2020 – Consumer Financial Services Watch

An Abundance of Riches: Do Increasing Deposits Mean Less for Borrowers?

Jun 23 2020

Attracting deposits for banks isn’t always an easy thing, witness the use of brokered deposits. But these days, since the beginning of the pandemic, deposits in banks have jumped to over $15.8 trillion in the first quarter, or over 13% increase from the prior year, and were up again for most of the second quarter.[1] Both businesses and individuals seem to be awash in liquidity. Individuals are selling stocks and holding cash, companies are holding on to their cash and not investing in capital or other expenditures. Many small businesses that received PPP or similar COVID-related loans are holding the proceeds and assessing which expenses they can be allocated against.

COVID-19: Echoes Don’t Fade: Lessons Learned From the Home Affordable Modification Program for the Next Wave of Mortgage Class Action Litigation

May 18 2020

By Brian M. Forbes and Robert W. Sparkes, III

As the country grapples with the impacts of the COVID-19 pandemic, financial service providers should hold fast to the adage that those who forget the past are destined to repeat it. The last financial crisis centered in large part on the mortgage industry, both in its inception and its slow climb to stabilization. Like the last crisis, a growing percentage of homeowners are not able to make their mortgage payments, requiring loan servicers to employ various loss mitigation tools to reduce individual’s financial hardships. While the COVID-19 pandemic is impacting nearly all sectors of the economy, the mortgage industry can look back to past experiences to help mitigate present and future risks. If past is prologue, one risk likely to increase in the coming months is class action litigation.

COVID-19: Emergency Regulations Do Not Pass Constitutional Muster

May 13 2020

Federal Judge Enjoins Enforcement of Massachusetts Attorney General’s Debt Collection Ban Under First Amendment

By Sean R. Higgins, John ReVeal, and Hollee M. Boudreau

In response to the COVID-19 emergency, the Massachusetts Attorney General’s Office (“AGO”) issued a set of emergency regulations [1] intended to broadly prohibit certain debt collection activities in Massachusetts, including prohibitions against initiating debt collection calls or lawsuits, during the pendency of the COVID-19 emergency. [2] On May 6, 2020, U.S. District Judge Richard Stearns enjoined the AGO’s enforcement of those regulations as an unconstitutional restraint on commercial free speech. The court found that the AGO’s broad prohibitions violated the constitutional rights of creditors and debt collectors in Massachusetts without providing any meaningful protections to consumers greater than those afforded by existing state and federal consumer protection laws. [3]

COVID-19: Massachusetts Joins the Five Other New England States in Temporarily Permitting Remote Notarization

May 06 2020

By Lindsay Sampson Bishop, Abigail P. Hemnes, Christopher J. Valente, and R. Nicholas Perkins

On 27 April 2020, Massachusetts Governor Charlie Baker signed Senate Bill 2645, “An Act Providing for Virtual Notarization to Address Challenges Related to COVID-19” (the Act) into law. With the enactment of this law, Massachusetts joins the other five New England states—Connecticut, Maine, New Hampshire, Rhode Island, and Vermont—in temporarily permitting remote notarization through the use of videoconferencing technology [1]. Like the remote notarization provisions in effect across the region, the Act allows individuals and businesses to get documents notarized while complying with social distancing and other health and safety guidelines.

COVID-19: Credit Reporting in the Age of COVID-19

Apr 30 2020

The CARES Act’s Impact on Furnisher Liability Under the Fair Credit Reporting Act

By Brian M. Forbes and Robert W. Sparkes, III

As part of the federal government’s efforts to provide relief from the economic impact of the COVID-19 pandemic to consumers, Congress took aim at financial services companies that provide consumer account information to credit reporting agencies (CRAs). The reporting activities of those companies, which are known as “furnishers” and include, among others, creditors, mortgage loan servicers and credit card account servicers, are governed by the Fair Credit Reporting Act (FCRA). [1] The Coronavirus Aid, Relief, and Economic Security (CARES) Act, [2] enacted on March 27, 2020, expressly amends FCRA and alters the duties of furnishers when reporting the status of accounts provided with COVID-19-related payment relief. [3] Despite the potential exposure carried by a violation of FCRA generally—either through private civil litigation, most notably class actions, or government enforcement—key defenses remain in place for furnishers to mitigate FCRA liability.

