Other Federal Agencies & GSEs – Page 2 – Consumer Financial Services Watch

“Take Me Out to the Ballgame?” Asked the Inspector: Saying “Yes” May Now Be a Federal Crime

May 12 2016

By Barry M. Hartman, Michael D. Ricciuti, Jasmine S. McGhee, Brian J. Smith

Imagine this hypothetical: A local fire marshal says to Mary Jones, who runs the residence halls at a major university, “It must be nice having seats at the Saturday football games.” Mary gets the message and thinks that if she agrees to offer the fire marshal tickets, he will be less likely to “nitpick” during his inspections of the residence halls. Could the government claim that this is a bribe by Mary within the meaning of the Hobbs Act’s proscription against “extortion” by public officials?

On May 2, in Ocasio v. United States, the U.S. Supreme Court broadened the reach of federal corruption law to cover private individuals who are involved in extortion conspiracies with government officials and held that anyone — even the bribe payor — who has conspired to engage in extortion can be charged for violation of the Hobbs Act, the federal statute that federal prosecutors use to indict state officials who solicit and take bribes, and can be convicted of conspiracy. In doing so, the Supreme Court has given federal prosecutors a new, and potent, weapon.

To read the full alert, click here.

PREPAID ACCESS GARNERS REGULATORY ATTENTION

Mar 24 2016

By: Sean P. Mahoney

Bank regulators are paying more attention to the role of banks in the prepaid card industry as evidenced by their new guidance on the applicability of know your customer requirements and proposed regulations on record-keeping with respect to master deposit accounts for prepaid cards and other products utilizing “pass-through” deposit insurance.

Will Assignee Liability Increase as FTC Seeks Comments on the Holder Rule?

Jan 26 2016

The “Adam’s Rib” of assignee liability ̶ the “Holder Rule” issued by the Federal Trade Commission (“FTC”) in 1976 ̶ is up for review. Imposing liability on innocent purchasers of consumer credit loans for the legal violations of the originating creditors has long been a controversial issue in the capital markets. The FTC is seeking public input as it reviews the Trade Regulation Rule Concerning Preservation of Consumers’ Claims and Defenses, commonly known as the Holder Rule. Although the Rule has not garnered significant attention over its 40-year existence, industry members should consider commenting by the February 12 deadline. Changes to the Holder Rule, including the scope and types of claims and defenses that can be asserted against a holder, could have a material impact on the market. The Consumer Financial Protection Bureau can also enforce the Holder Rule against covered institutions.

TRID/KBYO Rule: The CFPB Tries to Calm Lender Fears

Dec 30 2015

On December 29, 2015, CFPB Director Richard Cordray responded to MBA President and CEO David Stevens’ desperate plea for clarity to address what the MBA claimed is a significant rejection by large aggregators and investors of correspondent lending channel loans for minor or technical TRID errors. In its December 21, 2015 letter to Director Cordray, Mr. Stevens noted that these minor and technical errors include “issues with the alignment or shading of forms, rounding errors, time stamps with the wrong time zone, or check boxes that are improperly completed on the LE.” The MBA feared that without some clarity from the CFPB disruption and liquidity issues would overwhelm the mortgage markets.

GSEs Release Revised Framework for Origination Defects and Remedies — The Proof Will Be in the Execution

Oct 21 2015

By: Laurence E. Platt, Jennifer A. Overall

By recently releasing yet another revised representation and warranty framework, Fannie Mae and Freddie Mac continued their efforts to assuage the concerns of the lending industry that a default by a borrower poses an unfair risk of a loan repurchase demand. On October 7, 2015, Fannie Mae and Freddie Mac (the “GSEs”), at the direction of the Federal Housing Finance Agency (“FHFA”), announced a framework for origination defects and remedies (the “Framework”) that expands on existing frameworks governing the rights and responsibilities of lenders that sell or securitize loans to or with the GSEs. For example, permitting repricing or cure in lieu of the remedy of repurchase represents a concession by the GSEs. Nevertheless, the language of the new Framework is ambiguous enough that one may have to rely on the GSEs’ apparent spirit of good intentions rather than the precision of their language to take total comfort in the changes.

To read the full alert, click here.

