CFPB Auto Finance Consent Order: A Sign of Things to Come for Add-On Products?On May 21, 2021, the Consumer Financial Protection Bureau (CFPB) and 3rd Generation, Inc. d/b/a California Auto Finance entered into a Consent Order in which the CFPB alleged unfair acts or practices in connection with an auto finance add-on product.

What was the add-on product?

According to the Consent Order, 3rd Generation purchases and services “subprime auto loans by taking assignment of retail-installment-sales contracts that automobile dealers make with borrowers.” As part of its loan agreement, 3rd Generation requires consumers to use its Loss Damage Waiver (LDW) product. 3rd Generation … Continue Reading

Does the Eleventh Circuit’s Hunstein Decision Mean that the FDCPA Violates the First Amendment?The Eleventh Circuit’s far-reaching decision in Hunstein v. Preferred Collection and Management Services, Inc. — which we previously covered on this blog — continues to raise questions for the wide range of industries that fall within the FDCPA’s definition of “debt collectors.” To put it briefly, the Eleventh Circuit held that a debt collector violates the FDCPA when it communicates with any third party — including a vendor or other party assisting with the collection or servicing of the loan — regarding the loan or debt.

One issue not considered … Continue Reading

On April 21, 2021, the U.S. Court of Appeals for the Eleventh Circuit issued a decision that threatens significant consequences for a variety of loan servicing and debt collection industries. The upshot of the court’s holding is that anyone falling within the FDCPA’s broad definition of “debt collector” violates the FDCPA when it communicates with any third party – including a vendor or other party assisting with the collection or servicing of the loan – regarding the loan or debt.

In Hunstein v. Preferred Collection and Management Services, Inc. the … Continue Reading

One of the first things creditors ask after filing a proof of claim is, “when do I get paid?” As with so many other legal questions, the answer is, “it depends.” Although many different factors govern payment in a bankruptcy proceeding, there are four key elements to payment: proof, allowance priority, and timing.

Below, we discuss these elements and how they may vary depending on the type of claim and the chapter of the bankruptcy proceeding. Please also refer to this chart for more information regarding when claims are paid … Continue Reading

Mississippi Joins the Anti-Preemption ParadeThe Mississippi Supreme Court recently rejected federal preemption arguments relating to federally owned student loans. This follows other preemption rulings, as we’ve discussed here and here.

Mississippi’s attorney general filed the action on behalf of the state against Navient Corporation, bringing claims under the Mississippi Consumer Protections Act and for unjust enrichment for Navient’s alleged practices of steering borrowers into costly forbearance rather than income-driven repayment, failing to properly recertify income-driven repayment criteria, making misrepresentations regarding cosigner releases, and making errors in process payments. Navient filed a motion to … Continue Reading

Florida Homestead Exemption Applies Only to U.S. Citizens and Permanent ResidentsA bankruptcy judge in the Middle District of Florida recently sustained a Chapter 7 trustee’s objection to a non-Florida resident debtor’s attempted claim of the Florida homestead exemption. Although the debtor had lived in her Florida home for more than 20 years, she was not a United States citizen or a permanent resident with a so-called “green card.” Additionally, none of the debtor’s family members also living in the home were citizens or permanent residents.

When she filed for bankruptcy, the debtor claimed an exemption in her home pursuant to … Continue Reading

Landlords Again Successfully Challenge the CDC’s Authority to Ban Residential EvictionsEarlier this year, the Eastern District of Texas invalidated — commerce clause grounds — the Centers for Disease Control and Prevention’s (CDC’s) ability to halt residential evictions during the COVID-19 pandemic. Subsequently, in Tiger Lily, LLC v. U.S. Dept. of Housing & Urban Development, the Sixth Circuit Court of Appeals granted another win to landlords in Tennessee, who argued the agency’s order exceeded its authority.

On March 29th, the court denied the government’s emergency motion to stay a lower court’s order barring enforcement of the CDC’s Halt Order, … Continue Reading

Roughly three months ago, President Biden signed an executive order that, among other things, directed HUD to reevaluate earlier agency decisions perceived to weaken the Fair Housing Act. In response to this directive, HUD has submitted draft rules to the Office of Management and Budget that would roll back two significant changes made by the Trump-era HUD. First, HUD has submitted a proposed rule aimed at reinstating its previous standard for disparate impact discrimination claims. Second, HUD has submitted an interim final rule related to the Affirmatively Furthering Fair Housing … Continue Reading

Last March, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) made several changes to the Bankruptcy Code, including those changes discussed in more detail here. As it became clear that we would be dealing with COVID-19 for much longer than previously anticipated, Congress passed the Consolidated Appropriations Act (CAA), which made additional changes to the Bankruptcy Code, including those explored in more detail in this article.

Originally, several of the Bankruptcy Code amendments included in the prior legislation were scheduled … Continue Reading

Recent Updates Concerning the Home Mortgage Disclosure ActThe Consumer Financial Protection Bureau (CFPB) has been busy over the last few months laying out what appears to be a broad regulatory agenda. As discussed in this blog, the Bureau has issued an industry notice emphasizing industry preparedness related to COVID-19 forbearance plans, issued proposed COVID-19-related amendments to the Mortgage Servicing Rules, suggested that it will soon issue an NPRM related to Dodd-Frank 1071, and has proposed a delay to the implementation of its Debt Collection Rules, among other things. As light begins to emerge at the … Continue Reading