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Financial Services Law Insights and Observations


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  • Maryland regulator further extends foreclosure restrictions

    State Issues

    On February 22, the Maryland commissioner of financial regulation issued guidance that extends the “re-start date” for the initiation of residential foreclosures to April 1, 2021. The guidance is issued pursuant to the Maryland governor’s executive order 20-12-17-02, which amended and restated previous executive orders covered here, here, and here.

    State Issues Covid-19 Maryland Mortgages Foreclosure

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  • Georgia announces new rental assistance program

    State Issues

    On February 19, Georgia Governor Brian Kemp announced that Georgia has received $552 million from the federal government to implement a rental assistance program.  The Georgia Department of Community Affairs will be administering the Georgia Rental Assistance program (subject to the still-developing U.S. Treasury guidelines), which will make payments directly to the landlords and utility providers of eligible individuals. To qualify for the program, a household must have:

    • Qualified for unemployment benefits or experienced a reduction in household income, incurred significant costs, or experienced other financial hardship due directly or indirectly to Covid-19;
    • Demonstrated a risk of experiencing homelessness or housing instability; and
    • Have a household income at or below 80% of the Area Median Income (AMI), with priority given to: 1) households below 50% of the AMI, or 2) households with one or more individuals who have been unemployed 90 days or longer.

    Payments are generally capped at 12 months of rent and utilities, but may extend to 15 under certain circumstances. 

    State Issues Covid-19 Georgia Mortgages

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  • 8th Circuit affirms summary judgment for servicer without proof of RESPA injury


    On February 11, the U.S. Court of Appeals for the Eighth Circuit affirmed summary judgment in favor of a mortgage loan servicer, concluding that the consumer failed to establish that he was injured by the servicer’s alleged violation of RESPA. As previously covered by InfoBytes, the U.S. District Court for the District of Minnesota ruled on a motion for summary judgment concerning whether the Minnesota Mortgage Originator and Servicer Licensing Act’s (MOSLA) provision prohibiting “a mortgage servicer from violating ‘federal law regulating residential mortgage loans’” provides a cause of action under state law when a loan servicer violates RESPA but where the consumer ultimately has no federal cause of action because the consumer “sustained no actual damages and thus has no actionable claim under RESPA.” The 8th Circuit previously overturned the district court’s earlier ruling to grant summary judgment in favor of the consumer, concluding that while the loan servicer failed to (i) conduct an adequate investigation following the plaintiff’s request as to why there was a delinquency for his account, and (ii) failed to provide a complete loan payment history when requested, its failure did not cause actual damages.

    In affirming the district court’s recent order, the 8th Circuit agreed that for the consumer to pursue a MOSLA cause of action when a loan servicer violates a federal law regulating mortgage loans, such as RESPA, there must be a federal cause of action. Even though the 8th Circuit previously concluded the servicer violated RESPA, the plaintiff must still prove actual damages to establish an injury in order to prevail under MOSLA.

    Courts Appellate Eighth Circuit RESPA Mortgages

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  • Biden extends foreclosure protections

    Federal Issues

    On February 16, the Biden administration announced an extension of the Covid-19 forbearance and foreclosure protections for homeowners through June 30. According to the White House statement, the administration has directed HUD, Department of Veterans Affairs, and Department of Agriculture to (i) extend the foreclosure moratorium for homeowners through June 30; (ii) extend the mortgage payment forbearance enrollment window until June 30; and (iii) provide up to six months of additional mortgage payment forbearance, in three-month increments. The announcement notes that the extension will “directly benefit the 2.7 million homeowners currently in COVID forbearance and extend the availability of forbearance options for nearly 11 million government-backed mortgages nationwide.” The FHA extensions are reflected in Mortgagee Letter 2021-05 and the VA extensions are reflected in Circulars 26-21-04 and 26-21-05.

    As previously covered by InfoBytes, FHFA announced an extension of Fannie Mae and Freddie Mac’s foreclosure moratorium until March 31 and the option for borrowers to receive an additional three-month Covid-19 forbearance extension.