HUD Withdraws Proposal to Establish Claim Filing Deadline

Oct 16 2015

By: Krista Cooley, Kathryn Baugher

Servicers of mortgage loans insured by the Federal Housing Administration (“FHA”) can breathe a sigh of relief—at least for now. Today, the U.S. Department of Housing and Urban Development (“HUD”) withdrew part of a recently proposed regulation that would have required FHA-approved servicers to file a claim for FHA insurance benefits within a certain period of time or else face termination of the FHA insurance policy. HUD stated that it withdrew the proposal to establish a claim filing deadline “[i]n response to public comments expressing concern over the implementation of the proposed provisions[.]”

Key Takeaways From the CFPB’s and DOJ’s Redlining Settlement With Hudson City Savings Bank

Sep 25 2015

By: Melanie Brody, Anjali Garg

On Thursday, September 24, 2015, the CFPB and DOJ filed a complaint and proposed consent order against Hudson City Savings Bank (“Hudson City”) alleging violations of the Equal Credit Opportunity Act and Fair Housing Act. The complaint alleges that Hudson City discriminated against Black and Hispanic borrowers by redlining majority-Black-and-Hispanic neighborhoods (defined in the consent order as a census tract in which more than 50 percent of the residents are identified in the 2010 U.S. Census as either “Black or African American” or “Hispanic or Latino”) in its residential mortgage lending in New York, New Jersey, and Pennsylvania. The complaint alleges that Hudson City engaged in redlining through its (1) location of branches and loan officers, (2) exclusion of Black and Hispanic census tracts from its Community Reinvestment Act (“CRA”) assessment area, (3) use of brokers outside of majority Black and Hispanic neighborhoods, (4) marketing directed at neighborhoods with relatively few minority residents, and (5) exclusion of residents from majority-minority counties from discounted home improvement loans for borrowers with low to moderate incomes.

DOL Issues New Guidance on Independent Contractors

Sep 02 2015

By: Amy L. Groff

The misclassification of employees as independent contractors continues to be a hot issue and to receive attention at the state and federal levels. Recently, the U.S. Department of Labor, Wage and Hour Division (“DOL”) published new guidance addressing misclassification, emphasizing the broad scope of employment under the Fair Labor Standards Act (“FLSA”), and summarily concluding that most workers are employees covered by the FLSA. DOL plans to continue challenging these misclassifications through “robust” enforcement efforts across industries. Employers should expect scrutiny of their independent contractor classifications and should review their classifications to make sure they are appropriate.

New Flood Insurance Coverage and Escrow Requirements

Jul 01 2015

By: Kerri M. Smith, Christopher G. Smith

Last week, federal regulators issued long-awaited flood regulations implementing the Biggert-Waters Flood Insurance Reform Act of 2012 (“Biggert-Waters”) and Homeowner Flood Insurance Affordability Act of 2014 (“HFIAA”). To those following the legislative and regulatory developments for federally mandated flood insurance, there won’t be any big surprises in the final rule. Indeed, in both Biggert-Waters and HFIAA, Congress prescribed relatively clear and specific requirements; thus, in responding to comments, the agencies were largely able to rely on statutory language to shape the new obligations. In a few instances, the agencies added clarity through new definitions or additional explanations, but largely the agencies followed the statutes’ road map.

U.S. Supreme Court Allows DOL Interpretation on Overtime for Mortgage Loan Officers

Mar 16 2015

By: Thomas H. Petrides, John L. Longstreth

On March 9, 2015, the U.S. Supreme Court held that the U. S. Department of Labor (DOL) could issue a controversial “Administrator’s Interpretation,” which had concluded in 2010 that loan officers in the mortgage banking industry generally do not qualify as exempt from overtime under the administrative exemption of the federal Fair Labor Standards Act (FLSA). The Supreme Court reversed a ruling of the U.S. Court of Appeals for the D.C. Circuit that had struck down the DOL administrative ruling. The Mortgage Bankers Association had challenged the 2010 Interpretation in court, arguing that because the DOL had previously issued an Opinion Letter in 2006 determining that loan officers could generally qualify as exempt from overtime under the administrative exemption, the DOL could not change its prior position without first issuing a written notice and allowing a comment period pursuant to the Administrative Procedure Act. However, the Supreme Court in a 9-0 decision ruled that because the 2006 DOL Opinion Letter was itself merely an interpretation of an existing rule and not a new rule with the force and effect of law, DOL could reverse its prior position and issue a new interpretation without a prior notice and comment rulemaking.

Catagory:Other Federal Agencies & GSEs