House Subcommittees Examine Termination of HAMP, Effect of Dodd-Frank on Small Businesses
The House Financial Services Subcommittee on Insurance, Housing & Community Opportunity will hold a hearing today titled "Legislative Proposals to End Taxpayer Funding for Ineffective Foreclosure Mitigation Programs," while the Financial Institutions & Consumer Credit will hold a hearing titled "The Effect of Dodd-Frank on Small Financial Institutions and Small Businesses." The Insurance, Housing & Community Opportunity hearing will take place at 2 p.m. ET and information including prepared witness testimony can be found here http://financialservices.house.gov/Hearings/hearingDetails.aspx?NewsID=1782 . The Financial Institutions & Consumer Credit Subcommittee hearing will also take place at 2 p.m. ET and the witness list and further information can be found at http://financialservices.house.gov/Hearings/hearingDetails.aspx?NewsID=1779
Wednesday, March 2, 2011
Regulators' Mortgage Servicing Standards Would Tackle Second Liens, Require 20 Percent Down
Banking regulators took a critical step forward yesterday to establishing national mortgage servicing standards by cutting a deal to include some new rules as part of a related risk retention proposal, American Banker reported today. Under the agreement, servicers would be required to offer a loan modification when the value of a borrower's home is greater than its value in a foreclosure. Loss mitigation activities would have to be initiated within 90 days after a borrower was delinquent, and such procedures would have to be disclosed to borrowers prior to a mortgage closing. The servicing rules come as part of risk retention standards, which were required by the Dodd-Frank Act enacted last year. As part of the deal, borrowers would have to make at least a 20 percent downpayment to meet criteria that exempts lenders from retaining a portion of the loan when selling it into the secondary market.
http://www.americanbanker.com/news/regulators-cut-deal-on-risk-retention-servicing-standards-1033720-1.html?zkPrintable=true
http://www.americanbanker.com/news/regulators-cut-deal-on-risk-retention-servicing-standards-1033720-1.html?zkPrintable=true
RB/FTC Issue Proposed Rule on Dodd-Frank Act Changes to Risk-Based Pricing, Adverse Action Notices
The Federal Reserve Board and Federal Trade Commission propose to: (1) revise and add to the content requirements for risk-based pricing notices; and (2) revise and add related risk-based pricing and adverse action notice model forms to reflect the new Dodd-Frank Act credit score disclosure requirements .
The full text of the proposed risk-based pricing rule is available at:
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20110301a1.pdf
The full text of the proposed adverse action notice rule is available at:
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20110301a2.pdf
In January of last year, the FRB and the FTC published final rules to implement the risk-based pricing provisions in section 311 of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), which amends the Fair Credit Reporting Act (FCRA).
These existing final rules generally require a creditor to provide a risk-based pricing notice to a consumer when the creditor uses a consumer report to grant or extend credit to the consumer on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers from or through that creditor. The mandatory compliance date for these existing risk-based pricing rules was January 1, 2011.
As you may recall, the Dodd-Frank Act requires creditors to also and additionally disclose credit scores and related information to consumers in risk-based pricing and adverse action notices under the Fair Credit Reporting Act, if a credit score was used in setting the credit terms or taking adverse action. The effective date of these amendments is July 21, 2011.
Section 1100F of the Dodd-Frank Act requires that a risk-based pricing notice include: (1) a numerical credit score used in making the credit decision; (2) the range of possible scores under the model used; (3) the key factors that adversely affected the credit score of the consumer in the model used; (4) the date on which the credit score was created; and (5) the name of the person or entity that provided the credit score.
Accordingly, in order to prepare for the effective date of the Dodd-Frank Act amendments, the FRB and FTC propose to amend their respective risk-based pricing rules to require disclosure of credit scores and information relating to credit scores in risk-based pricing notices, if a credit score of the consumer is used in setting the material terms of credit.
In addition, the Federal Reserve Board proposes to amend the adverse action model notices under Regulation B (Equal Credit Opportunity Act), which combine the adverse action notice requirements for both Regulation B and the FCRA. The proposed amendments would revise the model notices to incorporate the new credit score disclosure requirements.
The Board proposes to amend these model notices in Regulation B to include the disclosure of credit scores and information relating to credit scores if a credit score is used in taking adverse action. These proposed amendments reflect the new content requirements in section 615(a) of the FCRA that were added by section 1100F of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Public comments on the proposed rules are due 30 days after publication in the Federal Register, which is expected shortly.
The full text of the proposed risk-based pricing rule is available at:
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20110301a1.pdf
The full text of the proposed adverse action notice rule is available at:
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20110301a2.pdf
In January of last year, the FRB and the FTC published final rules to implement the risk-based pricing provisions in section 311 of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), which amends the Fair Credit Reporting Act (FCRA).
These existing final rules generally require a creditor to provide a risk-based pricing notice to a consumer when the creditor uses a consumer report to grant or extend credit to the consumer on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers from or through that creditor. The mandatory compliance date for these existing risk-based pricing rules was January 1, 2011.
As you may recall, the Dodd-Frank Act requires creditors to also and additionally disclose credit scores and related information to consumers in risk-based pricing and adverse action notices under the Fair Credit Reporting Act, if a credit score was used in setting the credit terms or taking adverse action. The effective date of these amendments is July 21, 2011.
Section 1100F of the Dodd-Frank Act requires that a risk-based pricing notice include: (1) a numerical credit score used in making the credit decision; (2) the range of possible scores under the model used; (3) the key factors that adversely affected the credit score of the consumer in the model used; (4) the date on which the credit score was created; and (5) the name of the person or entity that provided the credit score.
