News and developments related to consumer financial services, litigation, and enforcement.
By: Soyong Cho , David I. Monteiro
On Tuesday, March 5, senior staff with the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of San Francisco presented a webinar on the prohibitions on unfair and deceptive practices under the Dodd-Frank Act and the Federal Trade Commission Act, and presented a number of case studies and compliance pointers, based on the Federal Reserve’s own enforcement and investigatory matters. Read More
By: Melanie Brody , Stephanie C. Robinson
On March 21, 2013, the CFPB issued CFPB Bulletin 2013-02: Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act. In this bulletin, the CFPB describes its understanding of how the indirect auto lending industry works, and describes its view on how ECOA applies to indirect auto lending—including its theory on lender liability for disparities in dealer markups. The guidance offers advice to bank and nonbank indirect auto lenders within the CFPB’s jurisdiction on how they can limit their indirect auto fair lending risk. Read More
By: Jonathan D. Jaffe , Amanda D. Gossai
The CFPB recently released a Bulletin directed to residential mortgage servicers and subservicers (servicers). The purpose of the Bulletin is to put servicers on notice that the CFPB intends to focus its supervisory process on mortgage loan servicing transfers. If the CFPB determines that a transferor or transferee servicer has engaged in any acts or practices that are unfair, deceptive, or abusive, or that otherwise violate federal consumer financial laws and regulations (including RESPA, FCRA, and FDCPA), the CFPB indicated its intent to take appropriate supervisory and enforcement actions and seek all appropriate corrective measures, including remediation of harm to consumers. Read More
In an effort to reach more consumers, HUD’s Office of Fair Housing and Equal Opportunity launched a new mobile app for iPhone and iPad today. The app gives users instant access to HUD’s online housing discrimination complaint form and information about fair housing rights. After downloading the app, consumers and fair housing advocacy groups will have what HUD Assistant Secretary for Fair Housing and Equal Opportunity John Trasviña called “faster and easier” access to the complaint form. This makes sense for repeat complainants like fair housing advocacy organizations. But for the average consumer looking to file a discrimination complaint, downloading an app rather than visiting HUD’s web site seems like an unnecessary extra step. In any case, the app is a valiant attempt by HUD to follow the CFPB’s lead in maximizing technology to reach out to consumers.
By: David A. Tallman , Kathryn M. Baugher
On January 23, 2013, the Federal Financial Institutions Examination Council (FFIEC) published proposed guidance to supervised institutions regarding social media use. The proposed guidance reminds financial institutions that they must comply with consumer protection laws when they engage in regulated activities over social media, but does not dwell on how an institution must comply with particular compliance obligations in the social media context. Rather, the guidance is meant to highlight the broader compliance, reputational, and operational risks that institutions should address within their risk management programs. Read More
By: Nanci L. Weissgold , Sean P. Mahoney , Gregory N. Blase
On January 24, 2013, the Massachusetts Office of the Attorney General (“AG”) issued guidance to the industry interpreting its debt collection regulations (“Regulations”) that became effective March 2, 2012. The AG took this unusual step as it recognized that the Regulations raise unique compliance issues for servicers of consumer debt. The AG promulgated the Regulations pursuant to the rulemaking authority conferred by the Massachusetts Consumer Protection Act (“Chapter 93A”), “to establish standards, by defining unfair or deceptive acts or practices, for the collection of debts from persons within the Commonwealth of Massachusetts.” 940 C.M.R. 7.01. Although there is no private right of action, a violation may, nevertheless, constitute “an unfair or deceptive act or practice under Chapter 93A.”
By: David A. Tallman , Michael A. Cumming
On February 12, 2013, President Obama signed an executive order (“Order”) aimed at enhancing the cybersecurity of the nation’s “critical infrastructure” (generally defined as those “systems and assets” whose incapacity “would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters”). An accompanying policy directive designates the financial services sector as one of sixteen “critical infrastructure sectors” and, among other things, directs the Commerce Department’s National Institute of Standards and Technology (“NIST”) to collaborate with industry representatives in order to create a voluntary “cybersecurity framework.” The framework must be “technology neutral” and focused on “cross-sector security standards and guidelines applicable to critical infrastructure.” Read More
By: Gregory N. Blase , Nanci L. Weissgold , Kerri M. Smith
Do regulations recently proposed by the Massachusetts Division of Banks disregard servicers’ duties under servicing agreements when considering borrowers for a modification under the Commonwealth’s new mandatory modification review statute? Read More
By: Phillip L. Schulman , *Nathan Pysno
*Mr. Pysno is not admitted to the D.C. Bar; currently admitted to the Maryland Bar.
Beginning January 1, 2013, issuers of Government National Mortgage Association (“Ginnie Mae”) mortgage-backed securities must submit their insurance and annual audited financial statements electronically. From June 1, 2012 through December 31, 2012, issuers had the option to submit their documents electronically or by mail in paper form. Before June 1, 2012, Ginnie Mae only accepted submissions in paper form. Documents that must be submitted electronically include annual audited financial statements, including required supplemental reports, fidelity bond insurance renewal forms, and errors and omissions insurance renewal forms.
Additional information on filing procedures, file-naming formats, and other instructions is available in Ginnie Mae’s Mortgage-Backed Securities Guide 5500.3 Rev. 1, Appendix VI-20 and in All Participant Memorandum (APM) 12-09: Electronic Submission of Issuers’ Insurance and Annual Audited Financial Documents. Both of these documents are available on the Issuer Resources page of Ginnie Mae’s website.
By: Phillip L. Schulman, *Nathan Pysno
*Mr. Pysno is not admitted to the D.C. Bar; currently admitted to the Maryland Bar.
A recent change to the HUD Office of the Inspector General Audit Guide has removed the requirement that all FHA investing mortgagees submit reports on internal controls and compliance.
An investing mortgagee or lender may purchase, sell, and hold FHA-insured mortgages but cannot originate or fund FHA loans. An investing mortgagee may service FHA loans with approval of the HUD Secretary. Read More
Copyright © 2023, K&L Gates LLP. All Rights Reserved.