Financial Services Law Developments: 5/31/20

Friday, June 5, 2020

FYI: California AG Issues Final Text of California Consumer Privacy Act Regulations | WEBINAR ON JUNE 30

On June 1, 2020, the Office of the California Attorney General filed its proposed Final Text of Regulations relating to the California Consumer Privacy Act (CCPA) with the California Office of Administrative Law (OAL)

The regulations are identical to the Second Modified Regulations issued by the attorney general on March 11, 2020. Any changes would have required an additional notice and comment period.

Pursuant to the California Administrative Procedure Act, the OAL has 30 days to review the attorney general's documents to ensure compliance with rulemaking standards.

This means the regulations could become effective and enforceable by July 1, 2020, the deadline set forth in the CCPA. The attorney general notes, however, that the 30-day review period could be extended an additional 60 days pursuant to the COVID-19 Executive Order N-40-20 issued by Gov. Gavin Newsom on March 30, 2020.

The attorney general's website contains a significant amount of information relating to its CCPA rulemaking process, including:

- The reasons for each modification made since the original proposed regulation;

- Its responses to comments submitted, with cross references to the specific parties that submitted the comments; and

- Transcripts from the four public hearings.

The CCPA became effective on Jan. 1, 2020, and the filing of the regulations marks the near end to what has been an eight-month rulemaking process.

It is anticipated the OAL will approve the regulations, such that businesses subject to the CCPA should follow through with final updates to their CCPA policies and procedures.

The attorney general can seek civil penalties up $2,500 for each non-intentional violation and up to $7,500 for each intentional violation.

WEBINAR

Now is the time to fine-tune your CCPA compliance.

On June 30, 2020 at noon ET, please join us to learn how to get your business ready to comply with the CCPA during "CCPA Enforcement is Almost Upon Us! Are You Ready?"

Please click here to register.

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

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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

Tuesday, June 2, 2020

FYI: 1st Cir Holds Note Acceleration Did Not Trigger Massachusetts 5-Yr SOL for "Obsolete Mortgages"

The U.S. Court of Appeals for the First Circuit recently held that the acceleration of the maturity date of a note does not affect the five-year limitations period for the related mortgage under Massachusetts's obsolete mortgage statute.

In so ruling, the First Circuit also confirmed that MERS can legitimately assign a mortgage without holding beneficial title to the underlying property.

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

In March 2007, a couple ("Borrowers") obtained a mortgage loan from a lender ("Lender") to purchase a property in Massachusetts. The Borrowers executed a promissory note memorializing the loan and a mortgage identifying MERS as the mortgagee, acting "solely as a nominee" for the lender and the lender's successors and assigns. The mortgage also granted MERS and its successors and assigns power of sale over the property.

In January 2008, MERS assigned the mortgage to an asset securitization trust ("First Trust"). In February 2010, the First Trust reassigned the mortgage to itself as trustee for a different asset securitization trust ("Second Trust").

The Borrowers defaulted on their loan in 2008. They then filed several bankruptcy petitions and requested injunctive relief, thereby delaying foreclosure until 2016.

After the servicer provided notice of a foreclosure sale in June 2016, the Borrowers sued the loan owner and servicer in federal court to enjoin the sale, arguing the MERS assignment of the mortgage to First Trust was invalid.

The trial court denied Borrowers' request for a preliminary injunction and granted the loan owner's and servicer's motion to dismiss.

Borrowers appealed to the First Circuit, arguing that (1) the servicer cannot foreclose on their property under Massachusetts General Laws Chapter 244, § 14, and (2) the mortgage is obsolete by operation of Massachusetts General Laws Chapter 260, § 33.

As you may recall, under Massachusetts's obsolete mortgage statute, a mortgage becomes obsolete and is automatically discharged five years after the expiration of the stated term or maturity date of the mortgage.

The First Circuit held that MERS can validly assign a mortgage without holding beneficial title to the underlying property (Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282, 291-93 (1st Cir. 2013)), and that Borrowers do not have standing to challenge a mortgage assignment based on an alleged violation of a trust's pooling and servicing agreement (Butler v. Deutsche Bank Tr. Co. Ams., 748 F.3d 28, 37 (1st Cir. 2014)).

The Court also held that a mortgage contract can validly make MERS the mortgagee and authorize it to assign the mortgage on behalf of the lender to the lender's successors and assigns.

Next, the First Circuit held that Borrowers' "obsolete mortgage" claim has no basis in the plain text of the statute or in precedent as nothing in the text of the statute supports the Borrowers' assertion that the acceleration of the maturity date of a note affects the five-year limitations period for the related mortgage.

The Court found Borrowers citation to the Massachusetts Supreme Judicial Court's ruling in Deutsche Bank National Trust Co. v. Fitchburg Capital, LLC, 28 N.E.3d 416 (Mass. 2015), inapposite because the decision makes no mention of the impact of an accelerated note on the obsolete mortgage statute's limitations period.

Accordingly, the First Circuit affirmed the trial court's ruling.

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

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

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.

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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.