2016 – Consumer Financial Services Watch

Down But Not Out: The CFPB’s Future May Be Uncertain, But Industry Participants Must Remain Vigilant

Dec 29 2016

By Daniel F. C. Crowley, Soyong Cho, Jennifer Janeira Nagle, Roger L. Smerage, Jeremy M. McLaughlin, Mark A. Roszak, and Brandon R. Dillman

Since its inception, the Consumer Financial Protection Bureau (“CFPB”) has been a lightning rod, and there is little dispute that recent events threaten, at a minimum, the current operational structure of the CFPB and possibly its future existence. Specifically, the constitutionality of the CFPB has been under direct judicial attack and President-elect Trump’s incoming administration, and legislative reform that may follow, threatens to make good on Mr. Trump’s plan to “dismantle the Dodd-Frank Act,” which created the CFPB, “and replace it with new policies to encourage economic growth and job creation.” In the aftermath of these developments, there has been no shortage of predictions on the CFPB’s future and some predictions allude to a near certain doomsday for the agency. But many may have rushed to judgment. While the continued existence of the CFPB is certainly an open question, it is more likely that the CFPB will receive a makeover, not a shutdown.

To read the full alert, click here.

Massachusetts Title Clearing Act To Take Effect December 31, 2016 – Are you Ready?

Dec 21 2016

On December 31, 2016, the remedial provisions of “An Act Clearing Titles to Foreclosed Properties” (the “Act”) will take effect in Massachusetts. The Act is designed to clear legal title for Massachusetts homeowners who purchased homes with a prior foreclosure, by limiting the time period that former homeowners can challenge the foreclosure sale. The Act should be seen as welcome relief to the industry, but as detailed below, the Act still has some limitations. Indeed, like most rules governing foreclosure-related litigation, attorneys representing individuals that are the subject of a foreclosure action will inevitably try to find ways to challenge the Act and seek to avoid its intended and desired results.

To read the full alert, click here.

OCC Explores Special Purpose National Bank Charter for Fintech Companies

Dec 07 2016

By Judith E. Rinearson, Anthony R.G. Nolan, Rebecca H. Laird and Jeremy M. McLaughlin

On December 2, 2016, the Office of the Comptroller of the Currency (“OCC”) announced its plans to move forward with a proposal to consider applications from financial technology (“fintech”) companies to receive charters as special purpose national banks. The OCC simultaneously released a white paper detailing the program. The OCC is seeking comments on its proposal, including responses to 13 specific questions listed in the paper. The announcement is potentially significant for the fintech sector, but questions remain as to whether a special bank charter would represent a fundamental change or merely an incremental enhancement. The comment period ends on January 15, 2017.

To read the full alert, click here.

The Post-Election FinTech World: Are Happy Days (for Bankers) Here Again?

Dec 02 2016

By Judith E. Rinearson and Eric A. Love

In the days following the U.S. federal elections that resulted in the election of Donald Trump as President and Republican control of the 115th Congress, FinTech companies, banks, and other financial institutions are increasingly asking whether they still need to worry about compliance with the landmark Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), Consumer Financial Protection Bureau (“CFPB”) regulatory actions, and other financial services regulations.

It is true that there will likely be some significant regulatory changes, but it is a little too early for industry participants to pop the champagne corks.

To see are our thoughts about some of the top issues impacting FinTech companies, banks and other financial institutions, click here.

Securitization developments for Alternative Finance

Dec 01 2016

K&L Gates partner Anthony Nolan will be speaking on “Securitization in Alternative Lending” at the Marketplace Lending & Alternative Financing Summit 2016 in Dana Point, California, on December 5th. This session will bring together participants with various perspectives, including investment bankers, platform representatives and service providers, in addition to Nolan’s viewpoint as a U.S. securitization and fintech lawyer. They will address recent commercial and regulatory developments that may affect the securitization of online and marketplace loans which include the impact of risk retention, which becomes effective on December 24, the implications of rating agency reform, emerging standards for asset-level representations and warranties, and the prospects for reform or rollback of Dodd-Frank consumer financial services regulation following President Trump’s inauguration in January.

The Marketplace Lending & Alternative Financing Summit is an educational forum for financial services professionals to delve into industry topics and trends to maximize returns and reduce risk in the growing field of marketplace lending. It brings together some of the thought leaders and market movers within the marketplace lending & alternative financing industry. Topics will include legal, tax and structural considerations, rating agency methodology, and information and tools for attendees to keep up with this dynamic industry. To see the agenda for the conference, please click here.

