Ben Purser, chief risk officer for mortgage lender, Roundpoint Mortgage Servicing Corporation, and Barak Cohen, partner in Perkins Coie’s White Collar & Investigations practice and lead for the firm’s Commercial Litigation in Washington, D.C., discuss the challenges of legal compliance and risk in an industry that has been directly affected by two global financial crises in one decade. Ben has 34 years of experience in financial services, including service as chief audit executive in two public companies, chief compliance officer in the Troubled Asset Relief Program (TARP) at the U.S. Department of the Treasury, and chief risk officer at two different mortgage companies. Barak is a former corruption prosecutor who has both conducted government investigation in the financial services industry and represented clients in the industry. Drawing on their unique insider perspectives, Ben and Barak discuss the delicacy of balancing consumer needs against profitability, and whether regulators, particularly today, address or impede achieving this equilibrium. In the wide-ranging discussion, Ben and Barak touch on anticipated CARES Act investigations and how these may compare to TARP oversight; managing conflicting guidance from state and federal regulators; and predictions for imminent enforcement in the wake of the coronavirus stimulus funds. They cap their discussion with straightforward advice for companies in the industry that are navigating the uncharted path of legal compliance in the current global pandemic.

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On June 20, 2020, Oregon Governor Kate Brown signed House Bill 4204 into law. The bill requires lenders to defer loan payments and refrain from enforcing default remedies on certain secured obligations during the “emergency period” beginning March 8, 2020, and ending September 30, 2020, unless modified by the governor. In this update, we outline the impacts of the bill on borrowers and lenders, and considerations moving forward.

Click here to read the full update.

The Federal Fair Debt Collection Practices Act (FDCPA) is the leading debt collection practices act, serving as the lynchpin of federal consumer protections in the area of debt collection as well as serving as a model for numerous state enactments. Not surprisingly, litigation often focuses on the crucial questions of who is a “debt collector” and what is “debt collection” for purposes of the FDCPA. This area of law has received close scrutiny in recent years with published cases from the U.S. Supreme Court and the U.S. Court of Appeals for the Ninth Circuit.

In Obduskey v. McCarthy & Holthus LLP, the Supreme Court had to decide whether “one principally involved in ‘the enforcement of security interests’ is . . . a debt collector” for purposes of the FDCPA. Obduskey v. McCarthy & Holthus LLP, 139 S. Ct. 1029, 1031 (2019). The Court concluded that the statutory language of the FDCPA’s definition of “debt collector” places:

Continue Reading The Ninth Circuit Clarifies Its Approach in FDCPA Cases Concerning Foreclosure

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, in response to the national emergency arising from the COVID-19 pandemic. Four key provisions of the CARES Act are likely to affect mortgage loan servicers: (1) credit protection; (2) a moratorium on foreclosures; (3) forbearance on mortgage payments; and (4) a moratorium on eviction filings. Compliance with the CARES Act may be straightforward for moratoriums but more challenging for credit reporting and regulatory compliance. This post provides an updated summary of salient portions of the CARES Act and identifies potential regulatory compliance pitfalls. Continue Reading CARES Act Regulatory Considerations for Mortgage Servicers

Under California’s Homeowner Bill of Rights (HBOR), if a borrower obtains injunctive relief or is awarded damages pursuant to Civil Code Section 2924.12(h), the court may award the prevailing borrower reasonable attorney’s fees and costs.

In cases where the court ultimately determines that the mortgage lender or servicer violated the provision of the HBOR outlined in Civ. Code Section 2924.12(a)(1) and (b), the borrower would undoubtedly be entitled to recover attorney’s fees and costs.  However, HBOR does not make clear whether the borrower would be entitled to attorney’s fees and costs in cases where the borrower applies for injunctive relief before the court makes an ultimate decision on the merits of the case. Specifically, the statute does not clarify when (i.e., in what phase of the litigation) the borrower is entitled to an award of fees and costs, nor does it distinguish between permanent and preliminary injunctions. And in the few iterations of the HBOR since it became effective in 2013, Civil Code Section 2924.12 has remained largely unaltered, substantively, on attorney fee and costs rewards for injunctive relief. Continue Reading California’s Third District Court of Appeal Expands a Borrower’s Right to Attorney’s Fees Under the Homeowner Bill of Rights

In response to the COVID-19 pandemic, the federal and state governments as well as many local governments have established regulations to temporarily suspend foreclosure and eviction activities. Perkins Coie has created an easy-to-use state-by-state guidance tracker for eviction and foreclosure orders related to COVID-19.

In response to the ongoing coronavirus pandemic, New York’s Governor Andrew Cuomo issued two executive orders since March 20, 2020, suspending the state’s statute of limitations for the commencement of new court cases until May 7, 2020. Executive Order 202.14; Executive Order 202.8.

Likewise, New York’s Office of Court Administration issued two memoranda suspending, among other things, the filing of new nonessential matter complaints until further notice, effective March 22, 2020. Administrative Order; Administrative Memorandum. Although foreclosures were not specifically addressed, they were left out of the defined “essential” matters.

The foregoing actions by the governor and the Office of Court Administration have more teeth than the industry letter issued by the New York Department of Financial Services on March 19, 2020. Industry Letter. Specifically, the New York Department of Financial Services issued an industry letter “urging” all regulated and exempt mortgage servicers to postpone foreclosures for ninety (90) days. For the reasons set forth below, loan servicers would do well to closely track the rapidly changing industry directives as they relate to the commencement of new foreclosure actions in the New York state courts.

In New York, “[w]here the commencement of an action has been stayed by a court or by statutory prohibition, the duration of the stay is not a part of the time within which the action must be commenced.” CPLR 204(a). CPLR 204. Accordingly, while foreclosure cases may be administratively delayed because they are not deemed “essential” and/or because the guidance from the Department of Financial Services is heeded by would-be foreclosing plaintiffs, the ability to suspend the statute of limitations pursuant to CPLR 204(a) is only available, absent an additional extension, until May 7, 2020.

Thus, if May 7, 2020, comes and goes without a new executive order further tolling the statute of limitations for the commencement of a new action, it will be essential for a statute of limitations analysis to be completed before voluntarily delaying the commencement of a New York foreclosure during the ongoing coronavirus pandemic. Guidance like the industry letter from the Department of Financial Services cannot act alone as a bar to the commencement of foreclosures and therefore will likely be unavailable as the basis to suspend the statute of limitations pursuant to CPLR 204(a).

A more thorough analysis of the New York statute of limitations to foreclose, and exceptions to same, is available here.

The California Consumer Privacy Act (CCPA) went into effect on January 1, 2020. Although enforcement cannot begin until July, private plaintiffs have started to bring claims under the law’s limited private right of action since the beginning of the year. Despite the CCPA going into effect just three months ago, it is already having an impact on litigation with two high profile cases alleging violations of the CCPA. This privacy quick tip aims to paint a broader picture of how the CCPA has been referenced in litigation and identify a few potential trends to watch.

As companies across all industries including consumer finance, prepare to face the widespread economic effects of the coronavirus (COVID-19) pandemic, ensuring access to liquidity during this time is a key strategy in addressing the challenges posed by COVID-19. This update provides guidance to companies evaluating whether and when to borrow on an existing line of credit.

Read the full update here.

California Governor Newsom issued Executive Order N-28-20 (order) on March 16, 2020, to assist Californians experiencing financial hardship. The order implements measures specifically aimed at helping those that have lost their source of income due to business closures or layoffs in the wake of COVID-19. The governor’s directives focus on freezing evictions and foreclosures through May 31, 2020.

Read the full update here.