Source: https://consumerfinancewatch.com/category/loan-servicing/
Timestamp: 2019-04-18 20:39:47+00:00

Document:
In Milone v. U.S. Bank National Association, New York’s Appellate Division, Second Department (“Second Department”), held that a notice of default sent to a borrower, stating that failure to cure the default within 30 days “will result in acceleration,” does not “clearly and unequivocally” accelerate the mortgage debt upon expiration of the cure period. 2018 WL 3863269, at *1, — N.Y.S.3d — (2d Dept. Aug. 15, 2018). In sum, the Second Department concluded that the word “will” indicates a future intention that “may always be changed in the interim” and, therefore, does not accelerate the debt for statute of limitations purposes. See id., at *3. In addition, the Second Department ruled that a de-acceleration notice must be clear and unambiguous, and, in a case of first impression, held that standing, when raised, is a necessary element to a valid de-acceleration. See id., at *5.
The Eleventh Circuit Court of Appeals recently issued its opinion in Emily Schweitzer v. Comenity Bank, holding that the Telephone Consumer Protection Act, 47 U.S.C. sec. 227 et seq. (“TCPA”), allows consumers to partially revoke their consent to be called by an automated telephone dialing system. No. 16-10498 (Eleventh Cir. August 10, 2017).
In Schweitzer, Plaintiff was issued a credit card by Comenity Bank (“Comenity” or the “Bank”) in 2012 and, during the application process, provided a cellular phone number to the Bank. In 2013, Plaintiff failed to tender the required monthly credit card payments and, as a result, Comenity used an automated telephone dialing system to make hundreds of calls to Plaintiff on her cellular phone regarding the delinquency. During a call with a Comenity representative on October 13, 2014, Plaintiff informed the representative that Comenity could not call her in the morning and during the work day, because she was working and could not discuss the delinquency while at work. Subsequently, Plaintiff twice told a representative of Comenity to please stop calling her. Thereafter, Comenity did not call Plaintiff’s cellular phone using an automated telephone dialing system.
Ultimately, Plaintiff commenced a suit against Comenity for alleged violations of the TCPA. Specifically, Plaintiff claimed that during the October 13th conversation, she revoked her consent for Comenity to call her cellular phone using an automated telephone dialing system and asserted that Comenity violated the TCPA by placing over 200 calls using an automated system from October 2014 through March 2015. The district court granted summary judgment in favor of Comenity and reasoned that the bank “did not know and should not have had reason to know that [Plaintiff] wanted no further calls.” In addition, the district court stated that Plaintiff did not “define or specify the parameters of the times she did not want to be called” and, therefore, a reasonable jury could not find that Plaintiff revoked her consent to call her cellular phone. Plaintiff appealed.
On appeal, Comenity argued that the district court correctly granted summary judgment in its favor because the TCPA does not allow partial revocations of consent and, even if possible, a reasonable jury could not find that Plaintiff had expressly done so during the October 13th conversation. The Eleventh Circuit Court rejected Comenity’s arguments, finding that “[a]lthough the TCPA is silent on the issues of revocation, [its] decision in Osorio holds that a consumer may orally revoke her consent to receive automated phone calls.” See Osorio v. State Farm Bank, F.S.B., 746 F. 3d 1242, 1255 (11th Cir. 2014).
Further, the Eleventh Circuit explained that since the TCPA is silent as to partial revocations of consent, the analysis of the matter is governed by common law principles, which support its holding that the TCPA “allows a consumer to provide limited, i.e., restricted, consent for the receipt of automated calls.” Moreover, “[i]t follows that unlimited consent, once given, can also be partially revoked as to future automated calls under the TCPA.” In support of its conclusion, the Eleventh Circuit reasoned that it is “logical that a consumer’s power under the TCPA to completely withdraw consent and thereby stop all future automated calls . . . encompasses the power to partially withdraw consent and stop calls during certain times.” Although the Eleventh Circuit noted the district court’s concern that partial revocations may create challenges for both callers and parties attempting to present evidence in support of TCPA claims, it held that any such complications do not warrant limiting a consumer’s rights under the TCPA.
This decision is significant because the Eleventh Circuit has expanded the consumer’s right to revoke consent under the TCPA to include partial revocations. Based on this decision, debt collectors conducting business within the Eleventh Circuit will need to update their automated dialing systems to incorporate such partial revocations.
In Reyes v. Lincoln Automotive Financial Services, the United States Court of Appeals for the Second Circuit recently held that the Telephone Consumer Protection Act (“TCPA”) does not permit a consumer to unilaterally revoke consent to be contacted by telephone when such consent is given as bargained-for consideration in a binding contract. Reyes v. Lincoln Automotive Fin. Servs., 2017 WL 3675363 (2d Cir. June 22, 2017).
In 2012, Plaintiff-Appellant, Alberto Reyes, Jr. (“Plaintiff”), leased a car which was financed by Defendant-Appellee, Lincoln Automotive Financial Services (“Lincoln”). The lease contained a provision which expressly permitted Lincoln to contact Plaintiff. Plaintiff stopped making payments under the lease and, as a result, Lincoln called Plaintiff in an attempt to cure his default. Plaintiff disputed his balance on the lease and alleged that he requested that Lincoln cease contacting him. Despite Plaintiff’s alleged revocation of consent, Lincoln continued to call Plaintiff. As such, Plaintiff filed a complaint in the Eastern District of New York alleging violations of the TCPA.
