The Consumer Financial Protection Bureau has released a proposal to prohibit creditors from using arbitration clauses to block class action litigation. The Bureau’s proposed ban is not surprising. However, it will only impact arbitration agreements concerning covered consumer financial products or services entered into after its effective date. Arbitration Clauses and Class Action Waivers Arbitration is an effective means for consumers to vindicate their claims in an informal setting. Through the informal setting of arbitration, consumers are not restricted by court rules of evidence and procedure that could otherwise limit or even prevent the assertion of particular claims or the use…
The District Court of Appeal of Florida, Fifth District, recently held that the trial court erred in ruling that a mortgagee failed to comply with the pre-foreclosure notice requirements of the mortgage, as the mortgagee’s default notice substantially complied with the mortgage and did not prejudice the borrower. The Court also held that testimony by the current loan servicer’s employee with regard to a prior loan servicer’s business records established sufficient foundation for the prior servicer’s records to be admitted into evidence as business records under Florida law. A copy of the opinion in The Bank of New York Mellon v.…
The U.S. Court of Appeals for the Fourth Circuit recently affirmed the dismissal of a borrower’s lawsuit against a bank, holding that the district court correctly found that sale orders entered in a prior bankruptcy case were res judicata and precluded the borrower’s new claims. A copy of the opinion in Providence Hall Associates v. Wells Fargo Bank, N.A. is available at: Link to Opinion. A Virginia-based limited partnership owned real property in several states, and entered into a line of credit and loan secured by deeds of trust or mortgages. The borrower defaulted and filed for bankruptcy protection under Chapter…
The Illinois Appellate Court, First District, recently affirmed a trial court’s denial of a borrower’s motion to vacate a default judgment of foreclosure and sale, rejecting the borrower’s argument that the mortgagee failed to comply with certain Home Affordable Modification Program (HAMP) guidelines. A copy of the opinion in Wells Fargo Bank, N.A. v. Hansen is available at: Link to Opinion. In January 2007, the borrower executed a mortgage in the amount of $360,000, which was later assigned to the mortgagee. In December 2008, the mortgage filed a complaint seeking to foreclose due to default beginning in August 2008. The mortgagee…
The District Court of Appeal of the State of Florida, Fourth District, recently affirmed the trial court’s dismissal of the borrowers’ permissive counterclaims based on violations of the Florida Unfair Trade Insurance Practices Act (FUTIPA) in connection with an alleged “force-placed insurance scheme,” as the allegations were barred by the applicable four-year statute of limitations. The Court upheld the dismissal of the borrowers’ remaining compulsory counterclaims without prejudice for lack of jurisdiction, as the compulsory counterclaims were not appealable until a final disposition of the original case was obtained on the merits. A copy of the opinion in 4040 Ibis Circle,…
The District Court of Appeal of the State of Florida, Fifth District, recently affirmed a final judgment of foreclosure in favor of a mortgagee, holding that: a) the trial court did not abuse its discretion in determining that the bank’s witness was competent to testify about and in admitting the prior servicer’s loan history records into evidence; b) the default letter was not defective because it substantially complied with paragraph 22 of the mortgage; and c) the borrowers failed to present competent evidence that the loan was subject to Federal Housing Administration (FHA) regulations governing the servicing of federally insured…
The U.S. District Court for the Eastern District of North Carolina recently rejected a defendant’s arguments that its contract with the plaintiff did not allow revocation of prior express consent under the federal Telephone Consumer Protection Act (TCPA), and that the defendant’s telephone communication system was not an “automatic telephone dialing system” under the TCPA. A copy of the opinion in Cartrette v. Time Warner Cable, Inc. is available at: Link to Opinion. In 2013, the plaintiff requested that the defendant install cable services at her home, and agreed to a services agreement that included a paragraph titled, “Robo-Calls,” stating: “[Defendant]…
The U.S. Court of Appeals for the Sixth Circuit recently held that residential mortgage loan underwriters are not entitled to overtime pay because their job duties related to general business operations of the bank, and they performed those duties exercising discretion and independent judgment. A copy of the opinion in Lutz v. Huntington Bancshares, Inc., et al. is available at: Link to Opinion. The plaintiffs, former bank employees, filed a class action suit against a bank, alleging that it failed to compensate them for overtime work in violation of the federal Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201-219. The…
The Annual Consumer Financial Services Conference organized by The Conference on Consumer Finance Law will be held Sept. 15-16 at Loyola University Chicago School of Law. The conference will include presentations on the latest developments in consumer financial services law, including mortgage lending and servicing, bankruptcy and debt collection. Twelve CLE credits will be provided, including one hour of Ethics. The fee is $495 for those who register before July 31. For more information, click here.
The Consumer Financial Protection Bureau (CFPB) recently reopened the comment period for its proposed amendments to the mortgage servicing related rules under RESPA and TILA that generally would require servicers to provide modified periodic statements to consumers who have filed for bankruptcy. The full announcement is available at: Link to Announcement. As you may recall, in December 2014, the CFPB published for notice and comment a proposed rule that among other things would require mortgage servicers to provide certain modified periodic statements to consumers in bankruptcy (subject to specific exceptions), with different disclosures and notices required for different types of…
The U.S. District Court for the District of Columbia recently denied a petition by the Consumer Financial Protection Bureau (CFPB) to enforce a Civil Investigative Demand (CID) issued to an accreditor of for-profit colleges, holding that the CFPB did not have statutory authority to issue the CID. A copy of the opinion in Consumer Financial Protection Bureau v. Accrediting Council for Independent Colleges and Schools is available at: Link to Opinion. The CID issued by the CFPB required the respondent to designate a representative to give oral testimony regarding the respondent’s policies, procedures, and practices relating to the accreditation of seven schools.…
The Third District Court of Appeal of the State of Florida recently affirmed final judgment in favor of a mortgagee that took title to real property as a result of a foreclosure, and against two homeowner associations, holding that the safe harbor provision of subsection 720.3085(2)(c), Florida Statutes applied, and therefore that the amounts recoverable by the homeowners associations were substantially limited. A copy of the opinion in Catalina West Homeowners Association, Inc., et al. v. Federal National Mortgage Association is available at: Link to Opinion. Husband and wife borrowers obtained a mortgage loan in 2005, which was assigned a little over…