFPB has released updated exam procedures for reviewing mortgage servicers, incorporating the Mortgage Servicing Rules (“the Rules”) that became effective on January 10, 2014. These updated exam procedures still focus on nine major modules covering routine servicing, default servicing, and foreclosure. However, they frequently cross-reference the TILA and RESPA exam procedures that were updated in November 2013 to reflect the Rules. Because of the overlap in coverage and the reliance on cross-referencing, the updated servicing exam procedures are shorter than the prior version of the CFPB’s Examination Manual, although there are some notable additions. Read More

Consumer Financial Services Group Hosts Webinar Series

Feb 18 2014

Members of the Consumer Financial Services Group will host a webinar series during February and March.

On February 26, 2014 from 2:00 -3:30 p.m. EST, the group will host “Navigating the Legal Landscape Between Broker and Correspondent.” Presenters include: Costas A. Avrakotos, Holly Spencer Bunting, Jonathan D. Jaffe, Kris D. Kully, Stephanie C. Robinson, David A. Tallman Read More

Consumer Financial Services Group Welcomes Four New Partners

Feb 17 2014

The Consumer Financial Services Group is pleased to welcome four new partners to the practice, effective March 1.

Soyong Cho focuses her practice on commercial disputes.

Kris D. Kully advises consumer financial services providers regarding federal and state laws and regulations, including a recent focus on new mortgage origination and compensation regulations of the Consumer Financial Protection Bureau.

Kerri M. Smith advises financial service providers on issues relating to mortgage servicing and mortgage lending, and regularly counsels clients on requirements applicable to default servicing and loss mitigation.

Robert W. Sparkes, III has extensive experience in complex civil and commercial litigation, including federal and state class action litigation.

We extend our warmest congratulations to this fine group of individuals.

Archive:2014