Source: http://www.cfslbulletin.com/preemption/
Timestamp: 2013-06-19 00:34:51
Document Index: 457325721

Matched Legal Cases: ['§ 2924', '§ 2924', '§ 2924', '§ 2924', '§ 2924', '§ 2924', '§ 2924', '§ 2924', '§ 2924']

Category Archives: Preemption	Ringing in the New Year in 2013: California’s Homeowner’s Bill of Rights Law Takes Effect
Posted by Yesenia Garcia Perez on 04 January 2013
Posted in Compliance; Mortgage Foreclosures; Preemption; State Consumer Protection Laws Dubbed as the “Homeowner’s Bill of Rights,” on July 11, 2012, California Governor Jerry Brown signed into law AB 278/SB 900 marking the first U.S. state to adopt into law the residential mortgage foreclosure reform principles outlined in the February 2012 National Mortgage Servicing Settlement with the nation’s top five mortgage servicers. The Homeowner’s Bill of Rights (“HBOR”) makes changes to nonjudicial foreclosure protocols for first lien residential mortgage loans. The law takes effect on January 1, 2013 and sunsets generally on January 1, 2018. HBOR will primarily impact the current practices of financial institutions, lenders, and other mortgage servicers regarding foreclosure proceedings as follows: (1) prohibits “dual tracking” non-judicial foreclosure with a pending loan modification; (2) prohibits the practice commonly referred to as “Robo-Signing” (3) creates a private right of action; and (4) makes attorney’s fees and costs available to the borrower.
The Scope Of The Homeowner’s Bill Of Rights: With certain exceptions, HBOR applies only to first lien mortgages or deeds of trust that are secured by owner-occupied residential real property containing no more than four dwelling units. Cal. Civ. Code § 2924.15. In addition, HBOR distinguishes between regulated /licensed lenders who conduct 175 or fewer residential foreclosures per year in California (Smaller Residential Mortgage Lenders) and other lenders (Larger Residential Mortgage Lenders) in that some parts of the law do not apply to Smaller Residential Mortgage Lenders. Cal. Civ. Code § 2924.18(b). A deed of trust in the mortgage industry is legal security relating to a property, and is used in place of a mortgage. In a deed of trust, the loan borrower is the trustor. The borrower/trustor transfers the subject property in a trust to an independent third party, which is the trustee. The trustee holds a conditional title on behalf of the lender or the promissory note holder, the beneficiary. The trustee is delegated with certain trustee powers under the deed of trust. The Homeowner’s Bill Of Rights Prohibits Dual Tracking: The law’s prohibition on dual tracking a non judicial foreclosure with a loan modification or short sale is perhaps HBOR’s most significant component. Pursuant to HBOR, a mortgage servicer cannot commence foreclosure by recording a notice of default or notice of sale while a loan modification is pending or during short sale. If the mortgage servicer approves the borrower’s loan modification application, the mortgage servicer generally cannot record a notice of default, notice of sale, or proceed with a trustee’s sale so long as the borrower is in compliance with the terms of the written loan modification. Cal. Civ. Code § 2924.11. This approval must be honored by a subsequent mortgage servicer if the borrower’s loan is transferred or sold. Cal. Civ. Code § 2924.11(g). If a notice of default or notice of sale has been recorded or a trustee’s sale has been scheduled before the loan modification application was approved, the mortgage servicer must record a rescission of the notice of default or notice of sale, or cancel the pending trustee’s sale upon the approval of the loan modification application. Cal. Civ. Code § 2924.11(d). HBOR’s no-dual tracking provisions apply until January 1, 2018, and do not apply to Smaller Residential Mortgage Lenders.
The Homeowner’s Bill Of Rights Prohibits “Robo-Signing:” In an apparent response to the practice commonly known as “robo-signing,” HBOR requires a mortgage servicer to review the foreclosure documents and ensure that the documents are accurate, complete, and supported by “competent and [reliable] evidence” concerning the borrower’s loan, loan status, and the mortgage servicer’s right to foreclose. Cal. Civ. Code § 2924.17(b). The law places the burden of compliance on the mortgage servicer. The Homeowner’s Bill Of Rights Creates A Private Right Of Action For Borrowers To Seek Injunctive Relief Or Monetary Damages: If a trustee’s sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin the mortgage servicer from proceeding with foreclosure until the mortgage servicer corrects a material violation of the law. Cal. Civ. Code § 2924.12. On the other hand, if a trustee’s sale has already occurred and the deed on sale has been recorded, a borrower may pursue an action for “actual economic damages.” If the court finds that the material violation was “intentional or reckless, or resulted from willful misconduct by a mortgage servicer,” the court may award damages to the borrower the greater of treble actual damages or $50,000 statutory damages. Cal. Civ. Code § 2924.12(b).
