Litigation & Enforcement Actions – Page 13 – Consumer Financial Services Watch

FinCEN Acknowledges the Problem, But a Solution Will Require More

Nov 12 2014

Money services businesses (“MSBs”) have been losing access to banking services. Increased scrutiny by bank regulators of MSB relationships have led banks to conclude that providing services to MSBs carries increased compliance and reputational risk. Even if these risks can be managed in theory through appropriate due diligence and controls, many banks have decided that costs and risks of offering banking services to MSBs outweigh the revenue that they generate. Read More

U.S. District Court Strikes Down HUD’s Fair Housing Act Disparate Impact Rule

Nov 04 2014

By: Paul F. Hancock, Andrew C. Glass, Roger L. Smerage, and Olivia Kelman

On Monday, November 3, 2014, Judge Richard J. Leon of the U.S. District Court for the District of Columbia struck down the disparate impact rule promulgated by the U.S. Department of Housing and Urban Development (“HUD”) in March 2013 under the Fair Housing Act. The court held that HUD had issued the rule—codified at 24 C.F.R. § 100.500—in contravention of the plain language of the Fair Housing Act. The case is styled American Insurance Association, et al. v. United States Department of Housing & Urban Development, et al., Case No. 1:13-cv-00966-RJL (D.D.C.).

If Bernanke Wants to Refinance, Maybe He Needs a Co-Signer?

Oct 06 2014

By: Kristie D. Kully, Laurence E. Platt

While former Federal Reserve Chairman Ben Bernanke may be known for his loose monetary policy, unfortunately his mortgage lender is not. According to Bloomberg News, Mr. Bernanke complained (while addressing a conference of the National Investment Center for Seniors Housing and Care in Chicago on October 2) that he was recently unable to refinance his mortgage loan.

Although Mr. Bernanke reportedly remarked that “it’s entirely possible” that lenders “may have gone a little bit too far on mortgage credit conditions,” it’s hard to blame lenders. Mr. Bernanke may seem to be a good credit risk, but a lender that follows the underwriting standards mandated by the federal Qualified Mortgage (“QM”) regulations can’t make a loan to just anyone.
Read More

K&L Gates Announcement: K&L Gates Receives Top Rankings in BTI’s Litigation Outlook Survey

Oct 03 2014

K&L Gates has been ranked as one of three top law firms as a “Powerhouse” in Class Action and Torts Litigation for the second consecutive year. The firm was also named as a “Standout” in Securities and Finance Litigation, Complex Commercial Litigation and Routine Commercial Litigation in BTI Consulting Group’s 2015 Litigation Outlook survey.

In addition, the firm was once again included in BTI’s “Honor Roll of Most Feared Law Firms” listing as well as on the honor roll of firms noted by clients for IP Litigation.

The rankings were based on direct client feedback from more than 300 interviews with general counsel and in-house litigation counsel from a wide array of industries.

Click here to read the press release on our rankings.

Mortgage Broker or Mini-Correspondent: CFPB Issues Policy Guidance on Questions for Consideration

Jul 18 2014

By: Holly Spencer Bunting, Anaxet Y. Jones

In response to what the CFPB views as an increasing trend among mortgage brokers shifting to a mini-correspondent lender model, the CFPB recently issued “Policy Guidance on Supervisory and Enforcement Considerations Relevant to Mortgage Brokers Transitioning to Mini-Correspondent Lenders” (“Policy Guidance”) regarding the application of Regulations X (RESPA) and Z (TILA) to transactions involving mini-correspondent lenders. In addition to providing background on the differences between brokers and mini-correspondents and certain requirements of Regulations X and Z, the Policy Guidance identifies questions the CFPB may consider when reviewing mini-correspondent transactions and the relationship between the mini-correspondent lender and the investor as part of CFPB examinations or enforcement actions. The CFPB, however, stops short of drawing any lines in the sand between what it considers to be brokered transactions and bona fide secondary market transactions under the mini-correspondent model. Read More

Inspector General Urges FHFA to Consider Suing Servicers, Force-Placed Insurers

Jun 30 2014

By: Nanci L. Weissgold, Kerri M. Smith, * Christopher Shelton
* Mr. Shelton is not admitted in D.C. Supervised by Nanci Weissgold, member of D.C. Bar.

