On June 12, 2017, Judge Gorsuch issued his first written opinion since taking the bench on the Supreme Court. In Henson vs. Santander Consumer USA, the Supreme Court ruled unanimously that a company that purchases defaulted loans and then attempts to collect on those loans is not a “debt collector” under the FDCPA because the company is not attempting to collect a debt owed or due to another. This ruling resolves a split in the Circuit…
In Judge Gorsuch’s first opinion, the U.S. Supreme Court rules that an entity that purchases debt and then collects that debt is not a “debt collector.”
U.S. Supreme Court Refuses To Apply FDCPA To Purchasers Of Debt But Leaves Potential Arguments For Applicability Undecided
The Fair Debt Collection Practices Act (“FDCPA”) authorizes private lawsuits and fines to deter abusive collection efforts by “debt collectors”—a term defined under 15 U.S.C. §1692a(6) to include anyone who “regularly collects or attempts to collect … debts owed or due … another.” In the June 12, 2017 opinion in Henson et al. v. Santander Consumer USA Inc., the United States Supreme Court ruled that those who purchase debt and seek to collect on the…
Can An Unexecuted Loan Modification Coupled With Performance Satisfy The Statute Of Frauds? A Simple Step Can Help Your Financial Institution Avoid Being The First To Find Out In Texas.
No Texas Court has considered whether a written offer to enter into a loan modification satisfies the requirement under Texas law—known as the statute of frauds—that all loan agreements over $50,000 must be in writing and signed by the party to be bound. However, the Fifth Circuit’s June 5, 2017 opinion in Owens v. Specialized Loan Servicing, L.L.C. mentions this issue and leads to the suggestion that lenders and servicers include language in modification documents…
Fifth Circuit Confirms That Constitutionally Non-Compliant Home Equity Liens Are Invalid And That No Statute Of Limitations Applies To A Quiet Title Action Alleging Such Violations
The Fifth Circuit recently confirmed that lenders and/or servicers cannot raise the statute of limitations as a defense where borrowers claim that a home equity loan fails to comply with the Texas Constitution. In Ocwen Loan Servicing v. Robert M. Berry, the Fifth Circuit vacated and remanded a summary judgment granted in favor of Ocwen Loan Servicing (“Ocwen”) in relation to a Texas home equity loan. In 2007, Robert Berry took out a home equity…
Third Circuit Ruling Could Reduce Value Of Modified Loans Serviced Under Fannie Mae And Freddie Mac Guidelines
The value of modified home loans serviced under Fannie Mae and Freddie Mac guidelines could be diminished by a March 9, 2017 ruling against JP Morgan Chase Bank in Fried v. JP Morgan Chase & Co., No. 16-3069, 2017 WL 929752 (3d. Cir. Mar 9, 2017). The ruling calls into question the manner in which the termination deadline for private mortgage insurance (“PMI”) should be calculated. But more significantly, it creates questions regarding the value…
Seventh Circuit Finds That Bank May Have Right To Sue Its Regulator Over Camels Rating
In the summer of 2016, Builders Bank of Chicago, Illinois was informed that its Camels rating—a risk-profile metric assigned by banking regulators—had reached a 4. This is the threshold at which a financial institution is considered a “problem bank” by regulators and has a significant impact on the insurance premium paid by the financial institution. But Builders Bank did not accept its Camels rating and took the unusual action of filing suit against the Federal…
New York Cybersecurity Regulations Impacting Financial Services Companies And Their Vendors Are Effective March 1, 2017 And Likely Foreshadow Forthcoming Regulations In Other States.
“First-in-the-nation” regulations issued by the New York Department of Financial Services (“NYDFS”) which require that financial services companies implement cybersecurity programs are effective March 1, 2017 and will phase in over a period of two years. The NYDFS regulations specifically apply to financial services firms that operate under a license, registration, charter, certificate, permit, accreditation or similar authorization by the NYDFS. The list of affected parties includes banks, credit unions, insurance companies, licensed lenders and…
The Consumer Review Fairness Act Impacts Form Consumer Contracts Used by Financial Services Companies.
This blog previously addressed the Consumer Financial Protection Bureau’s (“CFPB”) complaints database. Each week the CFPB receives and publishes thousands of consumer complaints about financial products and services. But what if financial services companies included nondisparagement or similar language in their consumer loan documents prohibiting CFPB complaints or negative online reviews? This sort of language may be covered by the Consumer Review Fairness Act. The Consumer Review Fairness Act makes any provision of a form…
Regional and community banks: proposed federal cybersecurity regulations don’t apply to you (yet) but do offer valuable strategies.
Executive summary Federal regulators have issued an advance notice of new proposed cybersecurity standards. The notice invites comment on enhanced cybersecurity standards for regulated entities with total assets of $50 billion and certain of their service providers. The potential new standards don’t apply (yet) to regional or community banks. But those banks should consider implementing aspects of the proposed standards into their cybersecurity practices, consistent with their resources and perceived risks. Specifically, the proposed standards…
The Supreme Court Will Answer Whether Collection of Time-Barred Debt in Bankruptcy Violates the Fair Debt Collection Practices Act
Lots of people and companies buy old debt—for example, hedge funds, private equity firms, and even some commercial bank affiliates. Typically, this is debt that the original creditor has charged off and sold for a fraction of the legal balance. In some cases, the debt has grown so old that a statute of limitations makes it technically unenforceable. But that doesn’t always stop the debt buyer from attempting collection. A few weeks ago, Jeff Novel…