With the rapid rise of nonbank financial product and service companies in an everchanging marketplace, there is growing concern that nonbanks will evade federal oversight. To keep pace with these changes, the Consumer Financial Protection Bureau (CFPB) announced that it will expand its oversight of nonbank entities, including nonbanks that brand themselves as “fintechs.” 

CFPB Director Rohit Chopra intends to hold nonbanks to the same standards to which banks are held. To level the playing field for banks and nonbanks, the CFPB will conduct examinations of nonbank financial companies that the CFPB has “reasonable cause” to determine are posing risks to consumers. Mr. Chopra seeks to “stop harm before it spreads.”

Continue Reading The CFPB Expands Its Oversight of Nonbank Entities

As we previously noted, the statute of limitations on actions to enforce a note or deed of trust can be a brutally effective sword for borrowers in Washington State. Under the six-year limitations period of RCW 7.28.300, a borrower is entitled to “judgment quieting title” against the security instrument where “an action to foreclose . . . would be barred by the statute of limitations.”Copper Creek (Marysville) Homeowners Ass’n v. Kurtz, 502 P.3d 865, 869 (Wash. Ct. App. 2022), Division 1 of the Washington Court of Appeals resolved an issue central to the statute of limitations—i.e., the effect, if any, of a bankruptcy discharge on the commencement of the limitations period on each installment of a mortgage loan. Since 2017, state and federal courts in Washington have concluded, in a series of unpublished rulings, that a bankruptcy discharge commences the statute of limitations on each and every installment of a mortgage loan. See, e.g., Jarvis v. Fed. Nat’l Mortg. Ass’n, No. C16-5194-RBL, 2017 WL 1438040, at *1 (W.D. Wash. Apr. 24, 2017). Courts routinely held that upon the expiration of six years after the bankruptcy discharge, the limitations period expired as to all installments, and the borrower was entitled to judgment quieting title against the security instrument. Continue Reading Copper Creek Confirms That Bankruptcy Discharges Have No Effect on the Statute of Limitations in Washington State

Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra warned consumer finance companies that he will be expanding the bureau’s anti-discrimination efforts “to combat discriminatory practices across the board in consumer finance.”

Under the Dodd-Frank Act, it is unlawful for providers of consumer financial products or services to engage in any unfair, deceptive, or abusive act or practice (UDAAP). The Act also provides the CFPB with supervisory and enforcement authority to detect and prevent UDAAPs in connection with any consumer financial product or service. Continue Reading CFPB Announces Expanded Anti-Discrimination Efforts Through UDAAP

The Supreme Court of California handed down a big win to mortgage lenders and servicers on March 7, 2022, when it issued a decision in Sheen v. Wells Fargo Bank, National Association et al., No. S258019, 2022 WL 664722, at *1 (Cal. Supreme Ct. March 7, 2022), ruling that lenders owe no tort duty sounding in general negligence principals to borrowers when reviewing loan modification requests. Going forward, this decision will impact litigation of negligence claims against mortgage lenders and servicers in California because it debunks the often-asserted claim for negligence based on allegations that the loan servicer “negligently” processed a loan modification application.

Continue Reading California Supreme Court Rules No Tort Duty of Care Required by Lenders When Considering Borrowers’ Loan Modification Requests

On December 8th, the Consumer Financial Protection Bureau (CFPB) issued the 25th edition of its Supervisory Highlights report, which covers examinations completed in the first half of 2021. The CFPB reported on violations that occurred in the areas of credit card account management, debt collection, deposits, fair lending, mortgage servicing, payday lending, prepaid accounts, and remittance transfers.

The report signals that the CFPB will continue to enhance enforcement actions against mortgage servicers. Since March 2020, the CFPB has prioritized mortgage servicing supervision due to the increase in borrowers applying for and receiving mortgage forbearance under the CARES Act as a result of the COVID-19 pandemic. CFPB examiners found that mortgage servicers unlawfully charged borrowers late fees and default-related fees. Examiners found that mortgage servicers failed to refund some of the fees until almost a year later. The CFPB vowed to continue its work to ensure that all mortgage servicers meet their homeowner protection objections under applicable consumer protection laws. Continue Reading Consumer Financial Protection Bureau Issues 25th Supervisory Highlights

Through a series of recent public comments, top leadership from the Consumer Financial Protection Board (CFPB) is warning that the agency is poised to play an increasingly affirmative role in the oversight of new payments systems, including the technologies and technology companies involved.

Read the full post on Perkins Coie’s White Collar Briefly blog.

