Saturday, October 3, 2015

Reminder :: Annual Consumer Financial Services Conference (CLE Provided | Nov. 19-20, 2015 | Chicago, IL)

A friendly reminder to please join us at the Annual Consumer Financial Services Conference organized by The Conference on Consumer Finance Law, along with various law firms.

 

 

REGISTRATION:  http://www.ccflonline.org/conference  (or you can use the attached to register by mail)

 

WHEN:  Nov. 19-20, 2015

WHERE:  Chicago, Illinois

CLE:  12.0 CLE Credits to Be Provided, including 1.0 hr of Ethics

PRICE:  $495 (discounts for multiple attendees)

 

Please circulate this Invitation to any other people -- inside or outside your firm or company -- whom you think might be interested in attending.

 

 

The Conference will include presentations by some 45 of the best and brightest speakers and practitioners in the country, on the following topics:

 

 

Fair Lending and HMDA

CFPB Administrative Appeals

TCPA: The New FCC Order

Arbitration Developments

UDAAP

Cybersecurity

CFPB Regulation of Non-Bank Auto Finance

 

TRID: Issues and Implementation

Flood and Lender-Placed Insurance

Mortgage Servicing and Bankruptcy

 

State Regulation of Debt Collection/Debt Buyers

Credit Reporting and Bankruptcy

The Madden Case and Debt Sales

 

CFPB Regulation Through Enforcement Actions

Ethics and Professional Responsibility

 

 

Additional information is provided in the attached, and at:  http://www.ccflonline.org/conference

 

 

 

 

Ralph T. Wutscher
Maurice 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
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

California   |   Florida   |   Illinois   |   Indiana   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

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 and webinar presentations are available on the internet, in searchable format, at:

 

Financial Services Law Updates

 

and

 

The Consumer Financial Services Blog

 

and

 

Webinars

 

and

 

California Finance Law Developments

 

and

 

Insurance Recovery Services

 

 

 

 

Friday, October 2, 2015

FYI: Feds State They Will Expect "Good Faith Efforts to Comply" With TRID

The federal banking regulators (including the CFPB) confirmed in a letter issued yesterday that "[e]xaminers will expect supervised entities to make good faith efforts to comply with the ['Know Before You Owe'

TILA-RESPA Integrated Disclosure] Rule's requirements in a timely manner."

 

More specifically, "examiners will consider the institution's implementation plan, including actions taken to update policies, procedures, and processes; its training of appropriate staff; and its handling of early technical problems or other implementation challenges."

 

A copy of the letter issued by the Office of the Comptroller of the Currency (OCC) is available at:

 

http://www.aba.com/Tools/Function/Mortgage/Documents/OCC-Response-TRID-Guidance.pdf

 

The CFPB's related press release is available at:

 

http://www.consumerfinance.gov/newsroom/cfpb-sends-industry-letter-on-know-before-you-owe-mortgage-disclosure-rule-compliance/

 

The regulators state that the member agencies of the Federal Financial Institutions Examination Council (FFIEC) "recognize that the mortgage industry has needed to make significant systems and operational changes to adjust to the requirements of the Rule, and that implementation requires extensive coordination with third parties."

 

The FFIEC is comprised of principals of the following: the Consumer Financial Protection Bureau, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the State Liaison Committee.

 

 

 

 

Ralph T. Wutscher
Maurice 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
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

California   |   Florida   |   Illinois   |   Indiana   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

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 and webinar presentations are available on the internet, in searchable format, at:

 

Financial Services Law Updates

 

and

 

The Consumer Financial Services Blog

 

and

 

Webinars

 

and

 

California Finance Law Developments

 

and

 

Insurance Recovery Services

 

 

Thursday, October 1, 2015

FYI: Ill App Ct Holds New Mortgagee May Be Substituted After Foreclosure Sale, Indicates Borrower's Counsel May Be Sanctioned

The Illinois Appellate Court, First District, recently held that a failure to file a motion to substitute plaintiff in a pending foreclosure proceeding prior to the judicial sale did not invalidate the sale.

 

Also, considering the absence of any meaningful argument advanced on appeal, the Court further ordered counsel for defendant to show cause why he should not be sanctioned.  

 

A copy of the opinion is available at:  http://illinoiscourts.gov/Opinions/AppellateCourt/2015/1stDistrict/1140999.pdf

 

The mortgagee filed a foreclosure action, and a judgment of foreclosure was ultimately entered. Thereafter, the mortgagee transferred servicing to a new mortgagee. 

 

The new mortgagee appeared at the judicial sale and bid the amount of indebtedness as an opening bid. The property was ultimately sold to a third party.  After the sale was conducted, the new mortgagee was substituted as plaintiff in the underlying action. Notwithstanding, the trial court issued an order confirming the sale.