Accordingly, in order to prepare for the effective date of the Dodd-Frank Act amendments, the FRB and FTC propose to amend their respective risk-based pricing rules to require disclosure of credit scores and information relating to credit scores in risk-based pricing notices, if a credit score of the consumer is used in setting the material terms of credit.
In addition, the Federal Reserve Board proposes to amend the adverse action model notices under Regulation B (Equal Credit Opportunity Act), which combine the adverse action notice requirements for both Regulation B and the FCRA. The proposed amendments would revise the model notices to incorporate the new credit score disclosure requirements.
The Board proposes to amend these model notices in Regulation B to include the disclosure of credit scores and information relating to credit scores if a credit score is used in taking adverse action. These proposed amendments reflect the new content requirements in section 615(a) of the FCRA that were added by section 1100F of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Public comments on the proposed rules are due 30 days after publication in the Federal Register, which is expected shortly.
Tuesday, March 1, 2011
2nd Cir Says FDCPA "Judicial District" May Not Mean "County," and Liability Possible Even for Consensual Dismissal of Lawsuit
The United States Court of Appeals for the Second Circuit recently held that: (1) the term “judicial district” in the FDCPA’s venue provision, as applied to state-court debt collection actions, must be defined in accordance with the judicial system of the state in which the debt collection action is brought; and (2) even the consensual dismissal of an debt collection action filed in the incorrect venue may give rise to FDCPA liability. A copy of the opinion is attached.
Debt collector Cohen & Slamowitz LLP (“C&S”) brought a debt collection action against the consumer in Syracuse City Court. Although the consumer resided in the same county as the City of Syracuse, the consumer obtained the dismissal of that action pursuant to Section 213 of New York’s Uniform City Court Act (“Section 213”) on the basis that he did not reside in the City of Syracuse or a town contiguous thereto.
The consumer filed suit in federal court against C&S, alleging that C&S violated the FDCPA’s venue provisions by suing him in a judicial district in which he did not reside. The district court granted C&S’s motion to dismiss because, among other reasons, that court interpreted “judicial district” under the FDCPA to mean “county.” The consumer appealed and the Second Circuit vacated and remanded the case.
As you may recall, the FDCPA’s venue provision requires that debt collection actions be brought “only in the judicial district or similar legal entity . . . in which [the] consumer resides at the commencement of the action.” 15 U.S.C. § 1692i(a)(2)(B).
Relying on the definition of “judicial district” “at the time the FDCPA was enacted,” and the Congressional intent behind the FDCPA, the Second Circuit concluded “that the term ‘judicial district,’ as applied to state-court debt collection actions, must be defined in accordance with the judicial system of the state in which the debt collection action is brought.”
In this case, the city court “of which C&S availed itself is governed by laws that limit the territorial extent of those courts based on a defendant’s contacts with the forum” and, accordingly, “those laws delimit the ‘judicial district’ by which compliance with the FDCPA’s venue provisions must be measured.”
Therefore, the “FDCPA’s term ‘judicial district,’ as applied to a case where a debt collector sues a consumer in one of New York State’s city courts, extends no farther than the boundaries of the city containing that court and the towns within the same county that are contiguous by land thereto. And, because the proper ‘judicial district’ in this case did not include the town where [the consumer] resided, the district court erred in dismissing [the consumer’s] complaint.”
The Court rejected C&S’s arguments that “judicial district” should encompass the entire county of the consumer’s residence even when a consumer is sued in a city court. First, C&S argued “that the dismissal of its lawsuit, on consent, does not give rise to a violation of the FDCPA’s venue provisions because Section 213 is addressed to the issue of jurisdiction, which C&S contends is irrelevant to the FDCPA’s venue analysis.”
However, the Court held that where, as here, “a state law outlines the required nexus between the residence or activities of the consumer and the location of the court, such a law sets forth the appropriate ‘judicial district’ for purposes of the FDCPA with respect to debt collection actions brought in that court, regardless of whether that provision is styled as jurisdictional or otherwise.”
The Court also rejected C&S’s argument that the “dismissal here should not give rise to a FDCPA violation because Section 213 provides that actions dismissed thereunder may be refiled in the appropriate court.” The Court reasoned that “it is irrelevant to the FDCPA whether state law sets forth a procedure for refiling actions that are dismissed based on defective venue.” In addition, the ability of the debt collector to refile the suit in fact contributes to the threat of ‘forum abuse’ that inspired Congress to enact 15 U.S.C. § 1692i.”
Finally, the Court rejected the lower court’s reasoning for dismissing the consumer’s complaint. First, the district court stated that dismissal was warranted because it “had difficulty concluding” that C&S’s act of bringing suit in Syracuse City Court was “intended to be unfair, harassing, and deceptive.” However, “this is an affirmative defense” and “[t]o recover damages under the FDCPA, a consumer does not need to show intentional conduct on the part of the debt collector.”
The Court also rejected the lower court’s interpretation of “judicial district” to mean “county.” Distinguishing the district cases relied upon by the lower court, the Court stated that the standard it had adopted “enables debt collectors to predict with accuracy and ease whether suing a consumer in a given forum would violate the FDCPA’s venue provisions.” In addition, the Court noted “that the conclusion we reach today is consistent with that of the only of our sister Circuits that has devoted extended consideration to the meaning of this statutory phrase.” See Newsom v. Friedman, 76 F.3d 813 (7th Cir. 1996).