Litigation of the Telephone Consumer Protection Act (TCPA) is an active area with frequent developments important to the consumer finance space. Two recent cases are worthy to note. In Loyhayem v. Fraser Fin. & Ins. Servs., Inc., 7 F.4th 1232 (9th Cir. 2021), the U.S. Court of Appeals for the Ninth Circuit held that the TCPA applies not only to “telemarketing” or “advertising” calls, but also to job-recruitment robocalls. In Fischman v. MediaStratX, LLC, No. 20-CV-83, 2021 WL 3559639 (E.D.N.C. Aug. 10, 2021), the Eastern District of North Carolina entered the debate on whether 47 C.F.R. § 64.1200(d) contains a private right of action by holding that it does. Continue Reading Recent Developments in Telephone Consumer Protection Act Litigation

Eviction moratoria are increasingly challenged in the courts. On August 12th, the U.S. Supreme Court issued an order partially enjoining enforcement of New York’s COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (CEEFPA). The Court’s order stressed that it applied only to a provision that bars the eviction of tenants who file a form stating they have suffered economic setbacks due to the pandemic, rather than providing evidence in court.

The Supreme Court determined that the self-certification process, which does not allow landlords the opportunity to be heard or to challenge the tenant’s attestation, “violates the Court’s longstanding teaching that ordinarily ‘no man can be a judge in his own case’ consistent with the Due Process Clause.” See Chrysafis v Marks, 21A8, 2021 WL 3560766, at *1 [US Aug. 12, 2021].

The dissenting opinion, issued by Justice Breyer with Justice Sotomayor and Justice Kagan joining, notes that because New York’s moratorium was set to expire on August 31, 2021, the moving party failed to establish an exigent circumstance justifying an injunction. However, given the recent rise in pandemic-related restrictions, state legislatures may well seek to extend eviction moratoria. In light of this recent decision, legislators will have to weigh the public concern for safety against what the Supreme Court declared a violation of landlords’ due process and implement modifications that balance both concerns.

Citing a surge of COVID-19 cases in July 2021, the Centers for Disease Control and Prevention (CDC) issued a new federal eviction moratorium on August 3, 2021 (Order). The Order is similar to the CDC’s previous eviction moratorium, which expired on July 31, 2021, with one major exception—the Order applies only to U.S. counties that are experiencing “substantial or high” levels of COVID-19 transmission, as defined by the CDC. Based on this standard, the Order currently applies to more than 80% of all U.S. counties. Continue Reading CDC Issues New Federal Eviction Moratorium

At the close of this month, certain moratoria on foreclosures and evictions are set to lift. While prior deadlines have been extended, it remains to be seen whether another continuance will be granted amidst an increase in the spread of the COVID-19 Delta variant.

Last month, the Federal Housing Finance Agency announced that government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac extended their moratorium on single-family foreclosures and real estate owned (REO) evictions from June 30 to July 31. The foreclosure moratorium only applies to homeowners with a GSE-backed, single-family mortgage, and the REO eviction moratorium applies only to properties that have been acquired by the GSEs through foreclosure or deed-in-lieu of foreclosure transactions. The extensions are implemented in Fannie Mae Lender Letter LL-2021-02 and Freddie Mac Guide Bulletin 2021-23.

The CDC also announced an extension of its current moratorium on residential evictions for nonpayment of rent through July 31, noting that “this is intended to be the final extension of the moratorium.”

In conjunction with the Biden-Harris administration and other federal agencies, the FHA also extended its foreclosure and eviction moratoria for all FHA-insured, single-family mortgages, except vacant or abandoned properties, through July 31. The FHA also continued its extension of the deadline for first legal action and reasonable diligence timeframes for 180 days after July 31, 2021, to provide servicers with the additional time needed to focus their work on assisting distressed homeowners.

To assist homeowners who remain at risk of falling behind on their mortgage payments due to COVID-19, the FHA extended the time period for homeowners to start new forbearance plans to September 30, 2021. Homeowners who have not previously been in COVID-19 forbearance can request this pause or reduction in mortgage payments.

The FHA established the COVID-19 Advance Loan Modification, which offers significant payment relief to eligible homeowners. This new home retention option is for those homeowners for whom a 30-year rate and term mortgage modification would bring the mortgage current and reduce the principal and interest portion of their monthly mortgage payment by at least 25 percent.

Finally, to assist seniors with Home Equity Conversion (reverse) mortgages who have been negatively impacted by COVID-19, the FHA is extending the ability for these homeowners to request an extension before the servicer may request that the loan be called due and payable. For extension requests received between July 1, 2021, and September 30, 2021, servicers must grant homeowners an extension of up to six months.

We will keep you posted on any further extensions here.