Litigation & Enforcement Actions – Page 15 – Consumer Financial Services Watch

Supreme Court Takes Mount Holly Disparate Impact Case

Jun 17 2013

Today, the Supreme Court granted certiorari in the appeal titled Township of Mount Holly, New Jersey v. Mt. Holly Gardens Citizens in Action, Inc., et al., No. 11-1507, agreeing to consider whether the Fair Housing Act allows claims under the disparate impact theory of discrimination. The disparate impact doctrine imposes liability on defendants for actions undertaken without discriminatory intent but which nonetheless have an allegedly disproportionately harmful effect on protected classes of persons.

CFPB’s RESPA Radar Pointed at Affiliated Business Arrangements

By: Holly Spencer Bunting

Have you been wondering whether the Consumer Financial Protection Bureau (“CFPB”) is focusing its enforcement efforts on the Real Estate Settlement Procedures Act (“RESPA” or “Act”)? After the public announcement of two RESPA-related consent orders, the answer is yes. And, given the alleged facts of the most-recent settlement, that focus is on a familiar topic – affiliated business arrangements.

To read the full alert, click here.

Solicitor General Urges Supreme Court to Reject Mt. Holly Case; Argues No Review Is Needed as to Whether the Fair Housing Act Recognizes Disparate Impact Claims

May 22 2013

By: Andrew C. Glass, Roger L. Smerage

In an increasingly complex battle among the branches of the federal government, the Solicitor General recently urged the Supreme Court to deny certiorari in the appeal titled Township of Mount Holly, New Jersey v. Mt. Holly Gardens Citizens in Action, Inc., et al., No. 11-1507. The Mt. Holly matter seeks review of whether the Fair Housing Act recognizes a disparate impact theory of discrimination and if so, how courts are to analyze such claims. A disparate impact theory imposes liability on defendants for actions that are undertaken without discriminatory intent but that nonetheless have a disproportionately harmful effect on particular groups of individuals. The Supreme Court had previously granted certiorari to review these same questions in the appeal titled Magner v. Gallagher, No. 10-1032, which appeal the defendants subsequently withdrew under circumstances garnering review by Congress.

CFPB Legislates Loss Mitigation Through Proposed Servicing Regulations

Aug 13 2012

By: Laurence E. Platt

For those who wondered how the Consumer Financial Protection Bureau (the “Bureau”) would seek to convert portions of the global foreclosure settlement into federal law, last Friday’s proposed servicing rules provide an answer. The Dodd-Frank Act (“DFA”) amended the Real Estate Settlement Procedures Act (“RESPA”) in several ways to address discrete loan servicing issues, such as escrow accounts, flood insurance, and qualified written requests. What it did not do, however, is address loss mitigation or foreclosure. Many thought that the Bureau would use its general authority to issue regulations prohibiting unfair, deceptive or abusive acts and practices to craft loss mitigation requirements, but that authority would not afford consumers with a federal private right of action. Read More

Circuit Court Declares Bank’s Wire Transfer Security to Be Commercially Unreasonable Under UCC Article 4A

Jul 18 2012

By: Holly K. Towle

In 2010 we reported on the “Wave of Online Banking Fraud Targeting Businesses” that use online banking relationships to make electronic fund transfers by wire or ACH. The fraudsters use malware such as key-loggers to steal access credentials and then start draining the business’ account. In the U.S., the transfers are governed by Article 4A of the Uniform Commercial Code (“UCC”). Consumer accounts are not impacted by Article 4A: they are eligible for the consumer protections afforded by the federal Electronic Funds Transfer Act and Regulation E, which limit a consumer’s exposure to fraudulent transfers to a maximum of $50 as long as the consumer promptly reports the fraudulent activity. Read More

Supreme Court’s No Decision is a Decision in First American v. Edwards

Jun 29 2012

By: Phillip L. Schulman, Emily J. Booth

Must a consumer suffer actual harm to sue the settlement service providers involved in his or her real estate mortgage transaction for engaging in activities that violate the Real Estate Settlement Procedures Act (RESPA), or is the mere allegation of a statutory violation sufficient to get the consumer into court? The U.S. Supreme Court’s decision in First American v. Edwards not to consider the standing issue under RESPA leaves the settlement service industry at the mercy of the lower courts and effectively invites private plaintiffs to sue settlement service providers under RESPA whenever a statutory violation is suspected regardless of whether any harm has resulted. Read More

The Massachusetts Supreme Judicial Court Issues Its Long-Anticipated Eaton Decision

Jun 28 2012

By: Phoebe S. Winder

In a long-anticipated decision, the Massachusetts Supreme Judicial Court (“SJC”) ruled in Eaton v. Federal National Mortgage Ass’n, 2012 WL 2349008 (June 22, 2012) (“Eaton”) that when conducting a non-judicial foreclosure in Massachusetts, a foreclosing entity must not only hold the mortgage – it also must hold the note or be authorized to act on behalf of the note holder. But if the goal of consumer advocates was to void a large volume of foreclosures, then they failed in that goal, and Eaton should be seen as a victory for those who have foreclosed, or who are seeking to foreclose, on mortgage loans in Massachusetts. Read More

DOJ Doubles Down on Disparate Impact, Settles Discriminatory Pricing Case with SunTrust Mortgage

Jun 07 2012

By: Melanie Hibbs Brody, David G. McDonough, Jr.

The Department of Justice recently announced a $21 million settlement with SunTrust Mortgage over allegations that SunTrust’s neutral and non-discriminatory policy of granting loan originators discretionary pricing authority somehow resulted in loans to minority borrowers to be priced higher than loans to White borrowers. DOJ based its case on the disparate impact theory of discrimination; as such, the Department did not allege that SunTrust treated minority borrowers in a disparate or discriminatory manner. Instead, the case follows DOJ’s practice of filing fair lending cases solely on statistical analyses of loan data and without alleging that any person treated a borrower differently because of race or ethnicity. Read More

U.S. Supreme Court Ends the RESPA Section 8(b) Debate: It Takes Two to Tango

May 25 2012

By: Holly Spencer Bunting, Phillip L. Schulman

The split in the federal Circuit Courts over the interpretation of Section 8(b) of RESPA has been resolved, and the result is that it takes two to tango for a Section 8(b) violation. In a decision made on May 24, 2012 in Freeman v. Quicken Loans, Inc., the U.S. Supreme Court held that a charge for settlement services must be divided between two or more persons to constitute a violation of Section 8(b). This is welcome news for settlement service providers, who can rest assured that their own prices, whether as part of a mark-up of a third-party fee or their own unilateral charges, cannot violate Section 8(b) of RESPA. Read More

Tenants’ Rights under the Global Foreclosure Settlement Agreement

Apr 12 2012

By: Nanci L. Weissgold, Morey E. Barnes Yost

Buried deep in the 40-plus pages of “Servicing Standards” that are part of the recently announced global foreclosure settlement agreement (the “Agreement”) are two bullets on a topic that could impact thousands: tenants’ rights.

Specifically, the Agreement requires subject servicers to: (1) comply with all applicable state and federal laws governing the rights of tenants living in foreclosed residential properties; and (2) develop and implement written policies and procedures to ensure compliance with such laws. Read More

Catagory:Litigation & Enforcement Actions