Debt collector Cohen & Slamowitz LLP (“C&S”) brought a debt collection action against the consumer in Syracuse City Court. Although the consumer resided in the same county as the City of Syracuse, the consumer obtained the dismissal of that action pursuant to Section 213 of New York’s Uniform City Court Act (“Section 213”) on the basis that he did not reside in the City of Syracuse or a town contiguous thereto.
The consumer filed suit in federal court against C&S, alleging that C&S violated the FDCPA’s venue provisions by suing him in a judicial district in which he did not reside. The district court granted C&S’s motion to dismiss because, among other reasons, that court interpreted “judicial district” under the FDCPA to mean “county.” The consumer appealed and the Second Circuit vacated and remanded the case.
As you may recall, the FDCPA’s venue provision requires that debt collection actions be brought “only in the judicial district or similar legal entity . . . in which [the] consumer resides at the commencement of the action.” 15 U.S.C. § 1692i(a)(2)(B).
Relying on the definition of “judicial district” “at the time the FDCPA was enacted,” and the Congressional intent behind the FDCPA, the Second Circuit concluded “that the term ‘judicial district,’ as applied to state-court debt collection actions, must be defined in accordance with the judicial system of the state in which the debt collection action is brought.”
In this case, the city court “of which C&S availed itself is governed by laws that limit the territorial extent of those courts based on a defendant’s contacts with the forum” and, accordingly, “those laws delimit the ‘judicial district’ by which compliance with the FDCPA’s venue provisions must be measured.”
Therefore, the “FDCPA’s term ‘judicial district,’ as applied to a case where a debt collector sues a consumer in one of New York State’s city courts, extends no farther than the boundaries of the city containing that court and the towns within the same county that are contiguous by land thereto. And, because the proper ‘judicial district’ in this case did not include the town where [the consumer] resided, the district court erred in dismissing [the consumer’s] complaint.”
The Court rejected C&S’s arguments that “judicial district” should encompass the entire county of the consumer’s residence even when a consumer is sued in a city court. First, C&S argued “that the dismissal of its lawsuit, on consent, does not give rise to a violation of the FDCPA’s venue provisions because Section 213 is addressed to the issue of jurisdiction, which C&S contends is irrelevant to the FDCPA’s venue analysis.”
However, the Court held that where, as here, “a state law outlines the required nexus between the residence or activities of the consumer and the location of the court, such a law sets forth the appropriate ‘judicial district’ for purposes of the FDCPA with respect to debt collection actions brought in that court, regardless of whether that provision is styled as jurisdictional or otherwise.”
The Court also rejected C&S’s argument that the “dismissal here should not give rise to a FDCPA violation because Section 213 provides that actions dismissed thereunder may be refiled in the appropriate court.” The Court reasoned that “it is irrelevant to the FDCPA whether state law sets forth a procedure for refiling actions that are dismissed based on defective venue.” In addition, the ability of the debt collector to refile the suit in fact contributes to the threat of ‘forum abuse’ that inspired Congress to enact 15 U.S.C. § 1692i.”
Finally, the Court rejected the lower court’s reasoning for dismissing the consumer’s complaint. First, the district court stated that dismissal was warranted because it “had difficulty concluding” that C&S’s act of bringing suit in Syracuse City Court was “intended to be unfair, harassing, and deceptive.” However, “this is an affirmative defense” and “[t]o recover damages under the FDCPA, a consumer does not need to show intentional conduct on the part of the debt collector.”
The Court also rejected the lower court’s interpretation of “judicial district” to mean “county.” Distinguishing the district cases relied upon by the lower court, the Court stated that the standard it had adopted “enables debt collectors to predict with accuracy and ease whether suing a consumer in a given forum would violate the FDCPA’s venue provisions.” In addition, the Court noted “that the conclusion we reach today is consistent with that of the only of our sister Circuits that has devoted extended consideration to the meaning of this statutory phrase.” See Newsom v. Friedman, 76 F.3d 813 (7th Cir. 1996).
Circuit Court of Appeals Cases from Last Week
United States Second Circuit, 02/07/2011
DISH Network Corp. v. DBSD N. Am., Inc., No. 10-1175
Chapter 11 plan confirmed and designation of votes of DISH Network Corporation as "not in good faith" under section 1126(e) where: 1) bankruptcy court's decision to designate DISH's vote as not having been cast in good faith and its treatment of its class's vote is appropriate; but 2) Sprint has standing to appeal the denial of its objection to the confirmation of the reorganization plan and the bankruptcy court erred in confirming the plan of reorganization.
United States Second Circuit, 02/08/2011
In re Adelphia Recovery Trust, No. 09-0799
Bankruptcy Court affirmed in part and reversed in part barring the Adelphia Recovery Trust from pursuing fraudulent conveyance claims against the appellee banks on res judicata and estoppel grounds.
United States Ninth Circuit, 02/10/2011
Barrientos v. Wells Fargo Bank, N.A., No. 09-55810
In an action alleging violation of section 524 must be brought by motion, not via an adversary proceeding.
Thanks to Findlaw.com.
DISH Network Corp. v. DBSD N. Am., Inc., No. 10-1175
Chapter 11 plan confirmed and designation of votes of DISH Network Corporation as "not in good faith" under section 1126(e) where: 1) bankruptcy court's decision to designate DISH's vote as not having been cast in good faith and its treatment of its class's vote is appropriate; but 2) Sprint has standing to appeal the denial of its objection to the confirmation of the reorganization plan and the bankruptcy court erred in confirming the plan of reorganization.