On June 25, 2014, the inspector general of the Federal Housing Finance Agency (FHFA) issued a report on force-placed insurance with only one recommendation: FHFA should consider suing servicers and force-placed insurers for hundreds of millions of dollars in allegedly “excessive” force-placed insurance premiums.

As we discussed in a recent blog post, “force-placed” or “lender-placed” insurance is an area of increasing controversy, with Fannie Mae and Freddie Mac rolling out new restrictions on perceived conflicts of interest between insurers and the servicers that bring them business. The inspector general noted these reforms going forward, but believes that FHFA should also assess how to pursue perceived past abuses. Read More

Recent Force-Placed Insurance Initiatives by FHFA & CFPB Suggest Divergent Priorities

Jun 12 2014

By: Nanci L. Weissgold, *Christopher Shelton
* Mr. Shelton is not admitted in D.C. Supervised by Nanci Weissgold, member of D.C. Bar.

Force-placed insurance is under continuing scrutiny by the Federal Housing Finance Agency (FHFA) and the Consumer Financial Protection Bureau (CFPB). However, each agency’s focus is slightly different. FHFA, perhaps galvanized by a New York enforcement action, has focused on conflicts of interest between servicers and insurers. The CFPB has focused on erroneous placing of insurance and excessive charges. Read More

Commonwealth of Massachusetts v. FHFA: Fremont Meets The Federal Government

Jun 05 2014

By: Irene C. Freidel

On June 2, 2014, the Commonwealth of Massachusetts sued the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac in state court, under Massachusetts’ consumer protection statute (“Chapter 93A”) to force them to sell foreclosed properties to non-profit organizations at fair market value, so that the properties can then be re-sold or leased back to the former homeowner. See Commonwealth of Massachusetts v. Federal Housing Finance Agency, et al., C.A. No. 14-1763 (June 2, 2014). Among other things, the lawsuit seeks a declaration that the GSEs’ current anti-fraud guidelines violate Massachusetts foreclosure law (M.G.L. c. 244, § 35C(h)), an order requiring property sales to non-profits in specific transactions, an injunction to prevent the GSEs from refusing to adhere to Massachusetts law, and an award of penalties of up to $5,000 for each transaction that the court determines constituted an unfair and deceptive practice under state law. The lawsuit follows a series of communications between the Massachusetts Attorney General and FHFA beginning in 2012 in which the state has demanded that FHFA direct the GSEs to change their anti-fraud “arms-length” requirements that apply to short sales and REO transactions. Read More

CFPB Widens RESPA Enforcement to Focus on Affiliated Business Arrangement Disclosures

Jun 03 2014

By: Holly Spencer Bunting, Anaxet Y. Jones

The CFPB once again has taken aim at affiliated business arrangements (“AfBAs”), only this time, it is targeting AfBA disclosures. In prior enforcement actions, the CFPB focused on the validity of the AfBA, bringing actions against alleged “sham” AfBAs. However, in its most recent enforcement action, the CFPB entered into a consent order with a real estate brokerage company, alleging that it referred consumers to its affiliate, but failed to provide an adequate AfBA disclosure. The CFPB also alleged that the brokerage company improperly required the use of its affiliate title insurance agency.

CFPB Proposes “Points and Fees” Cure for Qualified Mortgages

May 02 2014

By: Kristie D. Kully, Eric Mitzenmacher

The Consumer Financial Protection Bureau issued a proposed rule requesting public comments on several amendments to its recent mortgage regulations under the Truth in Lending Act (“TILA,” as amended by the Dodd Frank Act). One of those amendments would, if finalized, allow creditors a limited opportunity to “cure” a loan that inadvertently exceeds the three percent limit on points and fees for qualified mortgages (“QMs”). Read More

Catagory:Litigation & Enforcement Actions