2015 – Page 7 – Consumer Financial Services Watch

New York DFS Clarifies New Debt Collection Regulations

Feb 23 2015

By: Steven M. Kaplan, Gregory N. Blase, Christopher E. Shelton

Responding to industry questions about New York’s new debt collection regulations, most of which take effect on March 3, 2015, the Department of Financial Services has published a detailed FAQ on its website. We previously analyzed the regulations in a client alert.

As we anticipated in our alert, the FAQ confirms that “debt servicers, including companies that service student loans, home equity loans or mortgages … who collect or attempt to collect a debt that was not in default at the time it was obtained for collection are not” subject to the regulations. This parallels how the federal Fair Debt Collection Practices Act (“FDCPA”) is interpreted.

Navigating HUD’s New Single Family Housing Policy Handbook

Feb 17 2015

By: Phillip L. Schulman, Holly Spencer Bunting, Krista Cooley, Emily J. Booth-Dornfeld, Christa Bieker

Last fall the Department of Housing and Urban Development (“HUD”) issued the first section of its new Single Family Housing Policy Handbook (“Single Family Handbook” or “Handbook”). The Single Family Handbook is designed to achieve a consolidated, authoritative source of single-family housing policy. In addition to consolidating all policy into a single document, the Handbook makes numerous substantive changes to Federal Housing Administration (“FHA”) requirements. The Handbook will be effective for FHA-insured loans with case numbers assigned on and after June 15, 2015. This client alert analyzes key changes introduced by the Handbook.

To read the full alert, click here.

Department of Justice Settles Its First Discrimination Case against a “Buy Here, Pay Here” Used Car Dealership

Feb 16 2015

By: Melanie Brody, Anjali Garg

On February 10, 2015, the Department of Justice (DOJ) and the North Carolina Attorney General announced a settlement against two “buy here, pay here” used car dealerships and the companies’ presidents. The settlement resolves allegations under the Equal Credit Opportunity Act, its implementing regulation (Regulation B), the North Carolina Unfair and Deceptive Trade Practices Act, and the North Carolina Uniform Commercial Code, that the companies engaged in “reverse redlining” by allegedly targeting African American borrowers for used car loans using unfair and predatory terms.

CFPB to Section 8 of RESPA: Will You Be My Valentine?

Feb 16 2015

By: Holly Spencer Bunting, Phillip L. Schulman

The love affair continues between the Consumer Financial Protection Bureau (“CFPB”) and enforcement under Section 8 of the Real Estate Settlement Procedures Act (“RESPA”). On February 10, 2015, the CFPB announced a consent order with NewDay Financial, LLC (“NewDay” or the “Company”) involving alleged violations of the referral fee prohibitions under Section 8 of RESPA and deceptive marketing practices. Specifically, the CFPB alleges that NewDay paid “lead generation” fees to an unnamed veterans’ organization and a third-party company for the endorsement of the Company and referral of the organization’s veteran members to NewDay for mortgage financing. While the Company neither admitted nor denied the CFPB’s findings, the CFPB assessed a $2 million civil money penalty under the consent order. The facts as described in the consent order do not involve a typical marketing services agreement or lead generation agreement, but the consent order makes clear that endorsements of a company expressed through direct mail and email advertisements are considered to be referrals by the CFPB.

To read the full alert, click here.

UDAAP Round Up: 2014 Year in Review

Feb 10 2015

By: Soyong Cho, Stephanie C. Robinson, Anjali Garg, Christopher E. Shelton, Kathryn M. Baugher

In the last few years, the consumer financial services industry has increasingly faced the new darling tool of government enforcers — the prohibition of unfair or deceptive acts or practices (“UDAP”) found in Section 5 of the FTC Act and the prohibition of unfair, deceptive, or abusive acts or practices (“UDAAP”) found in Section 1031 of the Dodd-Frank Act. In 2014 alone, federal regulators resolved approximately 50 UDAP/UDAAP cases involving various forms of consumer financial services. These settlements resulted in over $2.5 billion in civil money penalties and consumer redress.