United States Second Circuit, 02/08/2011
In re Adelphia Recovery Trust, No. 09-0799
Bankruptcy Court affirmed in part and reversed in part barring the Adelphia Recovery Trust from pursuing fraudulent conveyance claims against the appellee banks on res judicata and estoppel grounds.
United States Ninth Circuit, 02/10/2011
Barrientos v. Wells Fargo Bank, N.A., No. 09-55810
In an action alleging violation of section 524 must be brought by motion, not via an adversary proceeding.
Thanks to Findlaw.com.
Drown vs O'Keefe
Never let it be said I didn't publish both sides.
From: Evonne Perfect
To: calh@gate.net
Subject: defamation of character
Date: Feb 27, 2011 6:02 PM
Good day ,
I am not sure you aware but the correct name is Drown vs O'Keefe.Veronica O'Keefe's estate owns the car. She paid for the entire car whicih can be proven by the wirre transfer for the exact amount of the car purchase price on the exact date the car was bought. Part of the evidence Drown knows about but was not included in the case. She was a amazing woman and her husband was a WWII veteran aand retired state police officer. Maureen Perfect is the executor of the estate. By the way you have the article tagged it is coming up under Evonne Perfect which is not correct. Please make the correction to the name and the tags. I am sure it was not done on purpose by you but just a reprint of an article.
Please make the corrections to the tags. It was done on purpose by the trustee in order to embarrass me and apply pressure to the courts to reverse their decision. I devote countless hours of my time to help as a political activist and humanitarian. I dont have any moeny but what I dont have in money I give in work hours to improve the lives of others.This trustee has used the laws to attack victims of bankruptcy. Look at some of his other cases. He tried to have mortgage thrown out and over the fact the house was not accurately described. He looks for legal loopholes in order to effectively steal property for his own gain. I am sure you would not want to exploit the public as he does. You seem like a good attorney from what I have researched and your motivation in printing the article is to be a source of info for others which appears altruistic.
Thank you,
Evonne
From: Evonne Perfect
To: calh@gate.net
Subject: defamation of character
Date: Feb 27, 2011 6:02 PM
Good day ,
I am not sure you aware but the correct name is Drown vs O'Keefe.Veronica O'Keefe's estate owns the car. She paid for the entire car whicih can be proven by the wirre transfer for the exact amount of the car purchase price on the exact date the car was bought. Part of the evidence Drown knows about but was not included in the case. She was a amazing woman and her husband was a WWII veteran aand retired state police officer. Maureen Perfect is the executor of the estate. By the way you have the article tagged it is coming up under Evonne Perfect which is not correct. Please make the correction to the name and the tags. I am sure it was not done on purpose by you but just a reprint of an article.
Please make the corrections to the tags. It was done on purpose by the trustee in order to embarrass me and apply pressure to the courts to reverse their decision. I devote countless hours of my time to help as a political activist and humanitarian. I dont have any moeny but what I dont have in money I give in work hours to improve the lives of others.This trustee has used the laws to attack victims of bankruptcy. Look at some of his other cases. He tried to have mortgage thrown out and over the fact the house was not accurately described. He looks for legal loopholes in order to effectively steal property for his own gain. I am sure you would not want to exploit the public as he does. You seem like a good attorney from what I have researched and your motivation in printing the article is to be a source of info for others which appears altruistic.
Thank you,
Evonne
In the News
Termination of Foreclosure Mitigation Programs
House Financial Services - Subcommittee on Insurance, Housing and Community Opportunity
Subcommittee Hearing
Insurance, Housing and Community Opportunity Subcommittee (Chairwoman Biggert, R-Ill.) of House Financial Services Committee will hold a hearing titled "Legislative Proposals to End Taxpayer Funding for Ineffective Foreclosure Mitigation Programs."
Contact: 202-225-7502
Note: The full committee will mark up these bills March 3.
Date: Wednesday, March 2, 2 p.m.
Place: 2220 Rayburn Bldg.
Agenda:
Draft Bill - The Home Affordable Modification Program (HAMP) Termination Act
Draft Bill - The Neighborhood Stabilization Program Termination Act
Draft Bill - The FHA Refinance Program Termination Act
Draft Bill - The Emergency Mortgage Relief Program Termination Act
Termination of Foreclosure Mitigation Programs
House Financial Services Committee
Full Committee Markup
House Financial Services Committee (Chairman Bachus, R-Ala.) will mark up pending legislation.
Contact: Larry Lavender - Majority Chief of Staff at 202-225-7502
Note: The Insurance and Housing Subcommittee will hold a hearing on the bills March 2.
Date: Thursday, March 3, 10 a.m.
Place: 2128 Rayburn Bldg.
Agenda:
Draft Bill - The Home Affordable Modification Program (HAMP) Termination Act
Draft Bill - The Neighborhood Stabilization Program Termination Act
Draft Bill - The FHA Refinance Program Termination Act
Draft Bill - The Emergency Mortgage Relief Program Termination Act
Limiting Investor and Homeowner Loss in Foreclosure Act of 2010
Senate Judiciary Committee
Full Committee Markup
Senate Judiciary Committee (Chairman Leahy, D-Vt.) will mark up pending legislation and vote on pending nominations.
Contact: Bruce Cohen - Democratic Chief Counsel at 202-224-7703
Date: Thursday, March 3, 10 a.m.
Place: 226 Dirksen Bldg.
Note: S 193, S 49 and D'Agostino and Feighery nominations carried over from Feb. 17.
