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Financial Services Law Insights and Observations


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  • Michigan Court of Appeals affirms dismissal of post-judgment interest case, says state court rule precludes class actions


    On April 21, the Michigan Court of Appeals affirmed a trial court’s dismissal of a post-judgment interest putative class action after concluding that a court rule that precludes “‘actions’ based on claimed violations of statutes that permit[ ] recovery of statutory damages in lieu of actual damages” necessitated the dismissal of the plaintiff’s class action claim. According to the opinion, after the plaintiff defaulted on her $900 credit card debt, the debt was assigned to the defendant debt collector who calculated the plaintiff’s unpaid balance to be $6,241.20. The defendant sought judgment against the plaintiff in that amount, plus interest, fees, and costs, and obtained a default judgment against the plaintiff after she did not respond. The defendant consequently obtained several writs of garnishment, all of which indicated that post-judgment interest had been added to the debt. Several years later, the plaintiff filed a putative class action alleging the defendant violated the FDCPA and the Michigan Regulation of Collection Practices Act (RCPA) by overstating how much she owed “and by impermissibly inflating [defendant’s] costs and the amount of interest it charged.” The state trial court dismissed the plaintiff’s class action claims with prejudice on the basis that Michigan Court Rules (MCR) preclude her from recovering statutory damages under the RCPA because the RCPA does not explicitly permit class actions. The court also dismissed her individual claims for lack of subject-matter jurisdiction.

    On appeal, the plaintiff argued that the trial court erred when it dismissed her class action claims under MCR because she also sought equitable relief and actual damages; however, the Michigan Court of Appeals pointed to a provision in the MCR that states “[a]n action for a penalty or minimum amount of recovery without regard to actual damages imposed or authorized by statute may not be maintained as a class action unless the statute specifically authorizes its recovery in a class action.” The Court of Appeals explained that the RCPA is implicated under this rule because (i) it permits the recovery of statutory damages; and (ii) does not contain a provision explicitly permitting class actions, and as such, “plaintiff’s class action claims must be dismissed irrespective of the fact that she also sought injunctive relief, declaratory relief, and actual damages.” The Court of Appeals further held that even if the plaintiff attempted to plead individual claims, the case would not be allowed to proceed because the actual damages in this case are not high enough to meet the jurisdictional minimum amount in Michigan.

    Courts State Issues Michigan Consumer Finance Appellate Debt Collection Class Action

  • FDIC announces Michigan disaster relief

    Federal Issues

    On July 23, the FDIC issued FIL-52-2021 to provide regulatory relief to financial institutions and help facilitate recovery in areas of Michigan affected by severe storms, flooding, and tornadoes. The FDIC acknowledged the unusual circumstances faced by institutions affected by the storms and suggested that institutions work with impacted borrowers to, among other things, (i) extend repayment terms; (ii) restructure existing loans; or (iii) ease terms for new loans to those affected by the severe weather, provided the measures are done “in a manner consistent with sound banking practices.” Additionally, the FDIC noted that institutions “may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery.” The FDIC further stated that it will also consider regulatory relief from certain filing and publishing requirements.

    Federal Issues FDIC Disaster Relief Consumer Finance Michigan CRA Bank Regulatory

  • Michigan regulator urges institutions to protect stimulus payments from overdrafts, fees

    State Issues

    On March 15, the Michigan Department of Insurance and Financial Services issued a bulletin “strongly” encouraging financial institutions to protect payments made to customers under the American Rescue Plan from overdrafts and fees. The bulletin further instructs that if a financial institution’s system automatically applies such a payment to a preexisting overdraft, the institution should reverse the application of the direct payment as promptly as possible.

