Mortgage Servicing – Page 4 – Consumer Financial Services Watch

Massachusetts Supreme Judicial Court Rejects Municipal Foreclosure Ordinances

Jan 15 2015

By: Gregory N. Blase, David D. Christensen, Matthew N. Lowe

Can a Massachusetts municipality impose ordinances on banks that are more onerous than existing statewide law? In a recent landmark decision, the Massachusetts Supreme Judicial Court (“SJC”) answered “no.” In Easthampton Savings Bank v. City of Springfield,[1] the SJC held that two ordinances, through which the City of Springfield (“Springfield”) sought to make foreclosures more difficult, were preempted by the Massachusetts Constitution. The Easthampton Savings Bank decision should serve to curtail municipalities’ attempts to impose regulations that are more stringent than those imposed by statewide law and—in welcome news to banks and investors—restore a degree of consistency in conducting foreclosures in Massachusetts.

To read the full alert, click here.

Fannie and Freddie Announce Guidelines for 3 Percent Down Payment Mortgage Program

Dec 12 2014

By: Phillip L. Schulman and Christa Bieker

Earlier this week, Fannie Mae and Freddie Mac announced guidelines for a new mortgage program that will allow down payments as low as three percent for some first-time and low-income home buyers. Melvin Watt, director of the Federal Housing Finance Agency which regulates Fannie and Freddie, explained that the new guidelines will “enable credit worthy borrowers who can afford a mortgage, but lack the resources to pay a substantial down payment plus closing costs, to get a mortgage with 3 percent down.”

Fannie Mae and Freddie Mac do not make loans, but instead buy loans from mortgage lenders and bundle them into securities to sell to investors. Fannie and Freddie’s loan guidelines have broad influence in the mortgage-lending market. The program, first announced in October, is designed to expand access to mortgages with low down payments, which Watt has stated is a “much needed piece to the broader access to credit puzzle.”

A Hard Rain Has Started to Fall A Product-by-Product Review of the CFPB’S First 60 Enforcement Actions

Nov 12 2014

By: Jon Eisenberg

Between July 17, 2012 and October 9, 2014, the Consumer Financial Protection Bureau brought 60 enforcement actions. According to our unofficial tally, they resulted in settlements requiring the payment of $2.2 billion in restitution, $174 million in CFPB civil money penalties, and, in a few cases, other forms of consumer relief. In this alert, we discuss the products and alleged practices that led to those recoveries. Our purpose is simple—what’s past is likely prologue when it comes to CFPB enforcement actions. Understanding the conduct that produced the first 60 enforcement actions will help companies avoid becoming one of the next 60 enforcement actions.

To read the full alert, click here.

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.).

K&L Gates Live Webcast: Telemarketing and the Telephone Consumer Protection Act—Avoiding Traps and Minimizing Risk

Sep 23 2014

Join us for this upcoming live video webcast on Thursday, October 2nd, from 12:00 p.m. to 1:30 p.m. (ET).

The program will include an in-depth discussion, followed by a lively Q&A session on a variety of issues involving the Telephone Consumer Protection Act (TCPA). Our knowledgeable panel will cover a range is issues, including:

Restrictions on texting and other types of communications
Issues around “Automatic Telephone Dialing Systems”
“Prior Express Consent” and revocation
Damages and standards for finding knowing and willful violations
Defense of class certification
Compliance and telemarketing issues
Insurance coverage
Other emerging issues

Big Data takes a Big Step: CFPB Offers Insight into Its Fair Lending Proxy Methodology

Sep 18 2014

By: Melanie Brody, Anjali Garg*
*Ms. Garg is not admitted in D.C. She is supervised by Stephanie Robinson, a member of the D.C. Bar.

The Home Mortgage Disclosure Act requires residential mortgage lenders to collect race and ethnicity information about loan applicants, and lenders, regulators and others routinely use this information to statistically evaluate whether there is a risk that a lender has discriminated against borrowers on a prohibited basis. With regard to other types of credit, with respect to which federal law generally prohibits the collection of demographic information, lenders and other interested parties must impute credit applicants’ race and ethnicity using proxies. For example, a lender could use the racial composition of the census tract in which a consumer resides to assign an assumed race to the consumer. Although proxying provides a way to evaluate fair lending risk in the absence of actual demographic data, there historically has not been a generally-accepted methodology for performing the proxy process, and this has made it particularly challenging to evaluate fair lending compliance for non-mortgage credit products.

California Attorney General Offers Online and Mobile “Do Not Track” Privacy Policy Recommendations

Jul 07 2014

By: Jonathan D. Jaffe, Jeremy M. McLaughlin

California Attorney General Kamala Harris recently issued guidance to help companies provide more “meaningful” privacy policies. Entitled “Making Your Privacy Practices Public,” the recommendations consolidate previously issued guidance and provide new information regarding online tracking and Do Not Track (DNT) signals. As the guidance document indicates, the recommendations “are not regulations, mandates or legal opinions” and offer greater protections than those required under existing law. Clearly, though, they reflect the attorney general’s preferences and what she believes are privacy best practices. 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

Catagory:Mortgage Servicing