Agenda:
S 193 - USA PATRIOT Act Sunset Extension Act of 2011
S 49 - Railroad Antitrust Enforcement Act of 2011
S 222 - Limiting Investor and Homeowner Loss in Foreclosure Act of 2010
Caitlin Joan Halligan to be U.S. Circuit Judge for the District of Columbia Circuit
Jimmie V. Reyna to be U.S. Circuit Judge for the Federal Circuit
Mae D'Agostino to be U.S. District Judge for the Northern District of New York
John A. Kronstadt to be U.S. District Judge for the Central District of California
Vincent L. Briccetti to be U.S. District Judge for the Southern District of New York
Arenda L. Wright Allen to be U.S. District Judge for the Eastern District of Virginia
Michael Francis Urbanski to be U.S. District Judge for the Western District of Virginia
Timothy J. Feighery to be chairman, Foreign Claims Settlement Commission
Foreclosure Issues; Neighborhood Stabilization; Debit Card Fees
Federal Reserve System
Advisory Committee Meeting
Consumer Advisory Council of the Federal Reserve Board will meet to discuss foreclosure issues (focusing on loss-mitigation efforts, including the administration's Home Affordable Modification Program, servicing issues related to foreclosures, and the development of national mortgage servicing standards); neighborhood stabilization and REO issues (including issues related to the disposition of real estate owned (REO) properties, the impact of foreclosed and vacant properties on communities and neighborhood stabilization strategies); proposed rules regarding debit card interchange fees and routing .
Contact: Jennifer Kerslake at 202-452-6470
For further information: http://www.gpo.gov/fdsys/pkg/FR-2011-02-22/html/2011-3843.htm
Date: Thursday, March 10, 9 a.m.
Place: Martin Building is located on C Street, NW., between 20th and 21st Streets
House Financial Services - Subcommittee on Insurance, Housing and Community Opportunity
Subcommittee Hearing
Insurance, Housing and Community Opportunity Subcommittee (Chairwoman Biggert, R-Ill.) of House Financial Services Committee will hold a hearing titled "Legislative Proposals to End Taxpayer Funding for Ineffective Foreclosure Mitigation Programs."
Contact: 202-225-7502
Note: The full committee will mark up these bills March 3.
Date: Wednesday, March 2, 2 p.m.
Place: 2220 Rayburn Bldg.
Agenda:
Draft Bill - The Home Affordable Modification Program (HAMP) Termination Act
Draft Bill - The Neighborhood Stabilization Program Termination Act
Draft Bill - The FHA Refinance Program Termination Act
Draft Bill - The Emergency Mortgage Relief Program Termination Act
Termination of Foreclosure Mitigation Programs
House Financial Services Committee
Full Committee Markup
House Financial Services Committee (Chairman Bachus, R-Ala.) will mark up pending legislation.
Contact: Larry Lavender - Majority Chief of Staff at 202-225-7502
Note: The Insurance and Housing Subcommittee will hold a hearing on the bills March 2.
Date: Thursday, March 3, 10 a.m.
Place: 2128 Rayburn Bldg.
Agenda:
Draft Bill - The Home Affordable Modification Program (HAMP) Termination Act
Draft Bill - The Neighborhood Stabilization Program Termination Act
Draft Bill - The FHA Refinance Program Termination Act
Draft Bill - The Emergency Mortgage Relief Program Termination Act
Limiting Investor and Homeowner Loss in Foreclosure Act of 2010
Senate Judiciary Committee
Full Committee Markup
Senate Judiciary Committee (Chairman Leahy, D-Vt.) will mark up pending legislation and vote on pending nominations.
Contact: Bruce Cohen - Democratic Chief Counsel at 202-224-7703
Date: Thursday, March 3, 10 a.m.
Place: 226 Dirksen Bldg.
Note: S 193, S 49 and D'Agostino and Feighery nominations carried over from Feb. 17.
Agenda:
S 193 - USA PATRIOT Act Sunset Extension Act of 2011
S 49 - Railroad Antitrust Enforcement Act of 2011
S 222 - Limiting Investor and Homeowner Loss in Foreclosure Act of 2010
Caitlin Joan Halligan to be U.S. Circuit Judge for the District of Columbia Circuit
Jimmie V. Reyna to be U.S. Circuit Judge for the Federal Circuit
Mae D'Agostino to be U.S. District Judge for the Northern District of New York
John A. Kronstadt to be U.S. District Judge for the Central District of California
Vincent L. Briccetti to be U.S. District Judge for the Southern District of New York
Arenda L. Wright Allen to be U.S. District Judge for the Eastern District of Virginia
Michael Francis Urbanski to be U.S. District Judge for the Western District of Virginia
Timothy J. Feighery to be chairman, Foreign Claims Settlement Commission
Foreclosure Issues; Neighborhood Stabilization; Debit Card Fees
Federal Reserve System
Advisory Committee Meeting
Consumer Advisory Council of the Federal Reserve Board will meet to discuss foreclosure issues (focusing on loss-mitigation efforts, including the administration's Home Affordable Modification Program, servicing issues related to foreclosures, and the development of national mortgage servicing standards); neighborhood stabilization and REO issues (including issues related to the disposition of real estate owned (REO) properties, the impact of foreclosed and vacant properties on communities and neighborhood stabilization strategies); proposed rules regarding debit card interchange fees and routing .
Contact: Jennifer Kerslake at 202-452-6470
For further information: http://www.gpo.gov/fdsys/pkg/FR-2011-02-22/html/2011-3843.htm
Date: Thursday, March 10, 9 a.m.
