May 2020 – Consumer Financial Services Watch

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.

Archive:May 2020