The Homeowner’s Bill Of Rights Makes Attorney’s Fees Available To The Borrower: HBOR authorizes the court to award the prevailing borrower reasonable attorneys’ fees and costs. Cal. Civ. Code § 2924.12(i). Given the discretionary nature of HBOR’s attorneys’ fee provision, it is unclear whether the court may also award attorneys’ fees and costs to a prevailing mortgage servicer. While the idea of reciprocity of attorneys’ fees is not unusual in California, the statutory provision mandating reciprocity applies only to contract provisions containing one-sided attorneys’ fee provisions, rather than to one-sided attorneys’ fee provision contained in a statute, such as HBOR. The requirements imposed by HBOR are not insurmountable, but because HBOR imposes significant obligations and restrictions, financial institutions, lenders, and mortgage servicers must implement procedures to ensure compliance with the law. Loan servicing employees and individuals must be given proper training and the right tools in their daily activities for evaluating loans and dealing with borrowers. Finally, it remains to be seen whether any of the provisions of HBOR may be challenged on preemption grounds under the National Bank Act.
Email	Dodd-Frank Did Not Materially Change National Bank Act Preemption Standards
Posted by Michael C. Lueder on 07 October 2011
Posted in Preemption The Dodd-Frank Wall Street Reform and Consumer Protection Act did not materially change the National Bank Act preemption standards, according to Iowa federal judge James E. Gritzner. In U.S. Bank National Association v. Schipper, the bank filed a declaratory judgment action against the Superintendent of the Iowa Division of Banking and other state officials in connection with their enforcement of the Iowa Electronic Transfer of Funds Act (“EFTA”). The issue centered around U.S. Bank’s provision of ATM services to certain Iowa state-chartered banks. U.S. Bank data processing centers handled Iowa state chartered bank “On-Us” transactions without Iowa regulatory interference. (“On Us” transactions are those where the bank’s customer is using his own bank’s ATM to withdraw funds.) However, U.S. Bank was not permitted to handle “Not-Us” transactions (customers using an ATM his bank does not own) because it had not registered as a central routing unit (“CRU”) with the State of Iowa. Continue reading this entry
Email	Ninth Circuit Issues Ruling on Limitations of Preemption
Posted by Timothy S. Crisp on 05 August 2011
Posted in Preemption; State Consumer Protection Laws This week, the U.S. Court of Appeals for the Ninth Circuit ruled that the Rees-Levering Act (also known as the California Automobile Sales Finance Act), a California law regulating debt collection and repossession, is not preempted by the National Bank Act.
In Aguayo v. U.S. Bank, ___ F.3d ___, No. 09-56679 (9th Cir. Aug. 1, 2011), the Ninth Circuit held that a national banking association is subject to the state law, which requires the lender (and any other auto loan lender) to provide each obligor with 15 days’ advance written notice of the lender’s intent to dispose of a repossessed or surrendered vehicle and of the obligors’ right to redeem the vehicle or reinstate the contract during such 15-day period. Continue reading this entry
Email	Fourth Circuit Holds State Law Claims Preempted by FCRA Because Sloppy Recordkeeping and Repeated Mistakes Do Not Amount to Malice
Posted by Ellen M. Wheeler on 02 November 2010
Posted in Fair Credit Reporting Act; Preemption In Ross v. Federal Deposit Insurance Corp., No. 08-1851, 2010 WL 4261819 (4th Cir. Oct. 29, 2010), the U.S. Court of Appeals for the Fourth Circuit affirmed the grant of summary judgment in favor of Washington Mutual Bank (“WaMu”) and against Charlotte Ross who alleged common law defamation claims, violations of the Fair Credit Reporting Act (FCRA), and violations of the North Carolina Unfair and Deceptive Trade Practices act (NCUDTPA).
Ross became the sole owner of home in 2001 while her husband retained sole responsibility for the mortgage, held by WaMu. Ross nonetheless requested that WaMu send her the mortgage statements and the IRS 1098 form. In the course of fulfilling Ross’s request, WaMu mistakenly listed Ross’s name on the mortgage. Continue reading this entry
Tags: Debt Collection, Preemption Comment
Email	Ninth Circuit Dismisses Claims Under the CCRAA
Posted by Jennifer N. Toussaint on 24 August 2010
Posted in Fair Credit Reporting Act; Preemption In Carvalho v. Equifax Information Services, LLC, No. 09-15030, 2010 W.L. 3239477 (9th Cir., Aug. 18, 2010), the Ninth Circuit affirmed a lower court’s grant of summary judgment dismissing Plaintiff’s claims under the California Consumer Credit Reporting Agencies Act (“CCRAA”).
