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CFPB Teams With Boston to Field Consumer Complaints
On June 18, the CFPB announced a partnership with the City of Boston to provide local residents access to the CFPB’s consumer complaint hotline through the city’s existing constituent service hotline. Boston residents who call the city hotline with a question or complaint about consumer financial products or services will be transferred directly to the CFPB for assistance.
FDIC Announces Senior Personnel Changes
On June 17, the FDIC announced that Arthur J. Murton will replace James Wigand, Director of the Office of Complex Financial Institutions, who plans to retire. Mr. Murton most recently served as the Director of the Division of Insurance and Research where he has been responsible for, among other things, leading the agency's efforts in assessing economic and financial sector risks to the banking industry, developing and overseeing risk-based deposit insurance pricing and overall insurance fund management, and overseeing the collection and publication of bank financial information. Diane Ellis will serve as the new Director of the Division of Insurance and Research, where she currently serves as Deputy Director for Financial Risk Management and Research.
Connecticut Expands Foreclosure Mediation Program
On June 18, Connecticut enacted HB 6355, which expands the state’s existing foreclosure mediation program and adds new mortgagee requirements. Specifically, the bill extends the foreclosure mediation program to (i) cover the disposition of property through means other than foreclosure, including short sales and deeds-in-lieu of foreclosure, and (ii) foreclosure actions with return dates of July 1, 2008 through June 30, 2009. The bill also, among other things, (i) establishes a pre-mediation process, (ii) requires mortgagees to provide to a borrower a complete financial package in connection with a request for a foreclosure alternative and provide to a mediator and the borrower an account history and related information after receiving notification that the case has been assigned to mediation, and (iii) establishes expedited foreclosure procedures for vacant and abandoned properties. The bill becomes effective on July 15, 2013.
Nevada Locality Latest to Explore Use of Eminent Domain to Seize Mortgages
On June 19, the city council of North Las Vegas, Nevada, reportedly voted to explore the potential use of the government’s eminent domain powers to seize underwater mortgages from trusts, write down the loan principal, and re-sell the altered mortgages to new investors. In January, a California county that had threatened such a course voted to abandon the concept. Since then, several other California cities have signed agreements with a third-party to explore the issue, with North Las Vegas now deciding to pursue a similar path. To date, however, no locality has taken the next step to implement a mortgage seizure plan.
OCC Issues Semiannual Risk Report, Highlights Cyber Security and Anti-Money Laundering Risk
On June 18, the OCC released its Semiannual Risk Perspective, which assesses risks facing national banks and federal savings associations with regard to: (i) the operating environment, (ii) condition and performance of the banking system, (iii) funding, liquidity, and interest rate risk, and (iv) regulatory actions. Among the many issues reviewed in the report, the OCC noted that cyber threats continue to grow in sophistication and require heightened awareness and appropriate resources to identify and mitigate the associated risks. It also stated that BSA/AML threats are increasing as a result of changing methods of money laundering and an increase in the volume and sophistication of electronic banking fraud, while compliance programs are failing to evolve or incorporate appropriate controls into new products and services.
FTC Chairwoman Announces Senior Personnel Changes
On June 17, FTC Chairwoman Edith Ramirez named several senior staff members, including Jessica Rich as Director of the Bureau of Consumer Protection. Ms. Rich has been with the FTC for more than 20 years and most recently served as Associate Director of the Division of Financial Practices. Prior to that, Ms. Rich was a Deputy Director of the Bureau and has served as the Acting Associate Director and Assistant Director of the Bureau’s Division of Privacy and Identity Protection, among numerous other positions. Ms. Ramirez also named Jonathan E. Nuechterlein as General Counsel. He joins the agency from a large law firm, where he was a partner and chair of the firm’s communications, privacy, and Internet law practice group. He previously was Deputy General Counsel for the FCC and an Assistant to the Solicitor General at the U.S. Department of Justice.
Massachusetts Finalizes Foreclosure Regulations
Last week, the Massachusetts Division of Banks adopted revised foreclosure and mortgage modification regulations. The amendments implement a 2012 law that makes it harder to foreclose in that state, including by creating a pre-foreclosure modification notice requirement for creditors. The amended regulations (i) establish the processes for a borrower and creditor with regard to the borrower’s right to request a loan modification, (ii) establish the actions that constitute a borrower’s good faith response to a creditor’s notice of the right to request a loan modification, (iii) define good faith efforts by creditors to avoid foreclosure, and (iv) establish safe harbors for creditors that comply with the loan modification process. The new regulations take effect on June 21, 2013 and must be implemented by September 18, 2013.
Texas Enacts Stringent Email Privacy Bill
On June 14, Texas enacted HB 2268, which amends current state law relating to “search warrants issued in [that] state and other states for certain customer data, communications, and other related information held in electronic storage” by “electronic communications services and remote computing services” providers. Among other things, the bill requires law enforcement to obtain a warrant to search emails, regardless of the age of the emails. The requirement exceeds the privacy protections granted by the federal Electronic Communications Privacy Act, which allows warrantless searches of emails left unopened for 180 days.
HUD Proposes Expansion of Mortgagee Evaluation System, Clarifies Good Neighbor Sales Program Rules
On June 12, HUD proposed in Mortgagee Letter 2013-21 revisions to the system used by the FHA to measure and inform mortgagees of their loss mitigation performance. The proposed revisions involve more comprehensive metrics to evaluate mortgagees on their overall performance with regard to delinquent loan servicing, as opposed to the limited review of default reporting of forbearance actions and loss mitigation and foreclosure claims paid under the current system. HUD is seeking comments on the proposal, which are due by July 12, 2013. Also on June 12, HUD issued Mortgagee Letter 2013-20 to clarify that under its Good Neighbor Next Door Sales Program, which enables eligible participants to purchase at a discount certain designated properties, (i) the mortgage insurance premium is based on the first mortgage only and (ii) the process for submitting requests for an interruption in the owner-occupancy term.
Freddie Mac Announces Numerous Servicing Requirements
On June 14, Freddie Mac issued Bulletin 2013-10 to announce servicing policy changes with regard to Hurricane Sandy, foreclosure and alternatives to foreclosure, and other servicing issues. The Bulletin announces that servicers must submit any Hurricane Sandy exterior property inspection reimbursements by September 16, 2013, using a new template included in the Bulletin. Regarding foreclosures, the Bulletin, among other things, (i) sets the parameters under which servicers may utilize bulk trial foreclosures as an alternative foreclosure process in Florida, (ii) updates requirements for requests related to the preservation of deficiency rights, (iii) revises FICO score seasoning requirements for standard short sales and deeds-in-lieu of foreclosure (DILs), (iv) revises property inspection and closing requirements for DILs and adds a MLS requirement for short sales, and (v) removes, in most instances, the requirement that a servicer obtain a copy of a borrower’s tax transcript or most recent signed federal income tax return to be evaluated for HAMP. Among numerous other servicing policy updates, the Bulletin also (i) specifies that Freddie Mac does not reimburse for credit reports obtained in servicing activities, and (ii) requires servicers to notify Freddie Mac within 24 hours of blocking or rejecting a mortgage or mortgage transaction based on a valid match to the OFAC list of Specially Designated Nationals and Blocked Persons.