What the Proposed North Carolina Regulatory Sandbox Could Mean for Fintech and the Financial Services CommunityTechnology is booming and financial technology (“fintech”) is advancing society in new and innovative ways. In 2021 alone, North Carolina has been the target for some very high-profile technology announcements, including Google’s plans to open a cloud engineering hub in Durham and Apple’s new campus in Research Triangle Park. Given the upward trajectory of this financial technology boom, it seems that the “innovation” business is ripe for opportunity — an opportunity that appears poised to take off in North Carolina with the newly proposed regulatory sandbox.

A regulatory sandbox allows … Continue Reading

HUD Announces New COVID-19 Recovery Loss Mitigation OptionsIn a bid to avoid a wave of COVID-19-related foreclosures, the Department of Housing and Urban Development (HUD) published Mortgagee Letter 2021-18 to lenders and servicers on July 23, 2021, that will allow borrowers with loans insured by the Federal Housing Agency (FHA) to extend the term of their mortgages and lock in lower monthly principal and interest payments in order to resolve COVID-19 financial distress.

The changes are a continuation of earlier programs initiated in response to the pandemic, which allowed borrowers to forbear monthly payments for up to … Continue Reading

Second Circuit Follows Other Recent Circuit Opinions Re: Private Student Loan DischargeThe Second Circuit has followed the lead of the Tenth and Fifth Circuits in affirming a bankruptcy court ruling regarding private student loans under 11 U.S.C. § 523(a)(8). In Homaidan v. Navient, et al., the court ultimately held that the exception to discharge language – “an obligation to repay funds received as an educational benefit, scholarship, or stipend” – does not cover private student loans. This follows similar results from the Tenth Circuit and Fifth Circuit.

Background

Homaidan took out over $12,000 in student loans from Sallie Mae … Continue Reading

U.S. House of Representatives Considers Bill to Improve Language Access in Mortgage ServicingIn recent months, regulatory bodies throughout the federal government have focused on ways to promote greater access to financial products and services to limited English proficiency (LEP) consumers. Take for example the Consumer Financial Protection Bureau’s (CFPB) January 2021 statement encouraging financial institutions to better serve LEP consumers and examples of recent enforcement actions by the U.S. Department of Housing and Urban Development (HUD) relating to discrimination based on national origin and LEP status.

These efforts to support LEP consumers have recently expanded beyond the regulatory arena and are now … Continue Reading

FHFA Issues Policy Statement on Fair Lending Requirements under the ECOA, Fair Housing Act, and Safety and Soundness ActOn Thursday, the Federal Housing Finance Agency (FHFA) issued a policy statement covering its views on fair lending requirements (Fair Lending Policy Statement) under the Equal Credit Opportunity Act, the Fair Housing Act, and the Federal Housing Enterprises Financial Safety and Soundness Act. The Fair Lending Policy Statement is the latest in a list of recently released pronouncements from the Biden administration and the CFPB on the critical topic of racial equity.

As stated by FHFA’s Acting Director Sandra L. Thompson, “FHFA is committed to fair mortgage lending … Continue Reading

Detailed Breakdown of the CFPB’s COVID-19 Mortgage Servicing Final RuleWith the release of the Consumer Financial Protection Bureau’s COVID-19 mortgage servicing final rule and an August 31, 2021, effective date that will be here before we know it, the race is on for servicers to digest the law’s new requirements and prohibitions and then implement them. This will not be an easy task.

As we noted in our prior post, the Bureau’s final rule contains four main components:

  • Moratorium on new foreclosure actions through December 31, 2021;
  • Exception to the anti-evasion clause for certain COVID-19 modification options;
  • New
… Continue Reading

Biden Administration Continues Fair Lending Efforts as HUD Announces Proposal to Restore the Discriminatory Effects RuleOne of the Biden administration’s first actions was a January 25, 2021, executive order on Redressing Our Nation’s and the Federal Government’s History of Discriminatory Housing Practices and Policies, whereby the White House committed to revitalizing enforcement of fair lending laws to address the “ongoing legacies of residential segregation and discrimination [that] remain ever-present in our society.” Among other broad statements regarding the nation’s history of discrimination in the housing area, the executive order clearly said that the government “must recognize and acknowledge its role in systematically declining to … Continue Reading

CFPB Releases COVID-19 Mortgage Servicing Final RuleOn June 28 2021, the Consumer Financial Protection Bureau released its much-anticipated mortgage servicing final rule related to COVID-19. This rulemaking amends Regulation X and, as expected, largely tracks the proposal that the Bureau issued in early April 2021 and that we wrote about shortly thereafter. The new rules will become effective on August 31, 2021, leaving mortgage servicers a very short amount of time — 64 calendar days to be exact — to digest and implement the new requirements and prohibitions.

Like the April 2021 proposal, the Bureau’s final … Continue Reading

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