In this report, we provide a detailed view of the specific acts and practices that were challenged as unfair, deceptive, or abusive in 2014. We also include a summary of formal and informal UDAP/UDAAP guidance issued in the past year. Taken together, this compendium is a useful introduction for consumer financial services companies interested in evaluating and mitigating their UDAP/UDAAP risk.

To read the report, click here.

Two for the Price of One? The First Circuit Holds that a Violation of the FDCPA is a Per Se Violation of the Massachusetts Consumer Protection Statute

Feb 06 2015

By: Brian M. Forbes, Laura P. Rich

A recent decision by the United States Court of Appeals for the First Circuit, McDermott v. Marcus, Errico, Emmer & Brooks, P.C., may have broad implications for persons and entities involved in debt-collection activities in Massachusetts. In McDermott, the First Circuit addressed the scope of the Massachusetts consumer protection statute, M.G.L. c. 93A, § 11 (“Chapter 93A”) and its interplay with the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (“FDCPA”). While prior decisions from the First Circuit had suggested that a violation of the FDCPA may also be a per se (intrinsically or by itself) violation of Chapter 93A, the Court took a fresh look at the issue in McDermott and made clear that it is. Notably, the coupling of FDCPA claims with a state unfair and deceptive trade practices statute could provide plaintiff debtors with additional avenues of relief, including statutory damages and injunctive relief.

To read the full alert, click here.

Webinar: K&L Gates Social Media Series: Handling Unlawful Content on Social Media Sites

Feb 06 2015

Please join us for the first in a series of webinars focusing on the intersection of social media, law, and business. This program will include an in-depth discussion on issues companies face when removing unlawful content from social media sites.

Wednesday, February 25, 2015 at 3:00 p.m. EST
Program will be 60 minutes followed by time for Q&A

Consumer Financial Services 2014 Highlights of Activities Report

Feb 05 2015

The Consumer Financial Services Group is pleased to share our 2014 Highlights report. The report describes our firm’s achievements, and our practice group’s events, representative matters and publications.

Please click here to view the report.

Webinar: K&L Gates Cybersecurity Webinar Series: Insuring Against Cyber Risks

Feb 05 2015

Our global insurance coverage lawyers and a guest speaker from Willis Group will discuss insurance coverage for data breaches and other cyber risks and how businesses can maximize their insurance coverage.

This is the third and final complimentary webinar in this series.

Wednesday 25 February 2015
Webinar Schedule: Log-in opens: 16:15 GMT; 11:15 EST; 8:15 PST
Program: 16:30 – 17:30 GMT; 11:30 – 12:30 EST; 8:30 – 9:30 PST

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Tweaks to TRID – CFPB Issues Final Rule Amending Integrated RESPA/TILA Disclosure

Feb 04 2015

By: Kristie D. Kully

The Consumer Financial Protection Bureau recently issued a final rule amending certain aspects of its integrated disclosure requirements under the Real Estate Settlement Procedures Act and the Truth in Lending Act. The CFPB gave the mortgage lending and settlement industries over 18 months—until August 1, 2015—to prepare for the comprehensive overhaul of the disclosures provided to consumers upon application for and settlement of most residential mortgage loans. (Some have called that overhaul effort “TRID”—the TILA/RESPA Integrated Disclosures.) During that preparation time, the CFPB has learned of the need for corrections or improvements to those complex requirements. In its latest rulemaking, the CFPB attempts to fix certain issues related to providing a revised Loan Estimate disclosure (the first part of TRID) when a creditor and consumer decide to lock in the interest rate or other charges, and when the creditor expects a long construction period prior to settlement. The new rule also requires loan originators to include their names and identification numbers on the Loan Estimate and the Closing Disclosure (the second part of TRID), and clarifies how creditors must disclose per diem interest. Below, is a description of the changes that the CFPB’s most recent rulemaking makes to the disclosure requirements under the original TRID rule.

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