Financial Services Law Developments: FYI: DC Cir Dissolves Stay of FRB's LO Compensation Rule

Tuesday, April 5, 2011

FYI: DC Cir Dissolves Stay of FRB's LO Compensation Rule

The U.S. Court of Appeals for the District of Columbia Circuit entered the attached order dissolving the administrative stay of the Board of Governors of the Federal Reserve System's ("FRB") final loan officer compensation rule.

The Court held that the appellants did not satisfy the stringent standards required for a stay pending appeal. The Court also issued the attached scheduling order.

As the administrative stay is now dissolved, the FRB's final loan officer compensation rule is now in force.

Ralph T. Wutscher
Kahrl Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
RWutscher@kw-llp.com
http://www.kw-llp.com

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.

Our updates are available on the internet, in searchable format, at: http://updates.kw-llp.com

________________________________

From: Ralph Wutscher [mailto:rwutscher@kahrlwutscherllp.com]
Sent: Friday, April 01, 2011 8:14 AM
To: Ralph Wutscher
Cc: socaloffice@kw-llp.com; dcoffice@kw-llp.com; Chicago Office
Subject: FYI: Implementation of FRB's LO Compensation Rule Stayed

The U.S. District Court for the District of Columbia denied the motions of the National Association of Independent Housing Professionals, Inc. ("NAIHP") and the National Association of Mortgage Brokers ("NAMB") for a temporary restraining order and preliminary injunction to enjoin the Board of Governors of the Federal Reserve System ("FRB") from implementing the loan officer compensation rule, effective on April 1, 2011, that restricts certain compensation practices of loan originators relating to mortgage loans. A copy of the District Court's Opinion is attached.

As you may recall, in their consolidated actions against the FRB, the NAMB and NAIHP allege that the FRB exceeded its authority under the Truth in Lending Act ("TILA") and the Home Ownership and Equity Protection Act ("HOEPA") in promulgating the loan officer compensation rule. Alternatively, the trade groups assert, if the FRB did have authority to issue the final rule, the final rule is arbitrary and capricious.

Following the denial of their requests for a TRO and preliminary injunction in the lower court, the trade groups appealed the U.S. Circuit Court of Appeals for the District of Columbia Circuit. The trade groups also filed an emergency motion for expedited relief and emergency motion to stay implementation of final rule pending appeal.

The DC Circuit ordered that the implementation of the final rule under review in the consolidated cases be stayed pending further order of the Court, in order to provide "sufficient opportunity to consider the merits of the motions for emergency relief." The Court specifically noted that the stay "should not be construed in any way as a ruling on the merits of those motions." A copy of the Circuit Court's Order is also attached.

The DC Circuit set a briefing schedule on the motions. The FRB must file a combined response to both motions by 12:00 noon, Monday, April 4, 2011. The trade groups were allowed until 10:00 a.m., Tuesday, April 5, 2011.

Thus, implementation of the loan officer compensation rule is stayed at least until April 5, 2011.

Our updates are available on the internet, in searchable format, at: http://updates.kw-llp.com

PLEASE NOTE:

The editor and sponsoring law firm of this blog represent and serve banks, lenders, loan buyers, loan servicers, debt collectors, and other financial services companies. We do not represent consumers.

Any communications or information obtained may be provided to our clients, including for the purpose of debt collection.

The information in this blog and related updates is general in nature, and should not be considered legal advice.

Legal advice requires a full and complete understanding of a particular situation. Your situation may involve material facts that prevent the direct application of the information in this blog and related updates.

You will not become a client of the editor or sponsoring law firm simply by reading this blog.

In order to become a client of the editor or sponsoring law firm, the editor or sponsoring law firm must agree to represent you in writing.

Until we agree to represent you in writing, we are not prevented from representing any other party.

Until you are a client of the editor or sponsoring law firm, any communications with us will not be confidential.

The Editor's Bio

Ralph T. Wutscher
Maurice Wutscher LLP
20 N. Clark Street, 33rd Floor
Chicago, Illinois 60602
Direct: (312) 493-0874
RWutscher@MauriceWutscher.com
https://www.MauriceWutscher.com/

Ralph Wutscher's practice focuses primarily on representing depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, distressed asset buyers and sellers, loss mitigation companies, automobile and other personal property secured lenders and finance companies, credit card and other unsecured lenders, and other consumer financial services providers. He represents the consumer lending industry as a litigator, and as regulatory compliance counsel.

Ralph has substantial experience in defending private consumer finance lawsuits, including cases ranging from large interstate putative class actions to localized single-asset cases, as well as in responding to regulatory investigations and other governmental proceedings. His litigation successes include not only victories at the trial court level, but also on appeal, and in various jurisdictions. He has successfully defended numerous putative class actions asserting violations of a wide range of federal and state consumer protection statutes. He is frequently consulted to assist other law firms in developing or improving litigation strategies in cases filed around the country.

Ralph also has substantial experience in counseling clients regarding their compliance with federal laws, and with state and local laws primarily of the Midwestern United States. For example, he regularly provides assistance in connection with portfolio or program audits, consumer lending disclosure issues, the design and implementation of marketing and advertising campaigns, licensing and reporting issues, compliance with usury laws and other limitations on pricing, compliance with state and local “predatory lending” laws, drafting or obtaining opinion letters on a single- or multi-state basis, interstate branching and loan production office licensing, evaluations and modifications of new or existing products and procedures, debt collection and servicing practices, proper methods of responding to consumer inquiries and furnishing consumer information, as well as proposed or existing arrangements with settlement service providers and other vendors, and the implementation of procedural or other operational changes following developments in the law.

Ralph is a member of the Governing Committee of the Conference on Consumer Finance Law. He is also the immediate past Chair of the Preemption and Federalism Subcommittee for the ABA's Consumer Financial Services Committee. He served on the Law Committee for the former National Home Equity Mortgage Association, and completed two terms as Co-Chair of the Consumer Credit Committee of the Chicago Bar Association.

Ralph received his Juris Doctor from the University of Illinois College of Law, and his undergraduate degree from the University of California at Los Angeles (UCLA). He is a member of the national Mortgage Bankers Association, the American Bankers Association, the Conference on Consumer Finance Law, DBA International, the ACA International Members Attorney Program, as well as the American and Chicago Bar Associations.

Ralph is admitted to practice in Illinois, as well as in the United States Court of Appeals for the Seventh Circuit, the United States District Courts for the Northern and Southern Districts of Illinois, and the United States District Court for the Eastern District of Wisconsin, and has been admitted pro hac vice in various jurisdictions around the country.