On December 30, 2022, New York Governor Kathy Hochul signed into law the Foreclosure Abuse Prevention Act (FAPA) after the bill’s passage by both the New York state senate and the assembly. FAPA is a direct response to a New York Court of Appeals decision, Freedom Mortg. Corp. v Engel, 37 N.Y.3d 1, reargument denied, 37 N.Y.3d 926 (2021) that seemingly gave lenders the right to unilaterally restart foreclosures and avoid a statute of limitations bar. FAPA seeks to curb a lender’s right to toll or extend the limitations period by amending existing state laws that affect the tolling of the limitations period for foreclosure actions and a lender’s use of New York’s saving statute to preserve the statute of limitations on an otherwise time-barred debt.

Continue Reading The Foreclosure Abuse Prevention Act is Now Law

The Consumer Financial Protection Bureau has survived many constitutional challenges since it was created by the Consumer Financial Protection Act, 12 U.S.C. §§ 5481, et seq. (the “Act”), in 2011.[1]  But on October 19, 2022, the CFPB suffered a setback in the wake of the Fifth Circuit’s decision in Community Financial Services Association of America, Ltd. v. CFPB, No. 21-50826, (5th Cir. 2022).

In a unanimous decision, the Fifth Circuit held that “Congress’s decision to abdicate its appropriations power under the Constitution, i.e., to cede its power of the purse to the Bureau, violates the Constitution’s structural separation of powers.”

Continue Reading CFPB Files Petition for Writ of Certiorari Seeking Expedited Review of Fifth Circuit Decision Finding Funding Structure Unconstitutional

On May 16, 2022, the Consumer Financial Protection Bureau (CFPB) published its second metrics report as part of its ongoing supervisory monitoring of mortgage servicers’ COVID-19 pandemic response. The data collected is part of the Bureau’s metrics requests to sixteen servicers representing “a broad cross-section of the mortgage servicing industry.” The first report, published in August 2021, covered the period from December 2020 through April 2021. 

Continue Reading CFPB’s May 2022 Mortgage Servicers Metrics Report

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