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  • HUD IG Blames Ginnie Mae for Inadequate Supervision; HUD IG Concludes HUD Did Not Follow Requirements When Forgiving Debts

    Federal Issues

    On September 21, the HUD Inspector General (IG) released an audit report of Ginnie Mae’s oversight of nonbanks in the mortgage servicing industry. The report found that Ginnie Mae did not adequately respond to the growth in its nonbank issuer base; a base, the report notes, that tends to have more complex financial and operating structures than banking institutions. The IG found, among other things, that Ginnie Mae may not be prepared to identify problems with nonbank issuers prior to default, requiring additional funds from the U.S. Treasury to pay back investors in the event of a large default.

    On the same day, the IG also announced a report which found that HUD did not always follow applicable requirements when forgiving debts and terminating debt collections. The report determined that HUD’s review process for evaluating debt forgiveness or collection termination was not thorough enough to ensure that statutory, regulatory, and policy requirements associated with this process were met—such as ensuring DOJ approval was obtained when required.

    Federal Issues HUD OIG DOJ Ginnie Mae Mortgage Servicing Mortgages Debt Cancellation Nonbank Supervision Department of Treasury

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  • Colorado UCCC Administrator Opinion Provides Guidance on Debt Cancellation and Suspension Agreement Fees

    State Issues

    On August 7, the Colorado Attorney General’s Office, through the Administrator of the Uniform Consumer Credit Code (UCCC), issued an Administrator Opinion to provide clarification on fees related to debt cancellation and suspension agreements. The UCCC has adopted and authorized rules permitting additional charges to be assessed in addition to a finance charge, such as fees for Single Premium Non-Credit Insurance, Involuntary Unemployment Insurance Premiums, and Guaranteed Automobile Protection. However, because the UCCC has not yet adopted by rule permissible fees for debt cancellation and suspension agreements, those fees must be included in the calculation of the finance charge, even if they are “permitted by federal or state law or regulation—including debt cancellation and suspension agreements offered by Colorado-[c]hartered [b]anks, Colorado-[c]harted [i]ndustrial [b]anks, and Colorado-[c]hartered [c]redit [u]nions.” This Administrator Opinion rescinds the November 9, 2004 Advisory Opinion titled “Debt Cancellation and Suspension Agreements Offered by Colorado-Chartered Banks, Colorado-Chartered Industrial Banks, and Colorado Chartered Credit Unions.” Organizations have 120 days to comply with the newly issued guidance.

    State Issues State AG Auto Finance Debt Cancellation UCCC

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  • Texas Enacts Law Expanding Requirements for Holders of Debt Cancellation Agreements

    State Issues

    On May 26, Texas Governor Greg Abbott signed into law SB 1052, which contains provisions related to retail installment contracts and debt cancellation agreements in the state. Notably, the revised and renumbered Section 354.007 of the Finance Code, “Refund for Debt Cancellation Agreements,” concerns the responsibilities of the holder or the administrator of the agreement. This section has been amended to add that if a debt cancellation occurs as a result of an early termination of the contract, the holder shall, within 60 days of the termination, “refund or credit an appropriate amount of the debt cancellation agreement fee” or refund or credit the appropriate amount of the fee through written instructions to the appropriate person. Revisions also dictate that the holder will ensure that the refund or credit of the debt cancellation agreement fee “made by another person” is also made no later than 60 days after the agreement terminates. Furthermore, the holder is now responsible for maintaining records pertaining to the refund or credit of the debt cancellation agreement fee, and likewise, must grant electronic access to the records per the terms of the provision. The law takes effect September 1, 2017.

    State Issues Debt Cancellation Consumer Finance

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