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Inside the CFPB

May 29, 2012

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SCOTUS Rejects Feds’ View in RESPA Case

The Supreme Court of the United States last week sided with Quicken Loans while unanimously rejecting the legal arguments of two federal agencies in affirming a lower court’s determination that a plaintiff must prove a settlement fee was split by two or more persons in order to successfully stake a claim under the Real Estate Settlement Procedures Act. The relevant portion of RESPA at issue in Freeman et al. v. Quicken Loans Inc. is the provision that “[n]o person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a... Read More

CFPB Takes on Nonbank Third-Party Vendors

The Consumer Financial Protection Bureau has proposed procedures it plans to use in exercising its supervisory and enforcement authority over how nonbank consumer financial service companies (like mortgage lenders and mortgage servicers) control their third-party vendors, such as subservicers, foreclosure trustees and law firms, and force-placed insurers. It’s all about controlling the potential risk to consumers. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has authority to supervise any nonbank that it has “reasonable cause” to determine is posing a risk... Read More

‘Show Me the Note’ Argument Thrown Out in Arizona Foreclosures

In Hogan v. Washington Mutual Bank, N.A. et al, the Arizona high court has dismissed the ‘show me the note’ claim in foreclosure litigation, throwing out a legal argument often used to block an impending foreclosure. “We granted review to decide whether a trustee may foreclose on a deed of trust without the beneficiary first having to show ownership of the note that the deed secures,” explained Arizona Supreme Court Chief Justice Rebecca White Berch. “We hold that Arizona’s non-judicial foreclosure statutes do not require the beneficiary to prove its authority or... Read More

Fed Issues Citi, HSBC, Ally Enforcement Requirements

Last week, the Federal Reserve Board put out action plans for Citigroup and HSBC Finance Corp. to correct deficiencies in their residential mortgage loan servicing and foreclosure processing. These enforcement actions require the mortgage servicing subsidiaries to provide appropriate remediation to borrowers who suffered financial injury as a result of errors by the servicers. The Fed also released the engagement letter between Ally Financial Inc. and its independent consultant to review foreclosures that were in the firm’s pipeline in 2009 and 2010... Read More

CFPB Wants Industry Input on Expected Compliance Costs

The Consumer Financial Protection Bureau wants to hear from the industry about the costs companies anticipate incurring in order to comply with a variety of rules and requirements pending at the agency. In proposing new rules for providers in the mortgage markets, the CFPB said it will consider the potential implementation and ongoing compliance activities and associated costs of the proposed rules. “Accordingly, the bureau seeks to collect qualitative information on the potential costs of complying with potential new regulations and other effects the rules may... Read More

Take RESPA Probes from CFPB Seriously, Attorney Warns

Complying with all the requirements of the Real Estate Settlement Procedures Act under the new Consumer Financial Protection Bureau is going to be a much different ballgame than had been the case when the Department of Housing and Urban Development was calling the shots, a leading industry attorney indicated recently. “The bottom line on RESPA enforcement [at the Consumer Financial Protection Bureau] is that there are many enforcement powers and authorities at the bureau’s disposal,” Holly Spencer Bunting, a partner in the Washington, DC, office of K&L Gates LLP, told participants... Read More

‘Dunning’ Notice May Give Rise to FDCPA Claim, Court Rules

The U.S. Court of Appeals for the 11th Circuit recently reversed and remanded a lower court’s rejection of a Fair Debt Collections Practices Act claim, determining in Reese v. Ellis, Painter, Rattertree & Adams, LLP that the contents of a “dunning” notice from the lender’s foreclosing law firm amount to an effort to collect a debt under the act. In this case, the borrowers, Izell and Raven Reese of Roswell, GA, purchased a piece of property in 2004 with the help of a $650,000 loan from Provident Funding Associates, LP. To get that loan, the Reeses signed a promissory note and... Read More

Streamlined Short Sales The Goal of Heller Legislation

With his home state of Nevada leading the nation in foreclosures, Republican Sen. Dean Heller has introduced legislation that seeks to simplify and speed up the short-sale process via an amendment to the Truth in Lending Act. Heller has recently introduced SB 3177, the Stopping Ongoing Lender Delays Act (or SOLD Act). His legislation would require each servicer of a home mortgage to respond in writing within 30 calendar days to a mortgagor of a residential mortgage loan who has requested in writing a short sale of the dwelling or residential real property that is subject to the mortgage... Read More

State Roundup

Alabama. The state recently enacted Senate Bill 347, which sets the procedures a borrower is to use to obtain a payoff statement for a residential mortgage, including the form of such a request and deadlines for responding to a request, as well as the method for providing the statement. Senate Bill 347 also mandates that a secured creditor has to record a mortgage satisfaction within 30 days after receipt of full payment and performance of the obligation. The bill also creates a process for enforcing the recording requirement. The bill’s provisions are effective... Read More

Federal Roundup

Federal Reserve Board. Fed Pushing Independent Foreclosure Review. The Federal Reserve last week released a new video on its website and on YouTube that explains to borrowers facing foreclosure how they can apply for a free, independent foreclosure file review. The video, available in English and Spanish, reminds borrowers that they may be eligible to receive compensation if the independent review finds evidence of direct financial injury due to servicer error. Borrowers are eligible for a review if their primary residence was... Read More

Worth Noting

The Federal Housing Finance Agency’s seasonally adjusted purchase-only house price index rose 0.6 percent in the first quarter of 2012. Seasonally adjusted house prices were up 0.5 percent year over year for the period, the first such increase seen since 2007.The U.S. housing market is looking better, with April's housing starts near the highest levels in over three years and showing signs of growth, according to economists at BMO Harris Bank in Chicago. “After bottoming in 2009, the U.S. housing sector has had little to no substantial growth; however, today’s housing... Read More

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