 

The sole issue on appeal was whether the change in mortgagee between the date the judgment of foreclosure was entered and the date the sale was conducted, without substituting the new mortgagee as the plaintiff until after the date of sale, entitled the borrower to relief from the order confirming the sale.

 

As the Appellate Court noted, in considering a motion to confirm a judicial sale of property under the Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1101 et seq., the sale must be confirmed unless the notice of sale was not given, the terms of the sale were unconscionable, the sale was conducted fraudulently or justice was otherwise not done.  See 735 ILCS 5/15-1508(b); Wells Fargo Bank, N.A. v. McCluskey, 999 N.E.2d 321 (2013). 

 

Here, the Appellate Court held that the first mortgagee's failure to substitute the new mortgagee as a party-plaintiff in the foreclosure proceedings did not fall into any of the categories set forth in 735 ILCS 5/15-1508.

 

The Appellate Court held that the fact new mortgagee that had not been substituted as plaintiff in the caption of the foreclosure complaint had absolutely no effect on the manner in which the sale was conducted, and also noted that the borrower failed to articulate how the alleged defect prejudiced her in any way.

 

Given the property was sold to third parties who submitted the highest bid, the Court found no reason to disturb the trial court's order confirming the sale.

 

Accordingly, the Appellate Court held that the borrower's appeal was completely without merit.  Considering the lack of merit in any issue raised, and the absence of any meaningful argument advanced on appeal, the Court also ordered counsel for the borrower's counsel to show cause why he should not be sanctioned.

 

 

 

 

Ralph T. Wutscher
Maurice 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
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

California   |   Florida   |   Illinois   |   Indiana   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

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 and webinar presentations are available on the internet, in searchable format, at:

 

Financial Services Law Updates

 

and

 

The Consumer Financial Services Blog

 

and

 

Webinars

 

and

 

California Finance Law Developments

 

and

 

Insurance Recovery Services

 

 

Wednesday, September 30, 2015

FYI: Mass Fed Ct Hands Creditors a Win on Post-Discharge Credit Reporting and FCRA Preemption

The U.S. District Court for the District of Massachusetts recently held that the federal Fair Credit Reporting Act ("FCRA") preempts Massachusetts state law claims for violations of the Massachusetts Credit Reporting Act, Mass. Gen. Laws ch. 93, § 54A, and the Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A.

 

Importantly, the Court also held that the mere furnishing of information following a bankruptcy discharge, without more, is not actionable.

 

A copy of the opinion is available at:  Link to Opinion

 

In 2008, the plaintiff obtained a mortgage and note for his home.  In August 2010, the plaintiff filed for Chapter 7 bankruptcy, receiving a discharge order in December 2010.

 

In May 2013, the mortgagee began a foreclosure proceeding.  In January 2014, the plaintiff and the mortgagee reached an agreement resolving the foreclosure through a permanent modification to the mortgage loan.  According to the plaintiff, although he agreed to the modification, he was no longer personally liable for the mortgage debt because of his Chapter 7 discharge and because the mortgage debt was not "reaffirmed" by him in his bankruptcy case.

 

In July 2014, the plaintiff was offered employment with a bank contingent on credit and background checks.  The prospective bank employer withdrew the job offer, allegedly when the plaintiff's credit report revealed the foreclosure action and a past due balance of $99,726.

 

The plaintiff alleged that the mortgagee's act of reporting his discharged mortgage constituted an effort to collect a debt in violation of the bankruptcy discharge injunction.  The mortgagee argued that it did not engage in misreporting because its right to enforce the mortgage was unaffected by the plaintiff's bankruptcy discharge. 

 

As the Court noted, it is well established that a mortgage lien on real property, including all amounts due thereunder, passes through bankruptcy unaffected.  Absent a reaffirmation, following a Chapter 7 discharge, although a debtor is not personally liable for the mortgage loan, he still "owes" the lender in the form of the property (the collateral).  The debtor must either make new arrangements with the lender to keep the property, return it to the lender, or wait for it to be foreclosed upon.  

 

Because of the continuing mortgage lien, a continuing "credit relationship" exists between the lender and the debtor.  The Court also noted that, more than seven months after the discharge, the plaintiff agreed to a loan modification, evidencing the continuing credit relationship.  As a result, the Court held that the mortgagee was under no obligation under the Bankruptcy Code to change the way it reported the status of the plaintiff's mortgage loan. 

 

Even assuming the plaintiff had no credit relationship with the mortgagee after the bankruptcy discharge, the Court held that the act of reporting a discharge debt even standing alone is not a violation of the bankruptcy discharge injunction, at 11 U.S.C. § 524(a).  To violate § 524(a), a creditor must act in a way that improperly coerces or harasses the debtor.

