InfoBytes Blog

Mortgage servicer must pay $4.5 million in payment service fee suit

On November 7, the U.S. District Court for the Southern District of West Virginia granted final approval of a class action settlement, resolving allegations that a defendant mortgage servicer charged improper fees for optional payment services in connection with mortgage payments made online or over the telephone. The plaintiffs' memorandum of law in support of its motion for final approval of the settlement alleges the defendant engaged in violations of the West Virginia Consumer Credit Protection Act, breach of contract, and unjust enrichment with respect to the fees. According to the memorandum, before deduction of attorneys’ fees and expenses, administrative costs, and any service award, the $4.5 million settlement fund represents approximately $216 per fee paid to the defendant by the putative class members. The court also approved $1.5 million in attorney’s fees, plus $4,519.20 in expenses, along with a $15,000 service award for the settlement class representative.

Courts Class Action Settlement Fees Mortgages Mortgage Servicing State Issues West Virginia

4th Circuit vacates $10.6 million judgment, orders district court to reevaluate class standing

On October 28, the U.S. Court of Appeals for the Fourth Circuit remanded a $10.6 million damages award it had previously approved in light of the U.S. Supreme Court’s decision in TransUnion LLC v. Ramirez. As previously covered by InfoBytes, in January, the Supreme Court vacated the judgment against the defendants and ordered the 4th Circuit to reexamine its decision in light of TransUnion (which clarified the type of concrete injury necessary to establish Article III standing, and was covered by InfoBytes here). Previously, a divided 4th Circuit affirmed a district court’s award of $10.6 million in penalties and damages based on a summary judgment that an appraisal practice common before 2009 was unconscionable under the West Virginia Consumer Credit and Protection Act (covered by InfoBytes here). During the appeal, the defendants argued that summary judgment was wrongfully granted and that the class should not have been certified since individual issues predominated over common ones, but the appellate court majority determined, among other things, that there was not a large number of uninjured members within the plaintiffs’ class because plaintiffs paid for independent appraisals and “received appraisals that were tainted.” At the time, the 4th Circuit “concluded that the ‘financial harm’ involved in paying for a product that was ‘never received’ was ‘a classic and paradigmatic form of injury in fact.’” On remand, the 4th Circuit considered questions of standing and ultimately determined that TransUnion requires the district court to reevaluate the standing of class members.

Courts State Issues Settlement Appellate Fourth Circuit U.S. Supreme Court Class Action West Virginia

West Virginia AG pings CFPB on "unconstitutionally appropriated" funds

On October 24, the West Virginia attorney general sent a letter to CFPB Director Rohit Chopra, and to the leadership of both the House Financial Services Committee and the Senate Banking Committee, regarding the constitutionality of the Bureau’s continuing operation. As previously covered by a Buckley Special Alert, the U.S. Court of Appeals for the Fifth Circuit held that the CFPB funding structure created by Congress violated the Appropriations Clause of the Constitution, which provides that “no money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” The 5th Circuit ruled that, although the CFPB spends money pursuant to a validly enacted statute, the structure violates the Appropriations Clause because the CFPB obtains its funds from the Federal Reserve (not the Treasury), the CFPB maintains funds in a separate account, the Appropriations Committees do not have authority to review the agency’s expenditures, and the Bureau exercises broad authority over the economy. In the letter, the AG argued that the Bureau cannot discharge its duties in a constitutionally permissible way. He further noted that the Bureau “plainly cannot do that with a funding scheme that ‘sever[s] any line of accountability between [Congress] and the CFPB.’” The AG urged the Bureau to reassess its future plans and to reevaluate whether its present regulations have any effect. The letter also requested answers to a series of questions, no later than November 1: (i) “Does the agency believe that any of the regulations that it promulgated under the unconstitutional funding scheme remain in effect? If so, which ones—and why? Similarly, how does the decision affect past enforcement actions?”; and (ii) “What plans does the Bureau plan to undertake to comply with the ruling? How will its ongoing enforcement efforts be effected? How will this change affect any promulgation of regulations? How will bank supervision continue, if at all?”

