Category: Consumer Protection Litigation

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CFPB Proposes Expanded Foreclosure Protections, New Servicer Obligations

On November 20, 2014, the Consumer Financial Protection Bureau (CFPB) issued a proposed rule expanding protections offered to borrowers who have defaulted on residential mortgages.  The proposed rule, if adopted following a 90 day comment period, would add to the agency’s mortgage servicing rules that became effective earlier this year.  A central part of the … Continue Reading

CFPB Issues First Enforcement Action Under New Mortgage Servicing Rules

On September 29, 2014, the Consumer Financial Protection Bureau (CFPB) announced it had issued its first enforcement order under the agency’s new mortgage servicing rules that went into effect in January 2014.  The action claims that the servicer, a Michigan-based federal savings bank and loan servicer, did not comply with the agency’s servicing rules concerning loss mitigation efforts … Continue Reading


On May 22, 2014, the Consumer Financial Protection Bureau (CFPB) issued its Spring 2014 Supervisory Highlights Report – its fourth such report since the agency’s founding.  The report includes a review of recent rulemaking, guidance, and enforcement activity.  The CFPB used its fourth report to focus on the importance of compliance management systems.  “In this … Continue Reading

FTC Settles First Text Message Debt Collection Action

On September 25, the Federal Trade Commission (FTC) announced it had settled its first case  alleging that a debt collector had unlawfully used text messaging while attempting to collect debts. The August 23 complaint alleged that two Glendale, California based debt collection companies violated the Fair Debt Collection Practices Act (FDCPA) and FTC Act by failing to disclose in English- … Continue Reading

Mortgage Servicing Settlement Reached

February 9, 2012.  Today government officials, including  Attorney General Eric Holder, announced a $26 billion settlement with five banks to settle allegations of mortgage servicing and foreclosure processing errors. The agreement, reached with Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co., and Ally Financial Inc., resolves allegations related to foreclosure practices in 2009 … Continue Reading

AZ Court Dismisses 72 Lawsuits Against MERS; Confirms Its Role as Beneficiary

October 3, 2011.  Arizona U.S. District Judge James Teilborg dismissed 72 lawsuits, including six class actions, against Mortgage Electronic Registration Systems Inc. (MERS) that challenged MERS’ role as a beneficiary on deeds of trust.  The plaintiffs in the consolidated actions claimed that because MERS is not a proper beneficiary the deeds of trust to which they agreed are unenforceable, leaving the … Continue Reading

Bank Settles Military Mortgage Foreclose Case with DOJ

On May 26, 2011, the U.S. Department of Justice announced a $20 million settlement with units of Bank of America and Morgan Stanley to resolve allegations of improper foreclosures on about 160 military members between 2006 and 2009.  The government alleged that the foreclosures, many concerning foreclosures that were taken or started by Countrywide Mortgage … Continue Reading

VA Federal Court: HOLA Preempts Tort Claims Alleging Savings Bank Posed as Lender to Collect Fees

April 4, 2011 – The U.S. District Court for the Eastern District of Virginia held that the Home Owner’s Loan Act (HOLA) preempts state tort law claims alleging that Flagstar Bank F.S.B. improperly represented itself as as a lender to collect brokerage fees on a home mortgage (Down v. Flagstar Bank F.S.B., E.D. Va., No. 3:10-cv-847, 4/4/11).  … Continue Reading

In New York Prevailing Homeowners in Foreclosures Have New Right to Claim Attorney Fees

New York has a new law that allows prevailing homeowners in many foreclosure actions to claim attorney fees from lenders.  According to supporters of the new law, the Access to Justice in Lending Act will encourage attorneys to take cases for homeowners facing foreclosure, many of them who cannot afford to hire their own lawyers.  The … Continue Reading

Wells Fargo Settles State AG Investigations Into “Risky Mortgages” Made By Acquired Lenders

October 7, 2010 –  The New York Times reports that Wells Fargo agreed to pay $24 million to resolve investigations by eight state attorneys general into whether lenders acquired by the bank made risky mortgages to consumers without disclosing the risks.   Wells reached the agreement was with attorneys general in Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, … Continue Reading

Morgan Stanley Pays $102mm to Settle Mass. Probe Related to New Century Lending Practices

June 24, 2010 – reports that Morgan Stanley & Co. agreed to pay $102 million to  settle allegations that it aided and abetted subprime lender New Century Financial Corp. in taking advantage of consumers.  Massachusetts Attorney General Martha Coakley’s office announced the settlement on Thursday.  According to its press release, the AG "alleged that Morgan entered … Continue Reading

Florida Attorney General Investigating Allegedly Fraudulent Mortgage Assignments

The Florida attorney general’s office has launched a civil investigation against Fidelity National Financial Inc. and Lender Processing Services Inc. to review allegations that the companies used fabricated assignments in foreclosure cases.  According to the AG’s summary of the case, the office is reviewing whether "bogus assignments" of mortgages were created in order that foreclosures may go … Continue Reading

Countrywide Pays $108 MM to Settle FTC’s Foreclosure Fee Case

According to a June 7, 2010 New York Times article, the FTC announced that two Countrywide mortgage-servicing companies agreed to pay $108 million to resolve charges that they collected excessive fees from homeowners.  The FTC alleged that Countrywide charged excessive fees to homeowners who were behind on their mortgage payments, in some cases asserting that borrowers were in default when they were not. … Continue Reading

Fed to Conduct Consumer Protection Compliance Exams of Nonbank Subsidiaries

The Federal Reserve announced last week that it would begin examining nonbank subsidiaries of bank holding companies for compliance with consumer protection laws.  A September 14 letter from Sandra F. Braunstein, the agency’s Director of Consumer and Community Affairs states:   This letter establishes, effective immediately, a policy for conducting risk-focused consumer compliance supervision of, and the investigation of … Continue Reading

Supreme Court Decides Preemption — States Can Probe National Banks

In a highly anticipated decision, a divided U.S. Supreme Court  authorized states to investigate national banks for lending discrimination, thus rejecting the OCC’s position that its regulatory authority preempted states’ enforcement powers.   In the 5-4 opinion authored by Justice Scalia, the high court in Cuomo v. Clearing House Association, LLC held that federal banking regulations did not pre-empt states from enforcing … Continue Reading