mortgage – Consumer Financial Services Watch

COVID-19: Echoes Don’t Fade: Lessons Learned From the Home Affordable Modification Program for the Next Wave of Mortgage Class Action Litigation

May 18 2020

By Brian M. Forbes and Robert W. Sparkes, III

As the country grapples with the impacts of the COVID-19 pandemic, financial service providers should hold fast to the adage that those who forget the past are destined to repeat it. The last financial crisis centered in large part on the mortgage industry, both in its inception and its slow climb to stabilization. Like the last crisis, a growing percentage of homeowners are not able to make their mortgage payments, requiring loan servicers to employ various loss mitigation tools to reduce individual’s financial hardships. While the COVID-19 pandemic is impacting nearly all sectors of the economy, the mortgage industry can look back to past experiences to help mitigate present and future risks. If past is prologue, one risk likely to increase in the coming months is class action litigation.

COVID-19: Credit Reporting in the Age of COVID-19

Apr 30 2020

The CARES Act’s Impact on Furnisher Liability Under the Fair Credit Reporting Act

By Brian M. Forbes and Robert W. Sparkes, III

As part of the federal government’s efforts to provide relief from the economic impact of the COVID-19 pandemic to consumers, Congress took aim at financial services companies that provide consumer account information to credit reporting agencies (CRAs). The reporting activities of those companies, which are known as “furnishers” and include, among others, creditors, mortgage loan servicers and credit card account servicers, are governed by the Fair Credit Reporting Act (FCRA). [1] The Coronavirus Aid, Relief, and Economic Security (CARES) Act, [2] enacted on March 27, 2020, expressly amends FCRA and alters the duties of furnishers when reporting the status of accounts provided with COVID-19-related payment relief. [3] Despite the potential exposure carried by a violation of FCRA generally—either through private civil litigation, most notably class actions, or government enforcement—key defenses remain in place for furnishers to mitigate FCRA liability.

COVID-19: How the CARES Act Will Impact Chapter 7 and Chapter 13 Consumer Bankruptcies

Mar 31 2020

By Phoebe S. Winder, Ryan M. Tosi, Stacey Gorman, Emily Mather

On March 27, 2020, the President signed into law the historic Coronavirus Aid, Relief, and Economic Security Act (“CARES Act” or “Act”), a $2.2 trillion stimulus package designed to mitigate the widespread economic effects of the novel coronavirus (“COVID-19”). The Act includes several temporary modifications to chapter 7 and chapter 13 of the U.S. Bankruptcy Code.[1] This alert details these modifications.

The Massachusetts Supreme Judicial Court Considers the Effect of a State-Mandated Default Notice on the Validity of Non-Judicial Foreclosures

Feb 24 2020

By Andrew C. Glass, Gregory N. Blase, Jeremy M. McLaughlin, and Hollee M. Boudreau

The Massachusetts Supreme Judicial Court (“SJC”) heard argument on February 13, 2020, on whether compliance with a state-mandated default notice could, nevertheless, void foreclosure sales in Massachusetts. Specifically, the SJC examined whether the provision of the state-mandated notice has the potential to deceive a borrower where it describes a period for reinstating a loan that varies (to the benefit of the borrower) from the period contained in the mortgage.

American Bankers Association Weighs In With a Comment on HUD’s Disparate Impact Rule

Aug 22 2018

By Paul F. Hancock, Olivia Kelman

On behalf of the American Bankers Association and state bankers associations across the country, K&L Gates partner Paul F. Hancock and associate Olivia Kelman crafted a comment that was submitted to the U.S. Department of Housing and Urban Development (“HUD” or “Department”) on August 20, 2018, in support of reopening rulemaking regarding the Department’s implementation of the Fair Housing Act’s disparate impact standard. On June 20, 2018, HUD issued an advance notice of proposed rulemaking that sought public comment on possible amendments to the Department’s 2013 final disparate impact rule in light of the U.S. Supreme Court’s decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015). In that decision, the Supreme Court articulated the standards for, and the constitutional limitations on, disparate impact claims under the Fair Housing Act. The comment explains that the rule should be amended because it adopts standards that are inconsistent with Supreme Court precedent, fails to provide much needed guidance to entities seeking to comply with the law, and is therefore outdated and ineffective. A copy of the comment is available here.

CFPB Releases “Mortgage Origination Examination Procedures” Governing Banks and Nonbanks – Not a Prelude to a Kiss

Jan 20 2012

By: Jonathan D. Jaffe

The CFPB wants to get to know you – well. But it’s not a prelude to a kiss.

On January 12, 2012, the CFPB released its new Mortgage Origination Examination Procedures Governing Banks and Nonbanks (the “Procedures”). The release of the Procedures follows close on the heels of the CFPB’s October 13, 2011 release of its mortgage servicing examination procedures (see The CFPB Mortgage Servicing Examination Procedures Fail to Harmonize – Isn’t It Ironic? ), and its January 5, 2012 announcement of its nonbank supervision program (see CFPB Officially Launches Nonbank Supervision Program). Read More

MERS and Foreclosure Law in Massachusetts: Culhane v. Aurora Loan Services

Jan 19 2012

By: Andrew C. Glass, Gregory N. Blase, Roger L. Smerage

A Massachusetts federal court recently confirmed MERS’s ability to assign mortgages under Massachusetts law and approved MERS’s practices in doing so.

In Culhane v. Aurora Loan Services, — F. Supp. 2d —-, 2011 WL 5925525 (D. Mass. Nov. 28, 2011), a borrower sued her loan servicer to prevent foreclosure. The court granted summary judgment for the servicer, addressing two principal issues. First, the court examined whether Massachusetts law requires that the same entity hold both the note and mortgage before initiating the foreclosure process. Predicting how the Massachusetts Supreme Judicial Court may rule in a pending appeal, Eaton v. Federal National Mortgage Association, SJC-11041 (argued Oct. 3, 2011), the federal court concluded that under Massachusetts law, the mortgagee must either be the noteholder, or the servicer of the noteholder acting pursuant to authority from the noteholder, to foreclose on property pursuant to the power of sale. Read More

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