COVID-19: Attention Massachusetts Mortgagees – New State Legislation Impacting Foreclosure Rights

Apr 21 2020

By Sean R. Higgins, Gregory R. Youman, David E. Fialkow, and Jack S. Brodsky

On Monday April 20, 2020, Massachusetts Governor Charlie Baker signed into law an emergency act that will temporarily ban almost all eviction and foreclosure proceedings statewide during the COVID-19 pandemic. That law, H4647 (the “Act”), will significantly impact the rights of financial services companies to enforce mortgage loans through foreclosure in the Commonwealth. Mortgagees need to be aware of many new restrictions and obligations to avoid missteps as the crisis unfolds.

COVID-19: The Massachusetts Attorney General’s Office Issues Emergency Regulations Significantly Limiting Debt Collection in Massachusetts During Pandemic

Apr 20 2020

By Sean R. Higgins, John ReVeal, and Hollee M. Boudreau

The rapid spread of the Coronavirus Disease 2019 (“COVID-19”) has caused unprecedented disruptions to the U.S. economy, both at the state and national levels.

On March 10, 2020, the Governor of Massachusetts declared a State of Emergency, imposed stringent social distancing measures, and ordered all “non-essential” businesses to cease in-person operations.[1] While these measures were intended to mitigate the impact of COVID-19, they also have caused many Massachusetts residents to experience significant financial hardships.

COVID-19: New England States Embrace Remote Notarization as Connecticut, Maine, New Hampshire, Rhode Island, and Vermont Temporarily Eliminate “In-Person” Requirements

Apr 16 2020

By Lindsay Sampson Bishop, Abigail P. Hemnes, Christopher J. Valente, and R. Nicholas Perkins

Among the dilemmas facing companies trying to conduct business through the COVID-19 crisis is the question of how to notarize documents while complying with social-distancing guidelines. As offices adapt to remote work and businesses are ordered to reduce person-to-person contact wherever possible, documents must still be notarized for many traditional commercial activities to continue. In response to COVID-19 and related governmental actions, some states are temporarily easing their notarization requirements to permit remote notarization through the use of videoconferencing technology. Consequently, individuals seeking to have a document notarized no longer need to appear in person before a notary in these states for the duration of the COVID-19 crisis.

COVID-19: Defending Class Actions in Massachusetts in the Wake of COVID-19

Apr 14 2020

By Brian M. Forbes, Robert W. Sparkes, III, and Michael R. Creta

The novel coronavirus (“COVID-19”) has caused severe business disruptions throughout Massachusetts. Many companies doing business in Massachusetts have been forced to indefinitely shut their doors, while others are facing supply problems or decreased product demand. In addition to navigating these choppy economic waters, business leaders must also consider the risks likely to follow the current crisis.

COVID-19: Impact on Consumer Financial Service Providers

Apr 01 2020

A Summary of Federal and State Statutes, Rules and Orders

By David E. Fialkow, Brian M. Forbes, and Jeffrey S. Patterson

The coronavirus (“COVID-19”) pandemic has been and will continue to be a major business disrupter that will have a substantial impact on the consumer financial services industry in the weeks and months to come. Notably, federal, state and local governments and agencies are acting swiftly and changing the rules by which consumer financial services companies are to do business in the short and long term. K&L Gates LLP (“K&L Gates”) has developed a COVID-19 Task Force to closely monitor these developments and is tracking them in several jurisdictions across the firm’s footprint. Below is a summary, current as of March 30, 2020, of key new and proposed statutes, rules, and orders that are likely to impact consumer financial services companies. Keeping track of these almost daily developments to foreclosure, eviction, debt collection, student loans and other business lines, which vary state to state, is critical for consumer financial services companies to respond to their customers. As with previous nationwide crises, how these companies implement and apply these changes will have a substantial impact on post-pandemic compliance, litigation, and risks. K&L Gates has team members assigned to each of the states listed below who are able to help answer your questions and help companies address ongoing issues associated with the pandemic. Please click on a jurisdiction below for more information:

Archive:2020