Place: Martin Building is located on C Street, NW., between 20th and 21st Streets
HAMP
The House Financial Services Committee will hold a hearing March 2 and vote on legislation on March 3 that would terminate HAMP and other executive branch-run foreclosure prevention programs. Separately, the Senate Judiciary Committee will consider legislation by Sheldon Whitehouse on March 3 that would clarify authority of the bankruptcy courts to establish foreclosure mediation programs (S. 222, the Limiting Investor and Homeowner Loss in Foreclosure Act of 2010). To become law, the legislation identified above would have to be approved by committee, passed on the floor of each chamber, reconciled between the House and Senate, and signed into law by the president, so there are many more steps to go in the process.
CFTC Charges Florida Resident David L. Ortiz and his Companies, Goyep International, Inc. and Royal Returns, Inc., with Defrauding Customers in an Off-Exchange Foreign Currency Scam
http://www.cftc.gov/PressRoom/PressReleases/pr5992-11.html
The CFTC filed an anti-fraud enforcement action against defendants David L. Ortiz of Vero Beach, Fla., and his companies, Goyep International, Inc., of Vero Beach, Fla., and Royal Returns, Inc., of Hollywood, Fla., charging them with operating a fraudulent off-exchange foreign currency (forex) scheme that accepted funds totaling at least $420,000 from at least 10 customers.
The CFTC filed an anti-fraud enforcement action against defendants David L. Ortiz of Vero Beach, Fla., and his companies, Goyep International, Inc., of Vero Beach, Fla., and Royal Returns, Inc., of Hollywood, Fla., charging them with operating a fraudulent off-exchange foreign currency (forex) scheme that accepted funds totaling at least $420,000 from at least 10 customers.
Friday, February 25, 2011
Four Federal Foreclosure Mitigation Programs on the Chopping Block
Rep. Spencer Bachus, chairman of the House Financial Services Committee, announced this week that he has scheduled a subcommittee hearing and full committee markup of four bills that will terminate what he says are "failed and ineffective housing foreclosure programs." On the chopping block are the Home Affordable Modification Program (HAMP), HUD's Neighborhood Stabilization Program, the Federal Housing Administration (FHA) Short Refi Program, and the Emergency Homeowner Relief Fund passed under the Dodd-Frank Act.
http://www.dsnews.com/articles/four-federal-foreclosure-prevention-programs-on-chopping-block-2011-02-24
http://www.dsnews.com/articles/four-federal-foreclosure-prevention-programs-on-chopping-block-2011-02-24
FRB Issues Final Rule on Escrow Accounts for Certain First-Lien Jumbo Mortgage Loans, Additional Proposed Escrow Account Rule
The Federal Reserve Board issued a final rule revising the escrow account requirements for certain first-lien jumbo mortgage loans, implementing provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act's amendments to the Truth in Lending Act.
The final rule is available at:
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20110223b2.pdf
The final rule implements a provision of the Dodd-Frank Act that increases the annual percentage rate threshold used to determine whether a mortgage lender is required to establish an escrow account for property taxes and insurance for first-lien, jumbo mortgage loans.
As you may recall, in July 2008, the FRB issued final rules requiring creditors to establish escrow accounts for first-lien higher-priced mortgage loans. A first-lien mortgage is considered a higher-priced mortgage loan if its APR is 1.5 percentage points or more above the current average prime offer rate. Under the final rule being issued today, the escrow requirement will apply to first-lien jumbo loans only if the loan's APR is 2.5 percentage points or more above the average prime offer rate. The APR threshold for non-jumbo loans remains unchanged.
The final rule is effective for covered loans for which the creditor receives an application on or after April 1, 2011.
The FRB also requested public comment on a second proposed rule to implement certain provisions of the Dodd-Frank Act's amendments to TILA that would lengthen the minimum period for mandatory escrow accounts for first-lien, higher-priced mortgage loans from one to five years, and longer under certain circumstances such as when the loan is delinquent or in default.
The proposed rule is available at:
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20110223b1.pdf
The proposal also would implement new disclosure requirements of the amendments. Disclosures would be required at least three business days before consummation of a mortgage loan to explain, as applicable, how the escrow account works or the effects of not having an escrow account if one is not being established. The proposed rule also would require consumers to receive disclosures three days before an escrow account is closed.
The proposed rule also would exempt certain loans from the statute’s escrow requirement. The primary exemption would apply to mortgage loans extended by creditors that operate predominantly in rural or underserved areas, originate a limited number of mortgage loans, and do not maintain escrow accounts for any mortgage loans they service.
The Board is soliciting comment on the proposed rule for 60 days after publication in the Federal Register, which is expected shortly.
The final rule is available at:
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20110223b2.pdf
The final rule implements a provision of the Dodd-Frank Act that increases the annual percentage rate threshold used to determine whether a mortgage lender is required to establish an escrow account for property taxes and insurance for first-lien, jumbo mortgage loans.
As you may recall, in July 2008, the FRB issued final rules requiring creditors to establish escrow accounts for first-lien higher-priced mortgage loans. A first-lien mortgage is considered a higher-priced mortgage loan if its APR is 1.5 percentage points or more above the current average prime offer rate. Under the final rule being issued today, the escrow requirement will apply to first-lien jumbo loans only if the loan's APR is 2.5 percentage points or more above the average prime offer rate. The APR threshold for non-jumbo loans remains unchanged.
The final rule is effective for covered loans for which the creditor receives an application on or after April 1, 2011.