 

The Court held that reporting a debt to a credit reporting agency – without any evidence of harassment, coercion or some other linkage to show that the act is one likely to be effective as a debt collection device – fails to qualify on its own as an "act" that violates § 524. 

 

Under the circumstances, the Court held that the mortgagee's single instance of failing to update the plaintiff's credit report was not so objectively coercive as to warrant relief under § 524.  Therefore, the plaintiff's allegations that the mortgagee violated the discharge were dismissed.

 

The Court also dismissed the plaintiff's claims which alleged that the mortgagee's credit reporting violated the Massachusetts Credit Reporting Act under Mass. Gen. Laws ch. 93, § 54A.

 

The mortgagee argued that the plaintiff's claim were preempted by the FCRA, which provides that "[n]o requirement or prohibition may be imposed under the laws of any State …relating to the responsibilities of persons who furnish information to consumer reporting agencies…"  15 U.S.C. § 1681t(b)(1)(F). 

 

The Court noted that, at first glance, the Massachusetts Credit Reporting Act claim would appear to fall directly within the FRCA's preemptive language because, FCRA explicitly preempts any requirement imposed by state law that clearly relates to the responsibilities of a furnisher of credit information. However, the FRCA also provides an express exemption for the Massachusetts Credit Reporting Act noting that § 1681t(b)(1)(F) "shall not apply - (i) with respect to section 54A(a) of chapter 93 of the Massachusetts Annotated Laws . . . ." 15 U.S.C. § 1681t(b)(1)(F). 

 

However, the Court held that the FCRA expressly exempts only section 54A(a) of the state law from its preemptive reach, but FCRA includes no such exemption for section 54A(g) of the Massachusetts Credit Reporting Act, which creates a private cause of action for the plaintiff to assert the state law violation. 

 

In the Court's view, the absence of express language exempting § 54A(g) from the FCRA's preemption provision was fatal to Lance's Massachusetts Credit Reporting Act claim. 

 

The Court also dismissed plaintiff's claim that the mortgagee's credit reporting violated the Massachusetts Consumer Protection Act, Mass. Gen. Laws Ch. 93A ("Chapter 93A").

 

The mortgagee argued that this claim was also preempted because it was based on its reporting of the plaintiff's consumer credit information.  The plaintiff argued that his Chapter 93A claim survived preemption because it was based on the existence of unfair practices independent from the subject matter of the mortgagee's credit furnishing obligations under FCRA.  Specifically, the plaintiff alleged that the Chapter 93A claim was based on the mortgagee's supposedly unlawful debt collection by means of credit reporting, rather than the inaccurate credit reporting itself. 

 

As the Court noted, however, the plaintiff's argument could not withstand analysis.  The Court held that the conduct at issue was the mortgagee's debt collection practices - insofar as they were coextensive with its reporting on a discharged debt - were exactly the type of conduct Congress intended to regulate under the FCRA. As a result, the Court held that the plaintiff's Chapter 93A claim was also preempted. 

 

Accordingly, the plaintiff's complaint was dismissed in its entirety.

 

 

 

 

Ralph T. Wutscher
Maurice 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
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

California   |   Florida   |   Illinois   |   Indiana   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

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 and webinar presentations are available on the internet, in searchable format, at:

 

Financial Services Law Updates

 

and

 

The Consumer Financial Services Blog

 

and

 

Webinars

 

and

 

California Finance Law Developments

 

and

 

Insurance Recovery Services

 

 

FYI: Mass Fed Ct Hands Creditors a Win on Post-Discharge Credit Reporting and FCRA Preemption

The U.S. District Court for the District of Massachusetts recently held that the federal Fair Credit Reporting Act ("FCRA") preempts Massachusetts state law claims for violations of the Massachusetts Credit Reporting Act, Mass. Gen. Laws ch. 93, § 54A, and the Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A.

 

Importantly, the Court also held that the mere furnishing of information following a bankruptcy discharge, without more, is not actionable.

 

A copy of the opinion is available at:  Link to Opinion

 

In 2008, the plaintiff obtained a mortgage and note for his home.  In August 2010, the plaintiff filed for Chapter 7 bankruptcy, receiving a discharge order in December 2010.

 

In May 2013, the mortgagee began a foreclosure proceeding.  In January 2014, the plaintiff and the mortgagee reached an agreement resolving the foreclosure through a permanent modification to the mortgage loan.  According to the plaintiff, although he agreed to the modification, he was no longer personally liable for the mortgage debt because of his Chapter 7 discharge and because the mortgage debt was not "reaffirmed" by him in his bankruptcy case.

 

In July 2014, the plaintiff was offered employment with a bank contingent on credit and background checks.  The prospective bank employer withdrew the job offer, allegedly when the plaintiff's credit report revealed the foreclosure action and a past due balance of $99,726.

