Winter 2020 Supervisory Highlights – CFPB’s Focus on Verbal Loss Mitigation ApplicationsThe Consumer Financial Protection Bureau (CFPB) released the Winter 2020 edition of its Supervisory Highlights report on February 21, 2020. Among other legal violations, the CFPB noted that certain mortgage servicers have recently struggled with the concept of a verbal loss mitigation application. Although the issues described in the report center around assistance offered in

State Law Claims Based on Student Loan Servicer’s Loss Mitigation Representations Not Preempted by the HEA, Seventh Circuit Court of Appeals HoldsThe Seventh Circuit Court of Appeals struck a blow to student loan servicers’ arguments that certain state law claims brought by borrowers are preempted under the Higher Education Act (HEA). In a lengthy opinion issued on June 27, 2019, in Nelson v. Great Lakes Educations Loan Services, Inc., the court held that a borrower’s

HUD OIG Report Could be Precursor to Increased Partial Claim Reimbursement DemandsOn September 21, 2018, the Department of Housing and Urban Development (“HUD”)’s Office of Inspector General (“OIG”) completed a review of HUD’s partial claims program. In many ways, the title of the OIG audit report, “HUD Did Not Have Adequate Controls To Ensure That Partial Claim Notes for FHA Loans Were Properly Tracked for

CFPB Makes Last-Minute Changes to 2016 Mortgage Servicing Final RuleOn October 4, 2017, the CFPB released an interim final rule and a proposed rule to amend certain provisions of its 2016 Mortgage Servicing Final Rule. While the changes will not drastically change the 2016 Mortgage Servicing Final Rule, it is nevertheless important for mortgage servicers to synthesize the information and adjust implementation efforts as

Sixth Circuit Affirms Dismissal of $2.3 Billion FCA Case Due to Prior Public DisclosureLast week, in U.S. ex rel. Advocates for Basic Legal Equality, Inc. (ABLE) v. U.S. Bank, the Sixth Circuit affirmed the dismissal of a False Claims Act (FCA) suit against U.S. Bank because the conduct alleged by the qui tam relator had previously been publicly disclosed in a consent order with the Office of

Chapter 7 Debtors Cannot Strip Off Junior Liens on Underwater Home Loans, United States Supreme Court RulesThis morning, the United States Supreme Court ruled that debtors in Chapter 7 bankruptcy cases cannot “strip off,” or completely void, junior mortgages that—based on the value of the property and the amount of claims secured by senior mortgages—are completely underwater. This ruling eliminates a potential means for Chapter 7 debtors to maximize the relief