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Financial Services Law Insights and Observations


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  • FHA extends Covid-19 origination and 203(k) servicing flexibilities

    Federal Issues

    On February 23, FHA announced the extension of several Covid-19-related flexibilities for single-family lenders and servicers through June 30, generally to continue to limit face-to-face contact as part of the mortgage origination process for FHA loans. Specifically, Mortgagee Letter 2021-06 extends the re-verification of employment guidance and the exterior-only appraisal scope of work option, while Mortgagee Letter 2021-07 will “allow industry partners additional opportunity to utilize flexible guidance related to” self-employment and rental income verification. Both extensions are applicable to Single Family Title II forward and Home Equity Conversion Mortgages. Additionally, FHA is extending temporary flexibilities “for the administration of 203(k) Rehabilitation Mortgage Insurance Program escrow accounts for borrowers in forbearance” for Single Family Title II forward 203(k) rehabilitation mortgages only.

    Federal Issues FHA Covid-19 Mortgages HUD Mortgage Origination Servicing

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  • AARMR urges waiving of certain fees and charges

    Federal Issues

    On March 17, the American Association of Residential Mortgage Regulators (AARMR) issued a statement encouraging mortgage lenders and servicers to take steps to “mitigate the impact to consumers of actions taken in response to Covid-19.” For lenders, the AARMR suggests steps such as waiving rate lock extension fees if an application is delayed for reasons beyond an applicant’s control, or refraining from closing an application due to incompleteness if an applicant is having difficulty gathering required documents. For servicers, the AARMR suggested waiving certain late charges (if permitted), offering forbearance plans or other deferment options, and generally ensuring that all staff are aware of available options and are proactive in assisting borrowers with potential delinquent payments. The AARMR also encourages member agencies to consider the impact of Covid-19 in their dealings with brokers, lenders, servicers, and MLOs.

    Federal Issues Covid-19 AARMR Mortgages Lending Servicing

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  • 6th Circuit affirms dismissal of certain TCPA class action claims, reverses decision on survivability issue


    On July 20, in a matter of first impression for the Courts of Appeals, the U.S. Court of Appeals for the 6th Circuit held that claims under the Telephone Consumer Protection Act (TCPA) survive the death of a plaintiff and may be brought by a successor in interest. In so doing, the court reversed the lower court’s decision that held the opposite and remanded the case back to the lower court for further proceedings. The 6th Circuit opined that the lower court erred in holding that TCPA was penal rather than remedial in nature, and thus could not survive a plaintiff’s death. “The purpose of the TCPA [is] to redress individual wrongs felt by individual consumers . . . [and] recovery under the statute runs to the harmed individual and not the public,” both of which suggest that TCPA claims were remedial, and thus survive a party’s death. Separately, the court affirmed the district court’s order granting a motion to sever and motion to dismiss.

    Courts TCPA Student Lending Servicing Appellate Sixth Circuit

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  • Department of Education plans to use servicers, not private debt collectors, to assist delinquent borrowers

    Federal Issues

    On May 23, the Department of Education (Department) affirmed plans to begin using “‘enhanced servicers’ to assist delinquent borrowers prior to default” instead of private debt collection agencies. The affirmation was made in a reply brief supporting the Department’s motion to dismiss an action filed by collection agencies in the U.S. Court of Federal Claims that challenged the Department’s decision to award contracts to two private debt collectors. The Department argues in the reply brief that the challenge is moot because the Department cancelled the solicitation under which the contracts were awarded to pursue a new collection plan using “enhanced servicers.” According to the brief, the new collection approach will “place a greater emphasis on customer service and early outreach to address delinquencies with a full range of early options for borrowers.”

    Federal Issues Department of Education Student Lending Debt Collection Servicing Consumer Finance

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