Category Archives: Financial Institutions

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The Consumer Financial Protection Bureau Adopts New Rule Barring Class Action Waivers in Arbitration Agreements

As expected, and with few changes, the Consumer Financial Protection Bureau adopted its proposed rule barring financial companies regulated by the agency from including class action waivers in arbitration agreements. Arbitration clauses in new contracts offering a consumer financial product or service will need to include specified language indicating that arbitration cannot be used to … Continue Reading

The Ninth Circuit Holds That Enforcing A Security Interest Is Not Necessarily Debt Collection

On Oct. 19, 2016, the Ninth Circuit held that merely enforcing a security interest is not “debt collection” under the federal Fair Debt Collection Practices Act (“FDCPA”).  In so holding, the Ninth Circuit disagreed with earlier decisions by the Fourth and Sixth Circuits, creating a split that might eventually be resolved by the U.S. Supreme … Continue Reading

Notice to Mortgage Lenders – Your Mortgage Interest Statements Must be Revised Starting in Tax Year 2016

An act passed by Congress last year makes changes to IRS Form 1098 (Mortgage Interest Statement) starting in tax year 2016 (reported commencing in calendar year 2017).  Internal Revenue Code Section 6050H(b)(2)(D) requires that a Form 1098 include “the amount of outstanding principal on the mortgage as of the beginning of the calendar year” as … Continue Reading

A Proposition 65 Violation May Be Lurking in Your Cash Register Receipt

Many consumer-facing businesses have learned to identify high-risk Prop 65 targets:  soft, flexible plastics; faux and colored leathers; and any kind of brass or metal that may contain lead or other heavy metals.  But businesses need to take action to avoid Prop 65 liability based on a new culprit: bisphenol-A (BPA) that may be lurking … Continue Reading

Google To Ban Payday Loan Advertisements

Google announced on May 11 that effective on July 13, 2016 it will ban all payday loan advertisements from its site.  Google was responding to concerns raised by consumer advocates who argued that the lending practice exploits the poor and vulnerable by offering them immediate cash that must be repaid at exorbitant interest rates.  Google … Continue Reading

In Wake of Panama Papers Scandal Obama Calls for Stricter Bank Regulations, Tax Rules

In a news conference today President Obama addressed rules and proposed regulations announced Thursday intended to help the U.S. fight tax evasion and other crimes connected to anonymous offshore companies and accounts.  The announcements come after a month of intense review by the administration following the first release of the so-called Panama Papers, millions of … Continue Reading

California Supreme Court Opens Door For Wrongful Foreclosure Lawsuits and Challenges to Transfers of Mortgages: Practical Implications and Options Moving Forward

In Yvanova v. New Century Mortgage Corporation et al, the Supreme Court of California reversed the Court of Appeal’s ruling, and held that a borrower plaintiff who has been subject to a nonjudicial foreclosure has standing to bring an action for wrongful foreclosure based on an allegedly void deed of trust assignment (without making any … Continue Reading

CFPB Issues Letter on TRID Enforcement and Liability

On December 29, 2015, CFPB Director Richard Cordray sent a letter to the president of the Mortgage Bankers Association regarding implementation of the CFPB’s Know Before You Owe mortgage disclosure rule (more commonly known as the Truth in Lending and RESPA integrated disclosure rule, or TRID) responding to concerns raised by the MBA.  The letter … Continue Reading

CFPB Publishes Bulletin on Respa Compliance and Marketing Services Agreements

For some time now, the residential lending community has been concerned that the Consumer Financial Protection Bureau has taken unclear positions with respect to marketing services agreements (MSA’s) in its enforcement actions, leaving residential lenders unsure as to how to proceed.  Some lenders, including Wells Fargo Bank and Prospect Mortgage Company, have responded to this … Continue Reading

The California Supreme Court Holds Consumer Class Action Waivers In Arbitration Provisions Are Enforceable Under Federal Law

On August 3, 2015, the California Supreme Court issued its long-awaited arbitration decision in Sanchez v. Valencia Holding Co., LLC, No. B228027. The Court held that the arbitration provision found in a standard form auto finance and sales contract widely used by auto dealerships and lenders throughout California is not unconscionable. Not surprisingly, the Court … Continue Reading

CFPB Issues Compliance Bulletin On Confidentiality of Supervisory Information

On January 27, 2015, the Consumer Financial Protection Bureau (“CFPB”) issued a compliance bulletin reminding supervised financial institutions (including large depository institutions, credit unions and their affiliates, certain nonbanks, and service providers) of existing regulatory requirements regarding confidential supervisory information.  In this article we (i) explain the definition of confidential supervisory information; (ii) discuss exceptions … Continue Reading