TRUMP’S CAMPAIGN TO GO IT ALONE ON FIRST AMENDMENT CHALLENGE TO THE TCPA

Nov 23 2016

By Andrew C. Glass, Gregory N. Blase, Christopher J. Valente, and Michael R. Creta

On Monday, the U.S. Department of Justice (“DOJ”) declined to intervene in Thorne v. Donald J. Trump for President, Inc., 1:16-cv-04603 (N.D. Ill.). As previously discussed here, a class of plaintiffs sued President-Elect Trump’s campaign alleging violations of the Telephone Consumer Protection Act (“TCPA”) in connection with text messages sent during the campaign. In seeking dismissal of the suit, the campaign argued that the TCPA does not pass muster under the First Amendment. Specifically, the campaign asserted that Congress’s November 2015 exemption of calls relating to government debt constitutes “preferential treatment” and qualifies as a “blatant and egregious form of content discrimination.”

The DOJ did not provide a reason for declining to intervene, and the campaign is now faced with the prospect of going it alone in its First Amendment challenge to the TCPA.

Bankruptcy Payment Change Notice Rule Changes to Take Effect December 1, 2016

Nov 22 2016

By Phoebe S. Winder and Ryan M. Tosi

On December 1, 2016, the amendments to Bankruptcy Rule 3002.1 aimed at clarifying when a secured creditor must file a payment change notice (“PCN”) in a Chapter 13 bankruptcy take effect. The new rule requires secured creditors to file PCNs on all claims secured by the Chapter 13 debtor’s primary residence for which the debtor or Chapter 13 Trustee is making post-petition payments during the bankruptcy, without regard to whether the debtor is curing a pre-petition arrearage. The new rule also clarifies that the PCN requirement ceases once the creditor obtains relief from stay, unless the court orders otherwise.

Our prior alerts and articles detailing the amendments can be viewed at:

Take Notice of This Change: Supreme Court Adopts Recommended Amendments to Bankruptcy Notice of Payment Change Rule

Advisory Rules Committee Adopts Amendments to Bankruptcy Rule 3002.1

Have You Noticed Your Payment Change? Advisory Rules Committee Proposes Amendments to Bankruptcy Rule 3002.1

Leave the “Tow Truck Guy” Alone: The Ninth Circuit Rules Foreclosure of a Deed of Trust Is Not Debt Collection

Nov 10 2016

By Andrew C. Glass, Gregory N. Blase, Roger L. Smerage, and Joshua Butera

The Ninth Circuit recently clarified when a trustee of a deed of trust acts as a debt collector under the Fair Debt Collection Practices Act (“FDCPA”). In a break from other courts of appeal, the Ninth Circuit held that when a trustee carries out the contractual and statutory requirements for foreclosing property subject to the deed of trust, the trustee does not act as a debt collector. The Ninth Circuit reasoned that in so acting, the trustee does not seek to collect monetary debt from the debtor. In so holding, the court broke with other courts of appeals.

To read the full alert, click here.

As Campaign Draws to a Close, Trump’s First Amendment Challenge to the TCPA Continues On

Nov 07 2016

By Andrew C. Glass, Gregory N. Blase, Christopher J. Valente, and Michael R. Creta

Donald Trump’s presidential campaign recently moved to dismiss a Telephone Consumer Protection Act (“TCPA”) claim on First Amendment grounds. Thorne v. Donald J. Trump for President, Inc., 1:16-cv-04603 (N.D. Ill.). The class-action complaint alleged that the campaign violated the TCPA by sending text messages without permission. In response, the campaign argued that the TCPA’s prohibition on the use of automatic telephone dialing systems (“ATDS”) for calls or text messages placed to cellular telephones, 47 U.S. Code § 227(b)(1)(A)(iii) (the “cell phone ban”), improperly regulates speech on the basis of content. Specifically, the campaign asserted that the ban cannot withstand strict scrutiny because it does not “further[] a compelling interest” and is not “narrowly tailored to achieve that interest.” Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett, 564 U.S. 721, 734 (2011).

FinCEN Looks to Financial Institutions to File SARs Regarding Cyber-Events

Nov 07 2016

By Mark A. Rush, Stanley V. Ragalevsky, Rebecca H. Laird, and Samuel P. Reger

On October 25, 2016, the Financial Crimes Enforcement Network (“FinCEN”) issued an advisory (the “Advisory”) explaining the obligations a “financial institution” might have under the Bank Secrecy Act (“BSA”) regarding “cyber-events and cyber-enabled crime.” The Advisory states that even if an actual financial transaction did not take place as result of a cyber-event, a financial institution may still be required to file a Suspicious Activity Report (“SAR”) in certain circumstances. Because of this, a covered financial institution should reconsider its obligations under the BSA after a cyber-event.

To read the full alert, click here.

Archive:2016