 

The plaintiff alleged that the mortgagee's act of reporting his discharged mortgage constituted an effort to collect a debt in violation of the bankruptcy discharge injunction.  The mortgagee argued that it did not engage in misreporting because its right to enforce the mortgage was unaffected by the plaintiff's bankruptcy discharge. 

 

As the Court noted, it is well established that a mortgage lien on real property, including all amounts due thereunder, passes through bankruptcy unaffected.  Absent a reaffirmation, following a Chapter 7 discharge, although a debtor is not personally liable for the mortgage loan, he still "owes" the lender in the form of the property (the collateral).  The debtor must either make new arrangements with the lender to keep the property, return it to the lender, or wait for it to be foreclosed upon.  

 

Because of the continuing mortgage lien, a continuing "credit relationship" exists between the lender and the debtor.  The Court also noted that, more than seven months after the discharge, the plaintiff agreed to a loan modification, evidencing the continuing credit relationship.  As a result, the Court held that the mortgagee was under no obligation under the Bankruptcy Code to change the way it reported the status of the plaintiff's mortgage loan. 

 

Even assuming the plaintiff had no credit relationship with the mortgagee after the bankruptcy discharge, the Court held that the act of reporting a discharge debt even standing alone is not a violation of the bankruptcy discharge injunction, at 11 U.S.C. § 524(a).  To violate § 524(a), a creditor must act in a way that improperly coerces or harasses the debtor.

 

The Court held that reporting a debt to a credit reporting agency – without any evidence of harassment, coercion or some other linkage to show that the act is one likely to be effective as a debt collection device – fails to qualify on its own as an "act" that violates § 524. 

 

Under the circumstances, the Court held that the mortgagee's single instance of failing to update the plaintiff's credit report was not so objectively coercive as to warrant relief under § 524.  Therefore, the plaintiff's allegations that the mortgagee violated the discharge were dismissed.

 

The Court also dismissed the plaintiff's claims which alleged that the mortgagee's credit reporting violated the Massachusetts Credit Reporting Act under Mass. Gen. Laws ch. 93, § 54A.

 

The mortgagee argued that the plaintiff's claim were preempted by the FCRA, which provides that "[n]o requirement or prohibition may be imposed under the laws of any State …relating to the responsibilities of persons who furnish information to consumer reporting agencies…"  15 U.S.C. § 1681t(b)(1)(F). 

 

The Court noted that, at first glance, the Massachusetts Credit Reporting Act claim would appear to fall directly within the FRCA's preemptive language because, FCRA explicitly preempts any requirement imposed by state law that clearly relates to the responsibilities of a furnisher of credit information. However, the FRCA also provides an express exemption for the Massachusetts Credit Reporting Act noting that § 1681t(b)(1)(F) "shall not apply - (i) with respect to section 54A(a) of chapter 93 of the Massachusetts Annotated Laws . . . ." 15 U.S.C. § 1681t(b)(1)(F). 

 

However, the Court held that the FCRA expressly exempts only section 54A(a) of the state law from its preemptive reach, but FCRA includes no such exemption for section 54A(g) of the Massachusetts Credit Reporting Act, which creates a private cause of action for the plaintiff to assert the state law violation. 

 

In the Court's view, the absence of express language exempting § 54A(g) from the FCRA's preemption provision was fatal to Lance's Massachusetts Credit Reporting Act claim. 

 

The Court also dismissed plaintiff's claim that the mortgagee's credit reporting violated the Massachusetts Consumer Protection Act, Mass. Gen. Laws Ch. 93A ("Chapter 93A").

 

The mortgagee argued that this claim was also preempted because it was based on its reporting of the plaintiff's consumer credit information.  The plaintiff argued that his Chapter 93A claim survived preemption because it was based on the existence of unfair practices independent from the subject matter of the mortgagee's credit furnishing obligations under FCRA.  Specifically, the plaintiff alleged that the Chapter 93A claim was based on the mortgagee's supposedly unlawful debt collection by means of credit reporting, rather than the inaccurate credit reporting itself. 

 

As the Court noted, however, the plaintiff's argument could not withstand analysis.  The Court held that the conduct at issue was the mortgagee's debt collection practices - insofar as they were coextensive with its reporting on a discharged debt - were exactly the type of conduct Congress intended to regulate under the FCRA. As a result, the Court held that the plaintiff's Chapter 93A claim was also preempted. 

 

Accordingly, the plaintiff's complaint was dismissed in its entirety.

 

 

 

 

Ralph T. Wutscher
Maurice 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
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

California   |   Florida   |   Illinois   |   Indiana   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

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 and webinar presentations are available on the internet, in searchable format, at:

 

Financial Services Law Updates

 

and

 

The Consumer Financial Services Blog

 

and

 

Webinars

 

and

 

California Finance Law Developments

 

and

 

Insurance Recovery Services