Financial Services Perspectives

Regulatory, compliance, and litigation developments in the financial services industry

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The United States Department of Housing and Urban Development (HUD) recently announced charges against social media company Facebook for violating the Fair Housing Act (42 U.S.C. 3601-3619 and 3631). The charges derive from Facebook enabling housing advertisers to target Facebook users based on protected class status: race, nationality, religion, color, familial status, sex, and disability. HUD Secretary Ben Carson, in a March 28, 2019 press release, stated that “Facebook is discriminating against people based…
The Consumer Financial Protection Bureau’s (CFPB) new Prepaid Rule went into effect on April 1, 2019. At a high level, the Prepaid Rule amends portions of the Truth in Lending Act and the Electronic Funds Transfer Act by extending a number of credit card-like protections to “prepaid accounts”: pre-acquisition and initial disclosures, change in terms notices, periodic statements, error resolution procedures, and regulating overdraft credit features. While each of these areas warrant close scrutiny to…
Part IV: Modifications Post-Discharge Welcome to Part IV of our series on servicing discharged mortgage debt. This part will discuss modifying a borrower’s loan post-discharge. (If you missed Part I, Part II or Part III, go ahead and catch up.) Part III discussed the legal ambiguity surrounding loan modifications when the borrower discharges personal liability in bankruptcy. However, as a practical matter, regulators, investors, and many bankruptcy courts expect lenders and servicers to evaluate…
In courts across the country, servicers are facing off against states and borrowers over the extent to which federal laws preempt state regulation of federal student loan servicers. Numerous states have stepped up their enforcement activity against student loan servicers and begun enacting new laws aimed at regulating student loan servicing, partially in response to what the states view as a slowdown in federal oversight. Some servicers of federal student loans, pushing back against the…
Legislation that would pave the way for financial institutions to transact with cannabis-related businesses operating in states that have legalized marijuana (herein “cannabis-related legitimate businesses”) is quickly working its way through the House of Representatives. The SAFE Banking Act of 2019 was introduced in the House by Rep. Ed Perlmutter (D-CO) on March 7, 2019. The bill is co-sponsored by 158 representatives—15 Republicans and 143 Democrats, representing over a third of the House. On March…
Amidst privacy concerns and booming technological innovation, Sens. Roy Blunt (R-Mo.) and Brian Schatz (D-Hawaii) have introduced a bill proposed as the “Commercial Facial Recognition Privacy Act of 2019” (CFRPA) targeting arguably the most “personal” biometric identifier—our face. While several states have enacted legislation relating to protection of biometric identifiers, this is the first federal legislation targeted at consumer protection using biometrics, namely facial recognition (FR). The purpose of the bill is to…
As lenders and servicers continue to litigate in Nevada’s state and federal courts about the effect of homeowner associations’ (HOAs) foreclosure sales, some questions have proven particularly sticky. What happens when a lender mails in a check to an HOA for its superpriority lien, but the check is refused? How about when the lender offers to pay the superpriority lien, but the HOA indicates that a payment will not be accepted? In our last post
On October 17, 2018, the Consumer Financial Protection Bureau (CFPB) released its Fall 2018 rulemaking agenda. Among the items on the agenda was the CFPB’s planned issuance – by March 2019 – of a Notice of Proposed Rulemaking (NPRM) for the Fair Debt Collection Practices Act (FDCPA). The goal of the NPRM is to address industry and consumer group concerns over “how to apply the 40-year old [FDCPA] to modern collection processes,” including communication practices…
The Arkansas State Legislature modified the Fair Mortgage Lending Act in February to “comply with recent developments in Federal Law and other purposes.” Federal law was recently amended to allow for Temporary Mortgage Loan Originator (MLO) Authority as defined under the Economic Growth, Regulatory Relief, and Consumer Protection Act or S.2155. The “other purposes” reason in the Arkansas law modification appears to be the easing of several regulatory burdens. The industry should embrace these changes…
Since Kathleen Kraninger was confirmed as the Director of the Consumer Financial Protection Bureau (CFPB) on December 6, 2018, six enforcement actions have been publicly resolved. Those cases have involved various types of defendants, and have covered a broad range of conduct that allegedly violated federal consumer financial law. Individuals, a federally chartered savings association, an online lender, offshore and domestic payday lenders, and a jewelry retailer have all been subject to the CFPB’s enforcement…