Tags: California Consumer Credit Reporting Agencies Act, Ninth Circuit Comment
Email	The Consumer Financial Protection Act’s Provisions on Preemption
Posted by Michael C. Lueder on 16 August 2010
Posted in Bureau of Consumer Financial Protection; Consumer Financial Protection Agency; Preemption The Dodd-Frank Wall Street Reform and Consumer Protection Act (CFPA) directly addresses its own preemptive effect on State law and amends the National Bank Act to clarify the standards that apply to national banks. The CFPA greatly increases the powers of states to make and enforce laws designed to protect consumers in financial transactions. The default preemption standard for all covered persons is conflict preemption. Conflict preemption occurs when a federal law is in “irreconcilable conflict” with State law. It arises when it is impossible to comply with both federal and State law or when State law stands as an obstacle to achieving some federal law objective. No covered person is exempt from complying with State law unless that State law is inconsistent with the CFPA and then only to the extent of the inconsistency. The CFPA specifically provides that a State law is not inconsistent if the protection given to consumers is greater than the protection provided in the statute. The Consumer Financial Protection Bureau (“Bureau”) has the power to determine what State laws are preempted, and we expect Courts to defer to the Bureau’s determinations as they would those of any administrative agency specifically empowered to interpret the law.
Tags: Barnett bank, Preemption Comment
Email	Ninth Circuit Affirms Dismissal of RESPA Claim for Overcharges
Posted by Thomas R. Mikrut on 10 March 2010
Posted in Preemption; Real Estate Settlement Procedures Act The Ninth Circuit affirmed the dismissal of a purported class action under the Real Estate Settlement Procedures Act ("RESPA") because the plain language of RESPA does not apply to the practice of "overcharging," as well as the dismissal of three state law claims that are preempted under the National Bank Act. The Plaintiffs claimed that they refinanced their home mortgage loan through Wells Fargo, who charged the Plaintiffs an $800 underwriting fee. Plaintiffs alleged that this fee was excessive and violated RESPA and California’s Unfair Competition Law because the fee was not reasonably related to the actual costs of underwriting. The district court dismissed all the claims against the Defendants. Continue reading this entry
Email	Elimination of Preemption Could Create 50 Mini CFPAs
Posted by Michael C. Lueder on 08 January 2010
Posted in Consumer Financial Protection Agency; Preemption Senator Chris Dodd’s decision to retire from politics has caused many to conclude that he will not have sufficient clout to assure the creation of a Consumer Financial Protection Agency. That may be. Or perhaps as Roll Call suggested, Senator Dodd might have agreed to step aside in exchange for a promise that he be the first person to head the new agency. Who knows? Perhaps it does not matter. Dramatic change is on the way, and nothing is likely to stop it.
Whether we get a CFPA or not, one shield for national banks is melting away. The preemption defense is dying a slow death. Just a little over one year ago, national banks could count on federal regulators to stand by their side to defend against attacks from state attorneys general. In 2004, the OCC had issued a rule establishing areas of state law that do not apply to national bank lending and deposit-taking activities. It also confirmed that the OCC as the exclusive supervisory authority for national bank activities. Click here for the regulation. According to the OCC, if a state AG claimed a bank was violating its state law, it was the OCC and no one else which had the power to enforce the law against the bank. The state AG’s office could not ask for information, it could not compel testimony, it could not require licenses, and it could not enforce even its own state laws against a national bank.
Tags: Consumer Financial Protection Agency, Preemption Comment
Email	Eighth Circuit Finds OTS Regulations Preempt Missouri Unauthorized Practice of Law Claims
Posted by Miki Vucic Tesija on 28 October 2009
Posted in Preemption Recently, the Eighth Circuit Court of Appeals issued an important opinion for federal savings associations (FSAs) when it found that federal law preempted Missouri law in a case involving loan-related document preparation by non-attorney employees. Casey v. Federal Deposit Insurance Corporation, et al., No. 09-1096 (8th Cir. Oct. 20, 2009).
Tags: Federal Preemption, HOLA Preemption, OCC Preemption, OTS Preemption, Unauthorized Practice of Law, UPL Comment