In 2020, the Consumer Financial Protection Bureau (CFPB) promulgated 12 C.F.R. § 1006.26, amending Regulation F, to implement and interpret the Fair Debt Collection Practices Act (FDCPA). It will become effective on November 30, 2021. Section 1006.26 prohibits debt collectors from bringing or threatening to bring legal action to collect a time-barred debt. Whether a debt is time-barred depends on the applicable statute of limitations under state law. To clarify this rule, the CFPB defines two terms not defined in the FDCPA: “statute of limitations” and “time-barred debt.” “Statute of limitations” means the period prescribed by applicable law for bringing a legal action against the consumer to collect a debt. “Time-barred debt” means a debt for which the applicable statute of limitations has expired. Continue Reading Strict Liability for Debt Collectors Attempting to Collect a Time-Barred Debt Through Litigation
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.
On July 21, Acting Director Dave Uejio celebrated the 10-year anniversary of the Consumer Financial Protection Bureau (CFPB) by giving prepared remarks highlighting the CFPB’s activities over the past 10 years in enforcement, consumer empowerment, and racial equity, as well as its response to the COVID-19 pandemic. Uejio advised that the CFPB’s enforcement and supervision work has resulted in approximately $14.4 billion in consumer relief and that its enforcement actions have resulted in $1.7 billion in civil penalties; however, he notes that there is much more to be done in enforcement. Continue Reading The Consumer Financial Protection Bureau Celebrates 10-Year Anniversary
In Hunstein v. Preferred Collection and Management Services, Inc., 994 F.3d 1341 (11th. Cir. 2021), the Eleventh Circuit held that a debt collector’s communication of a consumer’s personal information to a third party print vendor violated the Fair Debt Collection Practices Act’s prohibition on third party communications in connection with debt collection under 15 U.S.C. § 1692c(b).
Hunstein will likely require major operational changes for many loan servicers. At a minimum, loan servicers who qualify as a “debt collector” under the FDCPA should rethink how to utilize third party vendors for such basic operations as printing and higher functions such as loss mitigation. Although it is theoretically possible to continue using such vendors without communicating the personal information of the consumer, the efficiencies of using such vendors will be diminished. The short term solution to avoid exposure under Hunstein will likely entail bringing such services in house—a major shift in industry practices. Continue Reading 11th Circuit Issues FDCPA Decision That Could Dramatically Impact Mortgage Servicers Operations
The Office of the Comptroller of the Currency’s (the OCC) True Lender Rule is all but repealed. On May 11, 2021, the U.S. Senate voted to approve a joint resolution to repeal the True Lender Rule under the Congressional Review Act (the CRA). The House is expected to pass the measure and the president has expressed support for the resolution. Continue Reading The True Lender Rule: One Step Closer to Repeal
Today the Consumer Financial Protection Bureau (CFPB) issued an interim final rule supporting the Centers for Disease Control and Prevention’s (CDC) temporary eviction moratorium. The CDC’s temporary eviction moratorium has been extended through June 30, 2021 based on the current and projected epidemiological context of SARS-CoV-2 transmission throughout the United States. The CDC order generally prohibits landlords from evicting tenants for non-payment of rent if the tenant submits a written declaration that they are unable to afford full rental payments and would likely become homeless or have to move into a shared living setting. This prohibition applies to an agent or attorney acting as a debt collector on behalf of a landlord or owner of the residential property. Continue Reading The CFPB Issues Interim Final Rule Clarifying that Tenants Can Hold Debt Collectors Accountable for Illegal Evictions
On April 5th, the CFPB proposed a set of rule changes intended to prevent foreclosures as emergency federal foreclosure protections expire this summer. Given that the expected surge of borrowers exiting forbearance in the fall will put mortgage servicers under strain, the proposed rules seek to ensure that servicers and borrowers work together to prevent foreclosures.
The proposed rules intend to:
- Give borrowers time: The proposed rules provide a special pre-foreclosure review period that would generally prohibit servicers from starting foreclosure until after December 31, 2021.
- Give servicers options: The proposed rules permit servicers to offer certain streamlined loan modification options to borrowers with COVID-19-related hardships based on the evaluation of an incomplete application. This provision would only be available for modifications that do not increase a borrower’s monthly payment and that extend the loan’s term by no more than 40 years from the modification’s effective date.
- Keep borrowers informed: The proposed rules provide temporary changes to certain required servicer communications to make sure that borrowers receive key information about their options at the appropriate time.