Property Insurance Claims and Loss Drafts: Mortgage Servicer Obligations Under the GSE Security InstrumentAs homeowners file insurance claims for property damage following Hurricane Ida and with Hurricane Larry threatening the northeast coast, mortgage servicers are facing an influx of insurance proceeds or loss draft funds. To avoid borrower litigation and to protect against potential liability to borrowers and investors, mortgage servicers must ensure that all loss draft activities comply with the terms of property-specific mortgage agreements.

Section 5 of the current Fannie Mae and Freddie Mac standard mortgage agreements, which are being retired in December 2022 (changes to the insurance provisions of the … Continue Reading

CFPB Issues NPRM on Dodd-Frank 1071; Bradley to Host Initial Webinar on September 8Yesterday, the Consumer Financial Protection Bureau (CFPB) issued its long-awaited Notice of Proposed Rulemaking (NPRM) related to Dodd-Frank 1071. As we have discussed in this space, Section 1071 amends the Equal Credit Opportunity Act to mandate certain reporting requirements for financial services companies making business loans. The act aims to “facilitate enforcement of fair lending laws and enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority-owned, and small businesses.” There is a 90-day period in which stakeholders can submit comments … Continue Reading

The CFPB’s New COVID-19 Procedural Safeguard Rules Pose Significant Compliance Challenges for Mortgage ServicersJust two short months after the Consumer Financial Protection Bureau announced its COVID-19 mortgage servicing final rule, the effective date of August 31, 2021, is here. As we noted in our detailed breakdown of the final rule and corresponding webinar, the final rule poses new risks and challenges for mortgage servicers attempting to navigate the already complex COVID-19 landscape.

If you’re reading this post, you likely know that the new foreclosure “procedural safeguards” are arguably the most challenging aspect of the final rule. Over the past two months, … Continue Reading

District Court Ruling Clears Way for Small Dollar Rule Compliance Date in June 2022Yesterday, in Community Financial Services Association of America, Ltd. v. Consumer Financial Protection Bureau, a lawsuit involving implementation of the payment provisions of the Payday, Vehicle Title, and Certain High-Cost Installment Loans Regulation (the “Small Dollar Rule”), the district court ruled on the Consumer Financial Protection Bureau’s (CFPB) and the Community Financial Services Association’s (CFSA) cross motions for summary judgment. Specifically, the court granted the CFPB’s motion and denied the CFSA’s motion and entered final judgment in the case. Additionally, based on the parties’ additional briefing on an appropriate … Continue Reading

Cannabis Banking: An Update on the SAFE Banking ActDespite the cannabis industry’s explosive growth, many financial institutions have been hesitant to transact with cannabis-related businesses given the ambiguity created by divergent state and federal cannabis laws. The SAFE Banking Act seeks to remove these ambiguities at the federal level and pave the way for more financial institutions to serve the cannabis industry. But this is not the first time Congress has tried to pass the Act, and while bipartisan support has increased, obstacles to passage remain.

This article provides a brief overview of federal anti-money laundering laws and … Continue Reading

South Carolina Ruling Gives Lenders Flexibility on When to Foreclose in Face of Borrower LitigationIn a ruling that will provide guidance on when lenders must raise a foreclosure counterclaim in a borrower lawsuit, the South Carolina Court of Appeals in Deutsche Bank National Trust Company v. Estate of Patricia Ann Owens Houck has held that foreclosure was not a compulsory counterclaim in a borrower’s suit alleging errors in origination.

In 2013, the mortgagors sued Deutsche Bank and the loan servicer, alleging errors in the origination of their loan, including the allegation that no attorney closed the loan as required under South Carolina law. The … Continue Reading

The CFPB at 10 Years: A Look Back and a Look AheadOver the years, we have followed actions of the Consumer Financial Protection Bureau (CFPB) and published information that can be found on our Financial Services Perspectives blog. Now that the 10-year anniversary of the CFPB opening its doors has passed, let’s take a look back at where it started and where it may be going. Title X of the Consumer Financial Protection Act of 2010 (the Dodd-Frank Act) created the CFPB as an independent agency within the Board of Governors of the Federal Reserve System. The stated purpose of … Continue Reading

FHA Updates Single Family Policy Handbook 4000.1In late July, the Federal Housing Administration (FHA) made several important revisions to the Single Family Policy Handbook 4000.1. The new guidance is part of a series of changes recently announced by the Biden-era FHA, including guidance related to COVID-19 recovery loss mitigation options. Describing the changes as primarily “enhancements and revisions” and “technical edits,” the agency states in its release that it:

remains committed to making it easier for mortgagees to conduct business by maintaining and enhancing Handbook 4000.1 with regularly scheduled updates to ensure it remains the … Continue Reading

CFPB Releases TRID Guidance for Juneteenth National Independence DayLate last week, the Consumer Financial Protection Bureau (CFPB) released an interpretive rule that provided much-welcome guidance related to the effect of the new Juneteenth National Independence Day on disclosure waiting periods under the TILA-RESPA Integrated Disclosure (TRID) rule. According to CFPB Acting Director David Uejio, the Bureau “understand[s] that the quick enactment of the federal Juneteenth legislation created interpretive questions and compliance challenges for the mortgage industry with respect to rescission of closed-end mortgage and certain time-sensitive disclosures. The mortgage industry can refer to today’s interpretive rule when … Continue Reading

Department of Veterans Affairs Expands Its Limited-Time COVID-19 Mortgage Relief OptionsOn July 23, 2021, the Department of Veterans Affairs (VA) released Circular 26-21-13, which announced a new temporary modification called the COVID-19 Refund Modification. The COVID-19 Refund Modification and the COVID-19 Veterans Assistance Partial Claim Payment option are now both designed to help borrowers experiencing financial hardship related to COVID-19 bring their mortgages current and avoid foreclosure.

The COVID-19 Refund Modification

Under the new COVID-19 Refund Modification, veterans can receive a 20% or more payment reduction, depending on their circumstances. As part of this new modification option, the VA … Continue Reading