    Federal Issues Covid-19 HUD Foreclosure Forbearance Department of Veterans Affairs USDA Mortgages

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  • Washington issues updated guidance to residential mortgage loan servicers

    State Issues

    On February 12, the Director of the Washington Department of Financial Institutions issued their fourth amended guidance to residential mortgage loan servicers.  The guidance reminds residential mortgage loan servicers to take all necessary precautions to help prevent the spread of Covid-19, including allowing them to continue working from home (previously discussed here.)  It also urges servicers to take “reasonable and prudent actions” to support consumers by:

    • Forbearing mortgage payments;
    • Refraining from reporting late payments to credit rating agencies;
    • Offering mortgagors additional time to complete trial loan modifications, and ensuring that late payments do not affect their ability to obtain permanent loan modifications;
    • Waiving late payment fees and online payment fees;
    • Postponing foreclosures;
    • Ensuring that the closure of the mortgage servicer’s office does not disrupt services to borrowers; and
    • Proactively reaching out to mortgagors via app announcements, text, email or otherwise to explain the assistance being offered to mortgagors.

    The guidance also notes that efforts to assist mortgagors will not be subjected to examiner criticism.

    State Issues Covid-19 Washington Mortgages

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  • FHFA extends foreclosure moratorium, increases forbearance and deferral timelines

    Federal Issues

    On February 9, the FHFA announced that Fannie Mae and Freddie Mac (GSEs) will extend their moratorium on single-family foreclosures and real estate owned (REO) evictions until at least March 31 (which was set to expire on February 28, previously covered here). The foreclosure moratorium applies to homeowners with a GSE-backed, single-family mortgage only, and the REO eviction moratorium applies to properties that were acquired by the GSEs through foreclosure or deed-in-lieu of foreclosure transactions. Additionally, FHFA announced that borrowers may be eligible for up to a three-month forbearance extension so long as they are on a Covid-19 forbearance plan as of February 28 (details on the Covid-19 forbearance covered by InfoBytes here) and the Covid-19 payment deferral may now cover up to 15 months of missed payments (previously covering up to 12 months of missed payments, additional details covered by InfoBytes here).

    Additionally, FHFA issued an extension of several loan origination guidelines put in place to assist borrowers during the Covid-19 pandemic. Specifically, FHFA extended until March 31 existing guidelines related to: (i) alternative appraisal requirements on purchase and rate term refinance loans; (ii) alternative methods for documenting income and verifying employment before loan closing; and (iii) expanding the use of power of attorney to assist with loan closings.

    The extensions are implemented in updates to Fannie Mae Lender Letters LL-2021-02, LL-2021-03, LL-2021-04; LL-2021-07; and Freddie Mac Guide Bulletin 2021-6; Bulletin 2021-7 and Selling FAQs.

    Federal Issues FHFA Covid-19 Fannie Mae Freddie Mac GSE Forbearance Foreclosure Mortgages

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  • NYDFS details redlining issues from nonbank lenders

    State Issues

    On February 4, NYDFS released a report on redlining in the Buffalo metropolitan area, concluding that there is a “distinct lack of lending by mortgage lenders, particularly non-depository lenders” to majority-minority populations and to minority homebuyers in general. Among other things, the report concluded that (i) while minorities in the Buffalo region comprise about 20 percent of the population, they receive less than 10 percent of total loans made in the region; (ii) nonbank lenders lent at a lower rate in majority-minority neighborhoods than depository institutions did; and (iii) several of the nonbank mortgage lenders did not have adequate fair lending compliance programs and do not make an effort to serve majority-minority neighborhoods. The report made numerous recommendations, including a recommendation to amend the New York Community Reinvestment Act (CRA) to cover nonbank mortgage lenders and a request that the OCC and the CFPB investigate federally regulated institutions serving the Buffalo area for violations of fair lending laws.

