California Lawyers Association

Business Law Consumer Financial Services Committee

Updates from the BLS Consumer Financial Services Committee

On December 17, 2015, the Consumer Financial Protection Bureau (“CFPB”) ordered auto dealer CarHop (and its affiliated financing company) to pay a $6.4 Million civil penalty for allegedly providing “damaging, inaccurate, consumer information to credit reporting companies.”  Carhop was the subject of a CFPB investigation in which the CFPB alleged both parties violated the Fair Credit Reporting Act and the Consumer Financial Protection Act by specifically: Deceiving customers into believing they would be able to build and maintain good credit… Read more
On December 14, 2015, the U.S. Supreme Court once again upheld the enforceability of class waivers in arbitration agreements. In DIRECTV, Inc. v. Imburgia, the Supreme Court reversed a California Court of Appeal's refusal to enforce an arbitration agreement waiving the right to bring class arbitration claims.  The arbitration agreement at issue included a class arbitration waiver specifying that the entire arbitration agreement was unenforceable if the "law of your state" made class arbitration waivers unenforceable. The agreement also declared that… Read more
The Department of Justice announced a proposed resolution of lending discrimination claims asserted against Sage Bank.  In a complaint filed in the United States District Court for the District of Massachusetts, the Department of Justice alleged that Sage Bank employed a pricing system which resulted in African-American and Hispanic borrowers paying higher prices than similarly-situated white borrowers for residential mortgage loans.  Among other challenged elements of the pricing system, the bank allegedly allowed loan officers the discretion to price loans without… Read more
FHA Handbook: Last week, the Federal Housing Administration issued an updated handbook consolidating its guidance for lenders into a single resource. The updated resource is distinct from FHA’s effort to update its servicing manual. Comments on servicing changes are due Oct. 17. See updated handbook HMDA Data: In addition, Home Mortgage Disclosure Act data for 2013 is now available at http://www.consumerfinance.gov/hmda/. HMDA data is collected from financial institutions and includes statistics on applications, originations, denials, and loan purchases and sales, and breaks… Read more
On July 14, 2014, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit in federal district court against law firm Frederick J. Hanna and Associates and three of its partners. The action alleges that the firm, which filed more than 350,000 debt collection lawsuits in Georgia alone between the years 2009 and 2013, violated the Fair Debt Collection Practices Act (FDCPA) as well as the Dodd-Frank Wall Street Reform and Consumer Protection Act by operating “less like a law firm… Read more
The complaint was recently unsealed in a Qui tam action, where plaintiff and Texas resident Michael Fisher brought a $1 Billion dollar whistleblower action against Wells Fargo Bank N.A. under the False Claims Act. The complaint was filed in the United States District Court for the Southern District of New York. From 2008-2012, Fisher worked for law firms assisting with loan modifications relating to residential property mortgage loans made by Wells Fargo and other servicers or lenders. In 2009, the… Read more
On May 14, 2014, the Office of Mortgage Settlement Oversight released its Compliance in Progress report summarizing the six compliance reports filed with the United States District Court for the District of Columbia. These reports are required by the February 9, 2012 national mortgage settlement reached between the attorneys general of 49 states and the District of Columbia (every state except Oklahoma), the federal government and five banks and mortgage servicers – Ally/GMAC, Bank of America, Citibank, J.P. Morgan Chase… Read more
The Consumer Financial Protection Bureau issued its latest Supervisory Report this week, highlighting in particular the types of unfair and deceptive practices found by CFPB examiners to have been committed during the reporting period July – October 2013 by mortgage servicers. These practices were uncovered by examiners in connection with: servicing transfers; waivers of rights in loss mitigation agreements; payment processing; furnishing information to consumer reporting agencies; and other issues arising in servicing of defaulted loans. The CFPB adds that… Read more
Today the Consumer Financial Protection Bureau (CFPB) filed a complaint and proposed consent order with the United States District Court for the Southern District of Florida against Republic Mortgage Insurance Company (RMIC) for allegedly paying kickbacks for mortgage insurance referrals.  CFPB Director Richard Cordray stated that kickbacks are illegal and “can drive up costs for consumers seeking to buy a home.” The CFPB alleges that RMIC violated federal consumer financial law by providing kickbacks to lenders in exchange for referrals… Read more
On October 24, 2013, the Consumer Financial Protection Bureau (CFPB) further demonstrated how it is taking up the Department of Housing and Urban Development’s (HUD) mantle as the defender and enforcer of the Real Estate Settlement Procedures Act (RESPA). Read more

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