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The Consumer Financial Protection Bureau has issued yet another suite of regulatory changes related to mortgage servicing. The rules add additional protections for borrowers—and therefore increased requirements for servicers—as well as clarify certain issues that have been the subject of questions and confusion by servicers.
Continue Reading New CFPB Mortgage Servicing and Loss Mitigation Rules to Take Effect in 2017 and 2018; New FDCPA Safe Harbor CFPB White Paper May Signal More to Come from CFPB on Loss Mitigation

The Consumer Financial Protection Bureau (“CFPB”) announced yesterday at a field hearing in Sacramento, California, that it is considering several potential approaches to issuing rules on debt collection. The CFPB would take this action pursuant to its authority under the Dodd-Frank Act to issue regulations implementing the Fair Debt Collection Practices Act (“FDCPA”) as well as to issue regulations prohibiting unfair, deceptive, and abusive acts and practices. This rulemaking would mark the first time regulations would be issued to implement the FDCPA, and it is likely to have significant effects on the debt collection industry.
Continue Reading CFPB Releases Outline of Proposals for Debt Collection Rules

In an important ruling for debt collectors, the Ninth Circuit Court of Appeals held in Hernandez v. Williams, Docket No. 14-15672 (2016), that the failure of a debt collector (successor or otherwise) to send its own “validation notice” under 15 U.S.C. §  1692g(a) to a consumer violates the Fair Debt Collection Practices Act (“FDCPA”), specifically 15 U.S.C. § 1692g, even when a prior debt collector sent its own validation notice to the same person. In doing so, the Court reasoned that placing the requirement on any and all debt collectors involved was in line with the consumer-protection purpose of the FDCPA.
Continue Reading Ninth Circuit Holds That Each Debt Collector Must Send to the Consumer Disclosures After Its Own Initial Communication Under the Fair Debt Collection Practices Act (FDCPA)

As the clock ticks toward the July 22 comment deadline for the proposed Dodd-Frank incentive compensation rules, entities that may be covered by the rules continue to evaluate the potential effects on their operations and their compensation practices. The rules could significantly affect how financial institutions provide incentive-based compensation to their employees. As proposed, the rules would impose obligations such as lengthy clawback periods; deferral of compensation; limitations on “excessive” compensation; specific governance requirements; and long recordkeeping periods.
Continue Reading Insurance Companies – Are You Covered? The Dodd-Frank Proposed Rules on Incentive-Based Compensation

After much anticipation, the Consumer Financial Protection Bureau (“CFPB”) has released its proposed small-dollar lending rule. Spanning 1,334 pages in length, the proposal marks the first time the CFPB has exercised its authority to issue regulations prohibiting unfair, deceptive, or abusive acts or practices (“UDAAP”). Until now, the CFPB has elected to define UDAAP through its enforcement actions. And despite the proposal’s length, it does not appear that it fully covers the waters of consumer credit in the CFPB’s sights. Accompanying the proposed rule is a Request for Information (“RFI”) asking additional questions about certain other high-cost, longer-term installment loans and open-end lines of credit, raising the possibility of additional rulemakings in the future.
Continue Reading The CFPB’s Small-Dollar Lending Proposal: First UDAAP Rulemaking Proposal Hits the Streets

Illinois recently amended its data breach notification law, joining a number of states that have also amended their own breach notification statutes this year. States appear to be looking to strengthen their breach notification laws by expanding the definition of “personal information” covered by the laws, clarifying the role of encryption in providing a safe harbor, and redefining content and timing requirements for notifications provided to affected persons.
Continue Reading Illinois Strengthens Data Breach Notification Statute

On May 20, 2016, the Supreme Court of Texas decided two cases that arise from the requirements of Article XVI, Section 50 of the Texas Constitution regarding provisions related to home-equity loans. The opinions have great significance for mortgage servicers, originators, and title insurers that deal with Texas home-equity loans. Claims related to origination defects, once believed barred on limitations grounds, are now fair game for the life of the loan and will undoubtedly create a new incentive for borrowers to challenge the validity of lien securing their home-equity loan.
Continue Reading Texas Supreme Court Opens Door to Home-Equity Lien Challenges

In an important ruling for debt-collection law firms, the United States Supreme Court held in Sheriff et. al v. Fillie et. al, Docket No. 15-338 (2016), that when a debt-collection firm is hired by the Attorney General to collect debts on behalf of the State, use of the Attorney General’s letter head does not violate the Fair Debt Collection Practices Act (“FDCPA”). In doing so, the Court reasoned that the letters did not contain false information or misleading representations.
Continue Reading Supreme Court Holds That Debt-Collecting Law Firms Delegated as Special Counsel Do Not Violate FDCPA by Using Attorney General’s Letterhead

A Supreme Court ruling this week should give creditors a powerful tool to collect their debts from debtors who try to transfer assets before seeking bankruptcy protection. The primary reason an individual may turn to personal bankruptcy is to protect assets from creditor collection while obtaining a “discharge” from debts. Such protection is increasingly necessary where an individual is being pursued by one or more creditors, particularly where those creditors may have obtained (or are about to obtain) judgments against the individual. Once a debtor obtains a discharge in bankruptcy, creditors are prohibited from continuing to pursue collection efforts against the debtor. The Bankruptcy Code generally favors “fresh starts” for honest debtors, but there are several important exceptions to this general rule. Section 523(a) of the Bankruptcy Code contains at least 19 such exceptions, ranging from exceptions for unpaid taxes to exceptions for judgments arising from securities law violations. One of the more frequently litigated discharge exceptions is the “actual fraud” exception under section 523(a)(2)(A) of the Bankruptcy Code. That issue was front and center in Husky International, Inc. v. Ritz, 15-145 (May 16, 2016) (slip op.)
Continue Reading Fraudulent Transfer Judgments May Survive a Debtor’s Bankruptcy Filing: Supreme Court Clarifies Meaning of “Actual Fraud”