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Fannie Mae Names New General Counsel
On September 18, Fannie Mae announced that Bradley Lerman will join the company on October 1, 2012 as Executive Vice President, General Counsel, and Corporate Secretary. Mr. Lerman previously was associate general counsel and chief litigation counsel at Pfizer, Inc. Prior to his work at Pfizer, Mr. Lerman was in private practice, focusing on white collar defense, product liability, and securities litigation. Before that he served as Assistant U.S. Attorney for the Northern District of Illinois.
FinCEN Plans Roundtable on Customer Due Diligence Proposal, Releases Materials from July Hearing
On September 17, FinCEN announced that it will host a roundtable discussion on its proposed customer due diligence requirements on September 28, 2012 in Chicago, Illinois. The announcement identifies a series of “key issues” on which the roundtable discussion will focus, including (i) how institutions currently identify, collect, and verify beneficial ownership information, (ii) the costs associated with collecting and verifying such information, and (iii) how institutions currently conduct due diligence on trust accounts. Last week, FinCEN released a summary of a public hearing held in July on its customer due diligence proposal. The summary provides the final agenda for the hearing, a general summary of topics covered, and statements and other materials submitted for the record.
NIST Finalizes Information Security Risk Assessment Guidelines
On September 18, the National Institute of Standards and Technology released a final version of its risk assessment guidelines, which are designed to advise all types of government and private organizations—including financial institutions—about information security risks and information technology infrastructures. The Guide for Conducting Risk Assessments provides guidance regarding (i) threats, (ii) vulnerabilities, (iii) impact to missions and business operations, and (iv) the likely threat of exploitation of vulnerabilities in information systems and their physical environment to cause harm or adverse consequence.
Student Lender Agrees to Settle TCPA Collection Litigation
On September 17, the U.S. District Court for the District of Washington approved a settlement entered into between a student lender and a class of borrowers who alleged that the lender violated the Telephone Consumer Protection Act (TCPA) by employing an automated dialing system to place collection calls to borrowers’ cell phones. The lender and its affiliated companies agreed to pay $24 million to resolve the case and avoid the costs of further proceedings, but the lender continues to vigorously deny the allegations. According to counsel for the class, the settlement, which the parties have been negotiating since 2010, is the largest settlement to date under the TCPA.
HUD Plans New Reverse Mortgage Platform
On September 11, HUD announced the launch of a new platform to manage its home equity conversion mortgage portfolio. Mortgagee Letter 2012-17 advises mortgagees of the new system and related claim enhancements, and directs mortgagees to additional information about the new online platform.
Fannie Mae and Freddie Mac Implement Numerous Selling Updates, Announce Appraisal Submission Enhancements
On September 14, Freddie Mac issued Bulletin 2012-19, which implements changes to the requirements for Relief Refinance Mortgages announced on July 31, 2012. The Bulletin also notifies sellers that (i) Freddie Mac no longer is purchasing balloon/reset mortgages, (ii) the Selling Guide has been updated to reflect that at least one borrower on a refinance must have held title and resided in the property for the prior twelve months, and (iii) several requirements for the Selling System Servicing Released Sales Process have been updated and revised.
Also on September 14, Fannie Mae announced in Selling Guide Announcement SEL-2012-09 numerous enhancements to the underwriting and documentation policies for Refi Plus and DU Refi Plus loans, including to (i) reduce representation and warranties, (ii) provide an alternative to income verification for certain payment changes, (iii) reduce income and assets documentation, and (iv) provide an alternative qualification method when removing a borrower.
On September 18, Fannie Mae and Freddie Mac announced that the appraisal submission process through the Uniform Collateral Data Portal will be enhanced on October 7, 2012.
FBI Warns Financial Institutions About New Cyber Threats
On September 17, the FBI, together with the Financial Services Information Sharing and Analysis Center and the Internet Crime Complaint Center, issued a fraud alert to advise financial institutions of a new trend in which cyber criminals steal financial institution employee credentials for subsequent use in conducting wire fraud. The alert identifies spam and phishing emails as the primary method by which outsiders have obtained employee credentials, and notes that small and medium sized banks and credit unions have been the most targeted institutions to date. The fraudsters also have stolen administrative credentials to third-party services and have used those credentials to circumvent financial institutions’ authentication methods. Once obtained, the credentials have been used to conduct unauthorized wire transactions. The alert notes that in some instances the unauthorized transactions have been preceded by a denial of service attack against the institution’s public website, which may have served as cover for the illicit activity by distracting the institution’s personnel responsible for detecting unauthorized activity.
U.S. FCPA Guidance Expected Soon
The DOJ is expected to release soon guidance on compliance with the FCPA, which originally was promised in November 2011 by Assistant Attorney General for the Criminal Division Lanny Breuer. Recent FCPA settlements obtained by the DOJ set the stage for the guidance and provide companies with insight as to what the guidance likely will include. For example, as part of its recent $60 million FCPA settlement, Pfizer agreed to a detailed series of FCPA-specific compliance undertakings, augmenting the more general rendition of program elements. The Pfizer deferred prosecution agreement (i) details the structure of the company’s compliance program staffing and oversight, (ii) mandates the maintenance and content of certain anti-corruption policies and procedures, (iii) provides mechanisms and resources for internal compliance reporting, (iv) requires annual company-wide, corruption-related risk assessments and five market-specific proactive compliance reviews annually, (v) requires thorough corruption-risk diligence prior to acquisitions, (vi) describes a program of third-party diligence and control, and (vii) directs a program of biennial training for specific personnel and directors, and a three-year training rotation for certain third parties. The BuckleySandler FCPA Team has prepared a Client Update and a checklist of the entire list of “Enhanced Compliance Obligations”, allowing compliance counsel to conduct a quick cross-check of their company’s existing compliance program elements.
House Member Introduces Eminent Domain Bill
Recently, Representative John Campbell (R-CA) introduced a bill, H.R. 6397, that would prohibit Fannie Mae and Freddie Mac from buying mortgages originated in localities that employ eminent domain to rescue borrowers from their underwater mortgages by seizing the loans and selling them to private investors to be restructured. The FHFA currently is considering its options for responding potential action by localities absent legislative intervention.
UK Court Holds Contract May Be Formed Through Series of Emails
On September 3, an appeals court in the United Kingdom held that a contract of guarantee executed in a series of emails duly authenticated by the electronic signature of the guarantor is enforceable. Golden Ocean Group Ltd. v. Salgaocar Mining Indus. PVT Ltd., No A3/2001/0440, 0438. In this case, a ship owner sought to enter into a long-term charter of the ship with a mining conglomerate. The shipping brokers negotiating the contract on behalf of the parties did so through a series of emails. An early email contained the provision of guarantee, but the guarantee was not explicitly restated in the final email that culminated the agreement. The court held that under English law the emails at issue here properly formed a contract, including the guarantee. The court added that the electronic signature of the guarantor’s agent on the culminating email is proper authentication of the contract of guarantee contained in the earlier email, and that generally, “an electronic signature is sufficient and that a first name, initials, or perhaps a nickname will suffice.” The court upheld the lower court’s decision and dismissed the appeal.