The FRB also requested public comment on a second proposed rule to implement certain provisions of the Dodd-Frank Act's amendments to TILA that would lengthen the minimum period for mandatory escrow accounts for first-lien, higher-priced mortgage loans from one to five years, and longer under certain circumstances such as when the loan is delinquent or in default.
The proposed rule is available at:
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20110223b1.pdf
The proposal also would implement new disclosure requirements of the amendments. Disclosures would be required at least three business days before consummation of a mortgage loan to explain, as applicable, how the escrow account works or the effects of not having an escrow account if one is not being established. The proposed rule also would require consumers to receive disclosures three days before an escrow account is closed.
The proposed rule also would exempt certain loans from the statute’s escrow requirement. The primary exemption would apply to mortgage loans extended by creditors that operate predominantly in rural or underserved areas, originate a limited number of mortgage loans, and do not maintain escrow accounts for any mortgage loans they service.
The Board is soliciting comment on the proposed rule for 60 days after publication in the Federal Register, which is expected shortly.
Cal App Ct Upholds Dismissal of MERS Challenge
A borrower obtained a loan in the amount of $331,000 from a lender to finance the purchase of real estate. In connection with that transaction, he executed a promissory note (the “Note”), which was secured by a deed of trust. The deed of trust identified the lender, as well as naming Mortgage Electronic Registration Systems, Inc. (“MERS”) as beneficiary.
After the borrower defaulted on his loan payments, he was mailed a notice of default and election to sell, which initiated a non-judicial foreclosure process. The notice of default was sent to borrower by ReconTrust, which identified itself as an agent for MERS. Accompanying the notice of default was a declaration signed by an employee of Countrywide, which was acting as the loan servicer.
The borrower then filed a lawsuit against Countrywide, MERS and ReconTrust, attempting to allege a number of different causes of action. The only causes of action at issue on the appeal were the first and second causes of action.
The borrower’s first cause of action was titled “Wrongful Initiation of Foreclosure” and alleged that “the person or entity who directed the initiation of the foreclosure process, whether through an agent of MERS or otherwise, was neither the Note's rightful owner nor acting with the rightful owner's authority.” In other words, the first cause of action asserted that MERS did not have authority to initiate the foreclosure because it was not authorized to do so by the current owner of the Note.
The borrower’s second cause of action sought declaratory relief on the issue of whether California “[Civil Code section 2924, subdivision (a)] allows a borrower, before his or her property is sold, to bring a civil action in order to test whether the person electing to sell the property is, or is duly authorized to so by, the owner of a beneficial interest in it.” The court noted that although designated a cause of action for declaratory relief, the second cause of action served simply as a legal argument in support of the first cause of action. The defendants filed a demurrer as to the first and second causes of action, which the trial court sustained without leave to amend.
In sustaining the ruling of the trial court, the appellate court first noted that California’s non-judicial foreclosure scheme is set forth in California Civil Code sections 2924 through 2924k, which “provide a comprehensive framework for the regulation of a non-judicial foreclosure sale pursuant to a power of sale contained in a deed of trust.” The court noted that “[t]he purposes of [the] comprehensive scheme are threefold: (1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor; (2) to protect the debtor/trustor from wrongful loss of the property; and (3) to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.” Finally, the court stated that
“[b]ecause of the exhaustive nature of this scheme, California appellate courts have refused to read any additional requirements into the non-judicial foreclosure statute.”
With the purpose of California’s comprehensive non-judicial foreclosure scheme in mind, the court ruled that the borrower was “attempting to interject the courts into” the scheme without pointing to any legal authority to do so. The borrower argued that such authority was provided by Civil Code section 2924, subdivision (a). The court rejected the argument noting that Section 2924, subdivision (a)(1) states that a “trustee, mortgagee, or beneficiary, or any of their authorized agents” may initiate the foreclosure process. The court further ruled that “nowhere does the statute provide for a judicial action to determine whether the person initiating the foreclosure process is indeed authorized, and we see no ground for implying such an action.”
The court then discussed three federal district court cases, which the borrower cited as purported legal authority for the alleged right to challenge an entity’s ability to initiate the foreclosure process. The court found that the cases were not controlling, nor were they on point, as none recognized “a cause of action requiring the noteholder's nominee to prove its authority to initiate a foreclosure proceeding.” Further, the court noted that “the district court cases from outside of California are inapposite because they do not apply California non-judicial foreclosure law.”
Finally, the borrower argued that even if California's non-judicial foreclosure law did not provide for the filing of a lawsuit to determine whether MERS had been authorized by the holder of the Note to initiate a foreclosure, the court should nevertheless interpret such a right as the “[l]egislature may not have contemplated or had time to fully respond to the present situation.” Again, the court rejected this argument, finding that “because California's non-judicial foreclosure statute is unambiguously silent on any right to bring the type of action identified by [the borrower], there is no basis for the courts to create such a right.” The court therefore held that “the trial court properly sustained Defendants’ demurrer to the first and second causes of action in [the borrower’s] complaint.”
In addition, the appellate court went on to hold that “[a]s an independent ground for affirming the order sustaining the demurrer. . . even if there was a legal basis for an action to determine whether MERS has authority to initiate a foreclosure proceeding, the deed of trust. . . establishes as a factual matter that [borrower’s] claims lack merit.” The court noted that the language of the deed expressly stated MERS had the authority to initiate a foreclosure.
Finally, the court held that the borrower would not be able to cure the defects of his complaint simply by amending the allegations. The court therefore held that “the trial court properly sustained the demurrer without leave to amend.”