    State Issues Covid-19 Michigan Bank Compliance Overdraft Financial Institutions

  • Michigan regulators, business associations urge underserved businesses to apply for PPP loans

    State Issues

    On March 15, the Michigan Department of Insurance and Financial Services, the Michigan Bankers Association, Community Bankers of Michigan, the Michigan Credit Union League and the National Business League urged minority-owned and other underserved businesses in Michigan to apply for forgivable loans through the Paycheck Protection Program (PPP) prior to the March 31, 2021 deadline. The announcement highlighted that community development financial institutions offer specialized support to underserved communities and can assist customers with limited or no credit history to obtain a PPP Loan.

    State Issues Covid-19 Michigan Lending

  • FDIC encourages regulatory relief for Michigan borrowers affected by severe weather

    Federal Issues

    On July 16, the FDIC issued FIL-70-2020 to provide regulatory relief to financial institutions and help facilitate recovery in areas of Michigan affected by severe storms and flooding from May 16 through May 22. In the guidance, the FDIC encourages institutions to consider, among other things, (i) extending repayment terms; (ii) restructuring existing loans; or (iii) easing terms for new loans to borrowers affected by the severe weather, provided the measures are “done in a manner consistent with sound banking practices, can contribute to the health of the local community and serve the long-term interests of the lending institution.” Additionally, the FDIC notes that institutions may receive Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery. The FDIC states it will also consider relief from certain filing and publishing requirements.

    Find continuing InfoBytes coverage on disaster relief guidance here.

    Federal Issues FDIC Consumer Finance Disaster Relief Michigan

  • Michigan regulator announces that annual regulatory assessment invoices have been emailed to insurers

    State Issues

    The Michigan Department of Insurance and Financial Services (DIFS) announced that, in light of many offices working remotely during the Covid-19 outbreak, it has emailed invoices for annual regulatory assessments to licensed insurance companies. Previously, these invoices were typically mailed. As such, all licensed insurers should have received their electronic invoices on or before June 30. DIFS encouraged insurers to use the its e-payment option to pay the invoice.

    State Issues Covid-19 Michigan Insurance Licensing Insurance Licensing Fintech

  • Michigan governor extends eviction moratorium and creates Eviction Diversion Program

    State Issues

    On June 26, the Michigan governor issued Executive Order 2020-134, which extends the temporary suspension of evictions, previously covered here and here, until July 15. The order also creates the “Eviction Diversion Program” through which qualified renters who fail to make required payments during the Covid-19 pandemic can obtain rental assistance. The order “strongly” encourages Michigan landlords to take advantage of Covid-19 housing debt remedies, instead of pursuing eviction or foreclosure after July 15.

    State Issues Covid-19 Michigan Evictions Mortgages Foreclosure

  • Michigan extends Executive Order regarding remote transactions

    State Issues

    On June 24, the Michigan governor announced Executive Order 2020-131, which extends a previous order that temporarily allowed e-signatures on official documents and remote notarizations (previously discussed here).  Any notarial act may be performed by a notary that holds a valid notarial commission in Michigan using two-way real-time audiovisual technology if certain conditions are met. The order sets forth additional requirements for remote notarizations and continues through July 31, 2020 at 11:59 p.m.

    State Issues Covid-19 Michigan Transactions ESIGN Fintech Notary

  • Michigan governor extends eviction moratorium

    State Issues

    On June 11, the Michigan governor issued Executive Order 2020-118, which extends the state’s eviction moratorium, previously covered here, through June 30. During this period, a person may not be removed or excluded from leased residential premises or residential premises held under a forfeited executory contract, subject to certain exceptions. The executive order also stays any statutory limits on Michigan courts’ ability to adjourn any proceedings, toll any redemption periods or limitations periods, or extend any deadlines until 30 days after the restrictions on eviction expire.

    State Issues Covid-19 Michigan Evictions Mortgages

  • Michigan governor extends tax foreclosure redemption deadline

    State Issues

    On May 28, the Michigan governor issued an executive order extending the deadline by which Michigan residents must pay back taxes to avoid foreclosures on their property. The governor extended the deadline until June 29, 2020. The governor had previously extended the deadline from March 31 to May 29.

    State Issues Covid-19 Michigan Foreclosure Mortgages