State Issues Federal Issues State Attorney General Appellate Fifth Circuit West Virginia CFPB Constitution House Financial Services Committee Senate Banking Committee Funding Structure

West Virginia updates money transmitter licensing law

Recently, the West Virginia governor signed SB 505, which updates laws regarding licensure and regulation of money transmitters. Among other things, the bill (i) enhances and expands defined terms, including the definition of “control”; (ii) removes the provisional licensing option for check sellers; (iii) gives West Virginia the authority to participate in multistate examinations; (iv) increases the net worth requirement for licensees; (v) sets forth prior approval requirements for a change in control of a licensee; and (vi) requires licensees to maintain specified “permissible investments” at all times. The bill is effective June 7.

Licensing State Issues State Legislation Money Service / Money Transmitters West Virginia

Supreme Court vacates $10 million judgment in light of TransUnion ruling

On January 10, the U.S. Supreme Court issued a short summary disposition granting a petition for a writ of certiorari filed by a lender and an appraisal management company. Rather than hearing arguments in the case, the Court immediately vacated the judgment against the defendants and ordered the U.S. Court of Appeals for the Fourth Circuit to reexamine its decision in light of the Court’s ruling in TransUnion v. Ramirez (which clarified the type of concrete injury necessary to establish Article III standing, and was covered by InfoBytes here).

As previously covered by InfoBytes, in March 2021, a divided 4th Circuit affirmed a district court’s award of over $10 million in penalties and damages based on a summary judgment that an appraisal practice common before 2009 was unconscionable under the West Virginia Consumer Credit and Protection Act. During the appeal, the defendants argued that summary judgment was wrongfully granted and that the class should not have been certified since individual issues predominated over common ones, but the appellate court majority determined, among other things, that there was not a large number of uninjured members within the plaintiffs’ class because plaintiffs paid for independent appraisals and “received appraisals that were tainted.”

The defendants argued in their petition to the Court that the 4th Circuit’s “fundamentally unjust” holding could not stand in the wake of TransUnion, which ruled that every class member must be concretely harmed by an alleged statutory violation in order to have Article III standing. According to the defendants, the divided panel “affirmed the class certification and the class-wide statutory-damages award, because the class members all faced the same risk of harm: the appraisers had been ‘exposed’ to the supposed procedural error, and the class members paid for the appraisals, even though the court ‘cannot evaluate whether’ any harm ever materialized.”

Courts U.S. Supreme Court Fourth Circuit Appellate Appraisal Appraisal Management Companies Settlement Mortgages State Issues Consumer Finance West Virginia

FDIC announces West Virginia disaster relief

On June 1, the FDIC issued FIL-38-2021 to provide regulatory relief to financial institutions and help facilitate recovery in areas of West Virginia affected by severe storms. 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 will also consider regulatory relief from certain filing and publishing requirements.

Federal Issues FDIC West Virginia Disaster Relief Consumer Finance CRA Bank Regulatory

West Virginia extends remote working for depository and non-depository entities

The West Virginia Division of Financial Institutions extended, through September 1, 2020, its guidance temporarily permitting employees of regulated entities to work from home or some other remote location approved by the financial institution, whether in West Virginia or another state.  The initial guidelines were announced on March 13 (previously discussed here) and had been previously extended through June 15, as previously covered here.

State Issues Covid-19 West Virginia Non-Depository Institution Financial Institutions

West Virginia Division of Financial Institutions extends remote working

West Virginia’s Department of Financial Services Commissioner extended guidance enabling employees of regulated entities to work remotely through August 1 as a result of the Covid-19 crisis. The initial guidelines were announced on March 13 (previously discussed here and here) and were set to expire on June 15.

State Issues Covid-19 West Virginia Financial Institutions

West Virginia extends remote working for depository and non-depository entities

West Virginia’s Department of Financial Services Commissioner extended guidance enabling employees of regulated entities to work remotely through June 15 as a result of the Covid-19 crisis. The initial guidelines were announced on March 13 (previously discussed here) and were set to expire on May 1.

State Issues Covid-19 West Virginia Non-Depository Institution

West Virginia Secretary of State announces temporary remote notarization

On April 1, West Virginia’s secretary of state released an emergency rule authorizing electronic notarization as a result of Covid-19. The switch enables the use of audio and visual technology to witness and record notarizations, but requires the notary to create a recording of the performance of the individual signing, and retain a copy of that recording. Warner’s announcement specified that the electronic notary authorization would only be valid during the state of emergency, and will expire when the emergency measures are lifted.

State Issues Covid-19 West Virginia Notary Fintech