After the borrower defaulted on his loan payments, he was mailed a notice of default and election to sell, which initiated a non-judicial foreclosure process. The notice of default was sent to borrower by ReconTrust, which identified itself as an agent for MERS. Accompanying the notice of default was a declaration signed by an employee of Countrywide, which was acting as the loan servicer.
The borrower then filed a lawsuit against Countrywide, MERS and ReconTrust, attempting to allege a number of different causes of action. The only causes of action at issue on the appeal were the first and second causes of action.
The borrower’s first cause of action was titled “Wrongful Initiation of Foreclosure” and alleged that “the person or entity who directed the initiation of the foreclosure process, whether through an agent of MERS or otherwise, was neither the Note's rightful owner nor acting with the rightful owner's authority.” In other words, the first cause of action asserted that MERS did not have authority to initiate the foreclosure because it was not authorized to do so by the current owner of the Note.
The borrower’s second cause of action sought declaratory relief on the issue of whether California “[Civil Code section 2924, subdivision (a)] allows a borrower, before his or her property is sold, to bring a civil action in order to test whether the person electing to sell the property is, or is duly authorized to so by, the owner of a beneficial interest in it.” The court noted that although designated a cause of action for declaratory relief, the second cause of action served simply as a legal argument in support of the first cause of action. The defendants filed a demurrer as to the first and second causes of action, which the trial court sustained without leave to amend.
In sustaining the ruling of the trial court, the appellate court first noted that California’s non-judicial foreclosure scheme is set forth in California Civil Code sections 2924 through 2924k, which “provide a comprehensive framework for the regulation of a non-judicial foreclosure sale pursuant to a power of sale contained in a deed of trust.” The court noted that “[t]he purposes of [the] comprehensive scheme are threefold: (1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor; (2) to protect the debtor/trustor from wrongful loss of the property; and (3) to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.” Finally, the court stated that
“[b]ecause of the exhaustive nature of this scheme, California appellate courts have refused to read any additional requirements into the non-judicial foreclosure statute.”
With the purpose of California’s comprehensive non-judicial foreclosure scheme in mind, the court ruled that the borrower was “attempting to interject the courts into” the scheme without pointing to any legal authority to do so. The borrower argued that such authority was provided by Civil Code section 2924, subdivision (a). The court rejected the argument noting that Section 2924, subdivision (a)(1) states that a “trustee, mortgagee, or beneficiary, or any of their authorized agents” may initiate the foreclosure process. The court further ruled that “nowhere does the statute provide for a judicial action to determine whether the person initiating the foreclosure process is indeed authorized, and we see no ground for implying such an action.”
The court then discussed three federal district court cases, which the borrower cited as purported legal authority for the alleged right to challenge an entity’s ability to initiate the foreclosure process. The court found that the cases were not controlling, nor were they on point, as none recognized “a cause of action requiring the noteholder's nominee to prove its authority to initiate a foreclosure proceeding.” Further, the court noted that “the district court cases from outside of California are inapposite because they do not apply California non-judicial foreclosure law.”
Finally, the borrower argued that even if California's non-judicial foreclosure law did not provide for the filing of a lawsuit to determine whether MERS had been authorized by the holder of the Note to initiate a foreclosure, the court should nevertheless interpret such a right as the “[l]egislature may not have contemplated or had time to fully respond to the present situation.” Again, the court rejected this argument, finding that “because California's non-judicial foreclosure statute is unambiguously silent on any right to bring the type of action identified by [the borrower], there is no basis for the courts to create such a right.” The court therefore held that “the trial court properly sustained Defendants’ demurrer to the first and second causes of action in [the borrower’s] complaint.”
In addition, the appellate court went on to hold that “[a]s an independent ground for affirming the order sustaining the demurrer. . . even if there was a legal basis for an action to determine whether MERS has authority to initiate a foreclosure proceeding, the deed of trust. . . establishes as a factual matter that [borrower’s] claims lack merit.” The court noted that the language of the deed expressly stated MERS had the authority to initiate a foreclosure.
Finally, the court held that the borrower would not be able to cure the defects of his complaint simply by amending the allegations. The court therefore held that “the trial court properly sustained the demurrer without leave to amend.”
Thursday, February 24, 2011
FBI Cracks Down on Mortgage Fraud Schemes Across the Country
As the housing market struggles to get back on its feet, one element holding it back is the prevalence of fraud that increases in times of trouble. In December the CoreLogic Fraud Index revealed fraud losses for 2010 were estimated to be $11 billion. In the past week, the FBI has reported several convictions for mortgage fraud schemes all over the country. The agency says scams involving false promises and fraudulent sales pitches will continue to be a major focus.
http://www.dsnews.com/articles/fbi-cracks-down-on-mortgage-fraud-schemes-across-country-2011-02-23
http://www.dsnews.com/articles/fbi-cracks-down-on-mortgage-fraud-schemes-across-country-2011-02-23
U.S. Pushes for Deal in Mortgage-Servicing Cases
The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns that could force America's largest banks to pay for reductions in loan principal worth billions of dollars, the Wall Street Journal reported today. Terms of the administration's proposal include a commitment from mortgage servicers to reduce the loan balances of troubled borrowers who owe more than their homes are worth. The cost of those writedowns will not be borne by investors who purchased mortgage-backed securities. If a unified settlement can be reached, some state attorneys general and federal agencies are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers.
http://online.wsj.com/article/SB10001424052748703842004576162813248586844.html?mod=WSJ_business_LeadStoryCollection#printMode
http://online.wsj.com/article/SB10001424052748703842004576162813248586844.html?mod=WSJ_business_LeadStoryCollection#printMode
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