No Change Of Position, No Estoppel

Under California Law, a party seeking to defeat the statute of frauds based on promissory estoppel must allege an actual change in position.  In Jones v. Wachovia Bank, 230 Cal.App.4th 935 (2014), the California Court of Appeal affirmed a trial court’s dismissal of plaintiffs’ claims for breach of oral promises to postpone a foreclosure sale … Continue Reading

Does A Consumer’s Exercise of a Rescission Right Mean that the Loan Is Automatically Rescinded? Perhaps Not, According to One Federal Court, If the Consumer Does Not Also File a Lawsuit for Rescission

In Baker v. Bank of America, N.A., No. 5:13-CV-92-F, 2014 U.S. Dist. LEXIS 9578 (E.D.N.C. Jan. 27, 2014), the United States District Court for the Eastern District of North Carolina held that even if a consumer timely exercises his or her right to rescind a loan transaction under the Truth in Lending Act (TILA), 15 … Continue Reading

Some QM Relief in Sight? CFPB Proposes Amendment to QM Rule Which Will Permit Creditors to Cure Inadvertent QM Violations Through Refunding Excess Points and Fees

The Bureau of Consumer Financial Protection (the “CFPB”) announced April 30 that it is proposing amendments to Regulation Z that will, among other things, permit a creditor that believes in good faith that it has made a qualified mortgage (“QM”) loan and learns afterwards that the loan exceeded the applicable limit on points and fees … Continue Reading

If It’s Not In Writing, It Didn’t Happen: Oral Promises To Modify A Loan Are Not Enforceable

A recent decision issued by the California Court of Appeal will make it more difficult for plaintiffs seeking to avoid foreclosure.  In Rossberg v. Bank of America, N.A., 219 Cal.App.4th 1481 (4th Dist. 2013), the California Court of Appeal affirmed a trial court’s dismissal of plaintiffs’ claims of oral promises to modify a loan.… Continue Reading

SEC Announces 2014 Examination Priorities for Investment Advisers

On January 9, 2014, the Securities and Exchange Commission released its examination priorities for 2014 (the “2014 Exam Priorities Release”), covering a wide range of issues at financial institutions, including investment advisers and investment companies, hedge funds and private equity funds.  The 2014 Exam Priorities Release highlights a number of areas and key risks that the … Continue Reading

The End Is In Sight? Deutsche Bank Claims Victory In Defense Of A Repurchase Claim Based Upon Statute Of Limitations

A unit of Deutsche Bank won dismissal of a suit brought by mortgage bond investors after a New York state appeals court determined the claims for loan repurchase and indemnity were subject to a six-year statute of limitations that began to run when the deal to purchase the loans closed.  This decision may limit new … Continue Reading

Commissioner of California Department of Business Oversight Issues Order on Designated Point of Contact for Delivery of Emails

The Commissioner of the California Department of Business Oversight on November 22 issued an order directing all DBO licensees (which would include California Finance Lender licensees and residential mortgage lender licensees, among others) to designate a single standard email address for Department communications.… Continue Reading

Sixth Circuit Holds That Affiliated Business Arrangements Are Not Bound by HUD’s Statement of Policy Regarding Sham AfBAs

The U.S. Court of Appeals for the Sixth Circuit, which covers Michigan, Ohio, Kentucky and Tennessee, held late last month that real estate settlement service providers whose relationships satisfied the Real Estate Settlement Procedures Act ‘s (“RESPA’s”) statutory three-part test for affiliated business arrangements (“AfBAs”) were not also required to satisfy any tests set forth … Continue Reading

OCC Issues New Risk Management Guidance For Third Party Relationships

The Office of the Comptroller of the Currency published on October 30, 2013 a new Guidance relating to risk management for third party relationships. This Guidance rescinds OCC Bulletin 2001-47, “Third-Party Relationships: Risk Management Principles” and OCC Advisory Letter 2000-9, “Third-Party Risk.” Prior to the formation of the Consumer Financial Protection Bureau, OCC-regulated institutions were … Continue Reading

Is Everybody A Debt Collector? CFPB Proposes New Rules That Could Subject Creditors That Collect On Their Own Debts To New Debt Collection Rules

The Consumer Financial Protection Bureau is considering new rules to govern debt collection practices that could radically change the debt collection regulatory landscape and for the first time include creditors that are collecting their own debt. Third-party debt collectors are currently subject to the Fair Debt Collection Practices Act, but this law does not apply … Continue Reading
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