In a warning to other lenders on the importance of proper vendor oversight, the CFPB recently brought a$10 million enforcement action against Santander Bank, based in Wilmington, DE, because of its allegedly illegal overdraft services practices. Among the practices at issue, the bureau said the bank signed up consumers for overdraft services without their consent. “In some instances, Santander’s telemarketerbriefly described [the bank’s] Account Protector [service] to consumers, then asked for the last four digits of their Social Security numbers, and enrolled them without their consent,” said the CFPB. “In other instances, consumers said they did not want to enroll but requested information about the overdraft service, but the telemarketer enrolled them anyway,” the bureau added. Also, call ...

In May, the Supreme Court of the United States ruled in Robins v. Spokeo, Inc. that a plaintiff has to demonstrate that he or she suffered “concrete” and “real” harm in order to have standing under Article III of the U.S. Constitution to successfully sue for statutory damages under the Fair Credit Reporting Act.The CFPB has previously argued that is not necessarily so, and with the SCOTUS remanding the case back to the U.S. Court of Appeals for the Ninth Circuit, the bureau has recently reiterated its argument in an amicus brief with the lower court. The specific question in this case is whether the plaintiff (Robins) identified an injury-in-fact under Article III of...

In State National Bank of Big Spring, Texas, et al. v. Lew, et al., the U.S. District Court for the District of Columbia has shot down the latest attempt to void the actions taken by CFPB Director Richard Cordray while he was still a recess appointee. At issue are several CFPB rulemakings, such as those having to do with electronic fund transfers, integrated mortgage disclosures, escrow requirements, ability to repay/qualified mortgages, and mortgage servicing. On July 18, 2011, President Obama first nominated Cordray to serve as director of the bureau. When the Senate took no action on that nomination, Obama appointed him to the position on Jan. 4, 2012, invoking his...

Stakeholders in the MBS market should pay attention to a recent U.S. 11th Circuit opinion concerning a jury verdict in which the court focused on the similarities and differences between two kinds of securities fraud, suggested attorneys in their analysis of the case. Although the opinion in SEC v. Radius Capital Corp. is unpublished and not a binding precedent, it gives further clarity to two of the most important rules used by the Securities and Exchange Commission in targeting securities fraud, according to attorneys with the law firm Carlton Fields. The SEC sued...

The Federal Housing Finance Agency is seeking to prevent GSE shareholder and director of Investors Unite, Tim Pagliara, from inspecting the corporate records of Fannie Mae and Freddie Mac.Pagliara filed a lawsuit in state courts in March hoping to gain access, as an individual stockholder, to the GSEs’ records to determine the circumstances surrounding the sweep. Fannie, incorporated in Delaware, and Freddie, incorporated in Virginia, both denied his request to review the records earlier this year. Pagliara then argued that his rights as a shareholder were denied for “no legitimate basis.” This week, the FHFA filed a motion to substitute itself for Pagliara and remove...

A recent ruling by the Washington State Supreme Court goes against servicers’ practice of changing the lock on a property before a foreclosure. While such practices are generally allowed under mortgage contracts and have been approved by other states, the Washington state court ruling is favorable to 3,600 borrowers in a class-action lawsuit and could cause further issues for servicers. Laura Jordan v. Nationstar Mortgage centered on Nationstar’s actions after the borrower defaulted on her mortgage. A vendor acting on behalf of Nationstar inspected the property, deemed it to be vacant and changed the lock on the front door. The vendor also left a lockbox on the door with the key to the new lock and the borrower was provided access to the key. Jordan represents...

A federal jury in late June ruled in favor of former officials from Thornburg Mortgage in a lawsuit brought by the Securities and Exchange Commission in 2012. The charges centered on disclosure and accounting issues the jumbo lender faced in early 2008. The trial involved 10 counts against Larry Goldstone and Clay Simmons, the former CEO and chief financial officer of Thornburg, respectively. The jury ruled in favor of the former Thornburg officials on six counts and was ...

House Republicans this week accused the Department of Housing and Urban Development of giving preferential treatment to political favorites in changes to FHA distressed asset sales. House Financial Services Committee Chairman Jeb Hensarling, R-TX, denounced changes HUD Secretary Julian Castro made to the Distressed Asset Sale Program (DASP), saying the moves help liberal special interests at the expense of private investors. Hensarling said the changes would create “preferential bidding” for certain buyers and restrict investor options. HUD expanded DASP in 2012 as a conduit for selling nonperforming FHA loans to investors with the proviso they must first help borrowers save their homes from foreclosure and foreclose only if all loan-modification options have been exhausted. Distressed note sales also helped stabilize FHA’s Mutual Mortgage Insurance Fund and have contributed more than ...

The U.S. Senate this week passed legislation that includes reforms to current FHA restrictions on condominium financing, among other provisions. H.R. 3700, the Housing Opportunity Through Modernization Act of 2016, was approved without amendment by unanimous consent. The bill passed in the House of Representatives by a vote of 427-0 in February. The bill addresses problems facing buyers and sellers of condominiums. Specifically, the bill modifies the Department of Housing and Urban Development’s rental assistance and public housing programs, FHA’s requirements for condo mortgage insurance and the U.S. Department of Agriculture’s single-family housing guaranteed loan program. Among other things, the bill requires the FHA to make recertifications “substantially less burdensome,” while lowering the ownership-occupancy requirement from 50 percent to 35 percent. The current ...