    Additionally, NYDFS announced a settlement with a nonbank lender in connection with its lending to minorities and in majority-minority neighborhoods in Buffalo and Syracuse, New York. The settlement agreement found no evidence of intentional discrimination or fair lending law violations but rather weaknesses in the lender’s compliance program. The agreement outlines efforts the lender will take to “provide more meaningful access to residential loans and financing for minorities and individuals living in majority-minority neighborhoods” in Western and Central New York. Among other things, the lender will (i) develop a compliance management plan; (ii) increase marketing to majority-minority census tracts; (iii) create a $150,000 special financing program to increase loan originations for residents of majority-minority neighborhoods; and (iv) increase annual training.

    State Issues NYDFS Mortgages Settlement Enforcement CRA Fair Lending

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  • Wyoming executive order instructing cooperation with federal agencies to implement Emergency Rental Assistance Program

    State Issues

    On February 8, the governor of Wyoming issued Executive Order 2021-02, which instructs the Wyoming Department of Family Services (WDFS) to prepare for the implementation of the federal Emergency Rental Assistance Program (ERAP.)  Section (b) specifically charges WDFS to enter into “formal or informal” cooperative agreements with any necessary federal agency, including the Department of Housing and Urban Development, for “information-sharing, planning, and technical assistance” related to rolling out ERAP.

    State Issues Covid-19 Wyoming Mortgages

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  • Acting director outlines future direction for CFPB

    Federal Issues

    On February 4, CFPB acting Director Dave Uejio published a blog post conveying his “broad vision” for the Division of Research, Markets, and Regulations (RMR). Uejio emphasized that in order for the Bureau to respond to his previously stated policy priorities—(i) relief for consumers facing hardship and economic crisis due to the Covid-19 pandemic, and (ii) racial equity (covered by InfoBytes here)—the agency must sharpen its focus on the consumer experience. To achieve this goal, Uejio is authorizing the Bureau’s use of its 1022(c)(4) data collection authority and has asked RMR to examine “the impact of specific industry practices on consumers’ daily budget and overall bottom line in order to target effective policy interventions.” Among other things, RMR has been asked to take the following immediate steps:

    • Prepare an analysis assessing housing insecurities such as mortgage foreclosures, mobile home repossessions, and landlord-tenant evictions.
    • Prepare an analysis to address pressing consumer financial barriers to racial equity in order to “inform research and rulemaking priorities,” and “[e]xplicity include in policy proposals the racial equity impact of the policy intervention.”
    • Resume data collections paused due to Covid-19, including HMDA quarterly reporting, CARD Act data collection, PACE data collection, and the previously completed 1071 data collection.
    • Focus mortgage servicing rulemaking on Covid-19 responses “to avert, to the extent possible, a foreclosure crisis” when pandemic forbearances end in March and April.
    • Explore options for preserving the status quo with respect to QM and debt collection rules. (QM rules covered by InfoBytes here and a Buckley Special Alert; debt collection rules covered by InfoBytes here and here.) 

    Uejio also noted that he “will be assessing regulatory actions taken by the previous leadership and adjusting as necessary and appropriate those not in line with [the Bureau's] consumer protection mission and mandate,” and that he wants to “preserve, where possible, maximum policy flexibility” for President Biden’s nominee once confirmed.

    Federal Issues CFPB Succession Fair Lending Covid-19 Mortgages Qualified Mortgage Data Collection / Aggregation CFPB

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  • Illinois reissues and extends several Covid-19 executive orders

    State Issues

    On February 5, the governor of Illinois issued Executive Order 2021-04, which extends several executive orders through March 6, 2021 (previously covered hereherehere, here, and here). Among other things, the order extends: (i) Executive Order 2020-07 regarding in-person meeting requirements, (ii) Executive Order 2020-23 regarding actions by individuals licensed by the Illinois Department of Financial and Professional Regulation engaged in disaster response, (iii) Executive Order 2020-25 regarding garnishment and wage deductions (previously covered here), (iv) Executive Order 2020-30 regarding residential evictions (previously covered here), and (v) Executive Order 2020-72 regarding the residential eviction moratorium (previously covered here and here).

    State Issues Covid-19 Illinois Debt Collection Evictions Mortgages

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