The TCPA was enacted to protect consumers from “unrestricted telemarketing” which could be “an intrusive invasion of privacy.” See Mims v. Arrow Fin. Servs., LLC, 565 U.S. 368, 371 (2012) (internal citations omitted). Under the TCPA, any person within the United States is prohibited from “initiat[ing] any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party.” 47 U.S.C. 227(b)(1)(B).
Lincoln moved for summary judgment to dismiss the complaint, and the district court granted the motion, holding that (1) Plaintiff had failed to produce sufficient evidence to establish that he revoked his consent to be contacted and (2) the TCPA does not permit a party to a legally binding contract to unilaterally revoke bargained-for consent to be contacted by telephone. Plaintiff appealed both rulings.
The Second Circuit affirmed the district court’s holding that under the TCPA, a consumer cannot unilaterally revoke its consent to be called when such consent was part of a bargained-for exchange. In assessing whether a party can revoke prior consent under the TCPA, the Second Circuit agreed with the holdings of its sister courts that a party can revoke prior voluntary or free consent under the statute. See Gager v. Dell Financial Services, 727 F.3d 265 (3d Cir. 2013) (plaintiff permitted to revoke consent, where consent was provided in an application for a line of credit); Osorio v. State Farm Bank F.S.B., 746 F.3d 1242 (11th Cir. 2014) (plaintiff could revoke consent, where consent was provided in an application for auto insurance). The Second Court noted, however, that unlike in Gager and Osorio, Plaintiff’s consent was not provided gratuitously. Rather, Plaintiff’s consent was included as an express provision of a contract with Lincoln. Accordingly, the Second Circuit drew a distinction between the definition of consent under tort and contract law. Specifically, in tort law, the term “consent” is defined as a “voluntary yielding to what another purposes or desires.” Black’s Law Dictionary (10th ed. 2014). However, under contract law, “consent to another’s actions can ‘become irrevocable’ when it is provided in a legally binding agreement, in which case any ‘attempted termination is not effective.’” See Restatement (Second) of Torts 892A(5) (Am. Law Inst. 1979); see also 13-67 Corbin on Contracts 67.1 (2017).
The Second Circuit also determined that a contractual term need not be “essential” to be enforced as part of a binding agreement and that contracting parties are bound to perform on the agreed upon terms; a party who agreed to a valid term in a binding contract cannot later renege on that term or unilaterally declare that it no longer applies simply because the contract could have been performed without it. “[R]eading the TCPA’s definition of ‘consent’ to permit unilateral revocation at any time, as [Plaintiff] suggests, would permit him to do just that,” and the Second Circuit could not “conclude that Congress intended to alter the common law of contracts in this way.” (citation omitted).
This decision is significant, as it addressed the novel issue of whether consent that is given as part of a bilateral contract may be unilaterally revoked by a consumer under the TCPA. Based on Reyes, financial institutions that have consent provisions in binding contracts with consumers have a powerful defense against TCPA claims. In practice, if a contract with a consumer contains an express consent provision, the financial institution would need to agree to the consumer’s request to revoke. Financial institutions should also be cognizant that a consumer, who provides consent to be called in an application, may unilaterally revoke such consent.
 The Second Circuit also held that the district court erred in finding that no reasonable jury could find that Plaintiff revoked his consent, as Plaintiff had introduced sworn testimony of revocation. However, this error does not impact the ruling that Plaintiff nevertheless cannot unilaterally revoke his consent under the TCPA when such consent is part of a binding contract.
On April 13, 2017, the Consumer Financial Protection Bureau (“CFPB”) issued a Notice of Proposed Rule Making targeted at amending Regulation C to make technical corrections to and clarify certain requirements adopted by the CFPB’s Home Mortgage Disclosure final rule (“2015 HMDA Final Rule”), which was published on October 28, 2015.
Regulation C implements the Home Mortgage Disclosure Act (“HMDA”). HMDA has historically provided the public and public officials with information about mortgage lending activity by requiring financial institutions to collect, report and disclose certain data pertaining to mortgage activities. The Dodd-Frank Act amended HMDA and transferred rule-making authority to the CFPB. The Dodd-Frank Act additionally expanded the scope of information that institutions must collect and disclose under HMDA.
The 2015 HMDA Final Rule modified the types of institutions and transactions subject to Regulation C, the types of data that institutions are required to collect and the processes for reporting and disclosing the required data. Most of the modifications take effect in January 2018.
The CFPB now proposes establishing transition rules for two data points: loan purpose and the unique identifier for the loan originator. According to the CFPB, the rules would allow financial institutions to report “not applicable” for these data points when reporting certain purchased loans that were originated before the regulatory requirements took effect. Additionally, the proposal would facilitate reporting the census tract of the property securing the covered loan required by Regulation C via a geocoding tool that the CFPB intends to make available on its web site. This tool would allow financial institutions to identify the census tract in which a property is located. The proposal also includes a safe harbor provision for institutions that obtain the incorrect census tract number from the CFPB’s geocoding tool, provided that an accurate property address is entered and the tool returned a census tract for the address entered.
Comments on the proposal are due 30 days after the Notice of Proposed Rulemaking is published in the Federal Register.
Click below for the proposal: https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201704_cfpb_NPRM_HMDA.pdf.
 See https://www.consumerfinance.gov/policy-compliance/rulemaking/rules-under-development/technical-corrections-and-clarifying-amendments-home-mortgage-disclosure-october-2015-final-rule/ (last accessed April 17, 2017).
 12 U.S.C. § 2801 et seq.
 Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376, section 2097- 101 (2010).
 October 2015 HMDA Final Rule, 80 FR 66128, 29.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 2801