2015 – Page 5 – Consumer Financial Services Watch

STATEMENT OF PAUL F. HANCOCK, K&L GATES LLP, ON DECISION OF U.S. SUPREME COURT UPHOLDING ‘DISPARATE-IMPACT LIABILITY’ UNDER THE FAIR HOUSING ACT

Jun 25 2015

The Court’s decision today resolves an important legal issue about which there has been principled disagreement among White House administrations, as well as among advocacy and industry groups, for decades. While the Court, by a razor thin margin, upheld the application of disparate impact under the Fair Housing Act, the Court also imposed important limitations on the application of the legal theory. For example, the Court held that a racial imbalance, without more, does not establish a case of discrimination, and directed lower courts to “examine with care” the claims presented at the pleading stage. The Court further directed that remedial orders in disparate impact cases must “concentrate on the elimination of the offending practice” and employ “race-neutral [remedial] means.” The limitations that were announced were believed necessary by the Court to “avoid serious constitutional questions that might arise” and “to protect potential defendants against abusive disparate-impact claims.”

CFPB PUBLISHES NEW SUPERVISORY HIGHLIGHTS

Jun 24 2015

By: Melanie Brody, Ernest Simons

On June 23, the Consumer Financial Protection Bureau (CFPB or Bureau) released its latest Supervisory Highlights, outlining key findings from supervisory work completed between January and April 2015. Recent supervisory resolutions across all industries have resulted in remediation of approximately $11.6 million to more than 80,000 consumers. The report highlights recent supervisory observations in the following areas:

CFPB Issues Final Decision in In Re: PHH Corp.: First Agency Decision in Contested Administrative Proceeding

Jun 24 2015

Earlier this month, the Consumer Financial Protection Bureau (CFPB) issued the Director’s final decision in the CFPB’s enforcement action against PHH Corp. (PPH). The decision is the agency’s first ruling in a contested administrative proceeding and sheds light on how the agency—at least under the leadership of Director Richard Cordray—will approach these matters. Most strikingly, Director Cordray overturned several key rulings by the Administrative Law Judge (ALJ), resulting in a decision requiring PHH to pay over $109 million in disgorgement, nearly 17 times as much as the $6.4 million recommended by the ALJ.

FCC Empowers TCPA Plaintiffs At Peril Of Businesses

Jun 22 2015

By: Martin L. Stern, Andrew C. Glass, Gregory N. Blase, Joseph C. Wylie

At its June 18, 2015, open meeting, a sharply divided Federal Communications Commission made good on Chairman Tom Wheeler’s recent promise to bolster the Telephone Consumer Protection Act’s already strict rules and to bring about “one of the most significant FCC consumer protection actions since it established the Do-Not-Call Registry with the FTC in 2003.” While plaintiffs’ class action lawyers are likely to applaud the new measures, businesses are concerned that the new rules could unfairly restrict legitimate communications with customers.

DOJ and CFPB Settle Discriminatory Mortgage Pricing Case with Wholesale Lender

Jun 01 2015

By: Melanie Brody, Anjali Garg

On May 28, 2015, the DOJ and the CFPB filed a complaint and proposed consent order against Provident Funding Associates (Provident) alleging that the mortgage lender violated the Fair Housing Act and ECOA by charging African American and Hispanic borrowers higher broker fees than it charged white borrowers. To resolve these claims, Provident will pay $9 million to approximately 14,000 borrowers who allegedly paid higher interest rates and/or fees for mortgages between 2006–2011. The agencies did not impose a civil money penalty against Provident.

HUD Reached Record-Breaking Settlement in Redlining Case

Jun 01 2015

By: Melanie Brody, Tori Shinohara, Christa Bieker

On May 26, 2015, the Department of Housing and Urban Development (“HUD” or the “Department”) announced an approximately $200 million settlement with Associated Bank resolving allegations that the bank engaged in racial redlining in violation of the Fair Housing Act.

Supreme Court Grants Cert. to Consider Whether Offer of Complete Relief Moots TCPA Class Action

May 27 2015

By: Andrew C. Glass, Joseph C. Wylie II, Gregory N. Blase, Jennifer J. Nagle, Eric W. Lee

The United States Supreme Court recently granted certiorari in a Telephone Consumer Protection Act class action challenging text messages which a U.S. Navy vendor sent to recruit new sailors. In Campbell-Ewald Company v. Gomez, No. 14-857, the Supreme Court will review (1) whether a defendant’s offer to provide complete relief as to individual claims deprives the plaintiff of Article III standing, and (2) whether such an offer can also prevent a putative class plaintiff from proceeding where no class has yet been certified.

S.D.N.Y. Judge Denies Class Certification in Fair Housing Act Suit against Morgan Stanley

May 20 2015

By: Andrew C. Glass, Roger L. Smerage, Eric W. Lee

The United States District Court for the Southern District of New York recently denied class certification in a Fair Housing Act disparate-impact case in which plaintiffs attempted to hold Morgan Stanley liable for investing in subprime mortgage loans that another entity originated. Adkins v. Morgan Stanley, No. 12-CV-7667, 2013 WL 3835198 (S.D.N.Y. May 14, 2013).

Kristie Kully to speak at NBI Seminar: What the CFPB and FTC Need You to Know—RESPA/TILA, FDCPA and More

May 12 2015

Kristie Kully will participate as a speaker in the National Business Institute Seminar: What the CFPB and FTC Need You to Know—RESPA/TILA, FDCPA, and More, May 14–15, 2014. Kristie will be speaking at the following sessions: “Loan Estimates Under the New Rules,” “Closing Disclosures—Changes You Need to Know,” and “Loan Originator Compensation: What You Need to Know—NOW.”

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