As state and local governments throughout the country attempt to find a balance between re-opening the economy and sheltering in place, fears persist that the COVID-19 pandemic has already set in motion the next financial crisis. Early in the pandemic, we wrote about various types of debt that might melt down because of increased borrower defaults, including securities backed by student loans, auto loans, and commercial mortgages.[1]…

Mortgage Crisis & Financial Services Watch

Supreme Court Rules CFPB’s Structure Must Be Modified

By Philip R. Stein

June 30, 2020

While declining to rule that the Consumer Financial Production Bureau (CFPB) itself is unconstitutional — a position taken by many of the agency’s opponents since it began operating in July 2011 — the U.S. Supreme Court ruled today, June 29, 2020,that the CFPB’s structure violates the Constitution. In a 5-4 decision, the Court held that the structure put in place when the Dodd-Frank Act created the CFPB unconstitutionally insulates the agency from presidential oversight and…

Mortgage Crisis & Financial Services Watch

Florida’s Uniform Commercial Real Estate Receivership Act – A New Statutory Framework for Receiverships

By Enza G. Boderone & Philip R. Stein

June 8, 2020

In March, the Florida Legislature passed CS/HB 873, approving the Uniform Commercial Real Estate Receivership Act (“UCRERA”). First drafted in 2015 by the Uniform Law Commission, UCRERA has already been adopted by seven states: Arizona, Maryland, Michigan, Nevada, Oregon, Tennessee, and Utah. If Governor DeSantis signs the bill, UCRERA will become effective July 1, 2020, and will be codified under Chapter 714 of the Florida Statutes. With the anticipated large volume of commercial foreclosures…

Mortgage Crisis & Financial Services Watch

Proposed PPP Flexibility Act Would Relax Certain Current Loan Requirements

By Philip R. Stein

June 2, 2020

Businesses that receive forgivable loans through the Paycheck Protection Program (PPP) would get additional time and greater flexibility to make use of those funds under proposed legislation approved last week by the U.S. House of Representatives. By a 417-1 vote, the House passed on for the Senate’s consideration the PPP Flexibility Act. That Act, if it becomes law, would give employers 24 weeks to spend the money and have the loans forgiven. The current permitted…

Mortgage Crisis & Financial Services Watch

As Businesses Re-open, Congress Mulls Shielding Them From Liability

By Philip R. Stein

May 20, 2020

Talk of a broader “re-opening” of the economy has led to a fierce debate in Congress about whether it would be advisable to include, as part of a new COVID-19 legislative relief package, provisions creating certain immunities from potential liability for businesses that re-open. Specifically, some U.S. senators want to insulate companies from liability for claims by employees or customers that their health was compromised by unsafe workplace conditions that the company permitted to exist.…

Mortgage Crisis & Financial Services Watch

Florida Foreclosures Continue To Be Suspended

By Jake Greenberg

May 19, 2020

On May 14, 2020, Florida Governor Ron DeSantis issued Executive Order Number 20-121, extending his April 2, 2020 Executive Order 20-94 suspending all foreclosure actions through June 2, 2020. While the preamble to Governor DeSantis’ Executive Order makes clear that the purpose is to provide temporary relief to Floridians with single-family mortgages, the Executive Order goes further – it suspends all foreclosure actions, including commercial foreclosures. Though the deadline under Governor DeSantis’s Executive Order…

Mortgage Crisis & Financial Services Watch

Government-Mandated Closures, Direct Physical Loss, and the Explosion of Litigation Seeking Business Interruption Insurance Coverage

By Benjamin Mitchel & Philip R. Stein

May 6, 2020

On April 20, 2020, Colorado Governor Jared Polis laid out an ambitious plan to dramatically reduce the restrictions on personal movement and business operations created by last month’s “Stay-at-Home” Order.[1] Dubbed the “Safer-at-Home” Order, this modification (and others like it in various other states) provided a glimmer of hope to citizens who have been largely confined to their residences since March 26. The push to safely restart the American economy does not alter the fact…

Mortgage Crisis & Financial Services Watch

Lawsuits Allege Preferential or Self-Serving Disbursement of PPP Funds by Major Banks

By Philip R. Stein & Kenneth Duvall

May 5, 2020

In response to the severe economic disruptions caused by COVID-19, Congress took unprecedented fiscal steps to inject liquidity into the economy. One of Congress’ most significant actions was the CARES Act, which included the $349 billion Paycheck Protection Program (PPP), providing forgivable loans to businesses to cover payroll expenses.[1] However, the program ran out of money within only two weeks of its launch [2]Congress then replenished PPP funds in a second round of PPP funding that…

Mortgage Crisis & Financial Services Watch

A Resurgence of Residential Mortgage Repurchase Claims on the Horizon

By Philip R. Stein & Enza G. Boderone

May 1, 2020

A surge in repurchase claims against mortgage originators may be imminent as aggregators and servicers face nonpayment of debt obligations and liquidity shortfalls resulting from an increase in residential mortgage loans put in forbearance. In the coming weeks, it is likely that an unprecedented number of borrowers will avail themselves of mortgage relief provided under the CARES Act. As that number rises exponentially, aggregators and servicers, who are responsible for advancing funds on certain types…

Mortgage Crisis & Financial Services Watch

Residential Mortgage Originators Facing Increasing Pressures In the Midst of the Coronavirus Pandemic

By Robert M. Siegel

April 28, 2020

Mortgage loan brokers, correspondents and loan originators (“Originators”) who survived (or, in many cases, are still dealing with) the onslaught of “repurchase/indemnification” claims asserted by loan aggregators and government-sponsored entities (GSEs) (collectively, “Investors”) following the Great Recession are particularly well acquainted with Investors shifting the risk of a loss to the Originators of mortgage loans (“Mortgage Loans”) originated prior to that period. The Investors sought to attribute the fault for what was clearly a global…

Mortgage Crisis & Financial Services Watch

Business and legal issues affecting Banking, Finance and Lending | Credit | Securities and Investing | E-Commerce

Blog Authors

COVID-19, Economic Crisis Put Pressure on CLOs

Supreme Court Rules CFPB’s Structure Must Be Modified

Florida’s Uniform Commercial Real Estate Receivership Act – A New Statutory Framework for Receiverships

Proposed PPP Flexibility Act Would Relax Certain Current Loan Requirements

As Businesses Re-open, Congress Mulls Shielding Them From Liability

Florida Foreclosures Continue To Be Suspended

Government-Mandated Closures, Direct Physical Loss, and the Explosion of Litigation Seeking Business Interruption Insurance Coverage

Lawsuits Allege Preferential or Self-Serving Disbursement of PPP Funds by Major Banks

A Resurgence of Residential Mortgage Repurchase Claims on the Horizon

Residential Mortgage Originators Facing Increasing Pressures In the Midst of the Coronavirus Pandemic

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