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  • Michigan Enacts Several Foreclosure-Related Bills


    In late December, Michigan enacted several bills related to certain of the state's foreclosure rules. HB 4542 and 4543 alter and extend through the end of 2012 Michigan's pre-foreclosure notice and mediation procedures. Among the changes is a shift from mandatory to optional filing of a one-time pre-foreclosure notice publication. The new laws also (i) make clear that a borrower's housing counselor may initiate a pre-foreclosure mediation on the borrower's behalf, (ii) extend to thirty days the time for a borrower or housing counselor to respond to a pre-foreclosure notice, and (iii) allow foreclosure by advertisement before the end of the 90-day stay period if a borrower fails to return a completed financial package within sixty days of the pre-foreclosure notice. Additionally, pre-foreclosure notices mailed on or after February 1, 2012 must (i) provide certain detailed contact information related to scheduling mediation, (ii) state the length of the redemption period, and (iii) include certain statements regarding responsibility for property damaged during the redemption period. Finally, HB 4544, among other things, reduces to six months the redemption period on non-agricultural properties over three acres when the amount claimed due exceeds two-thirds of the original mortgage balance.


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  • New York Limits Exemptions for Mortgage Licensing and Registration Requirements


    On January 4, the New York Department of Financial Services (DFS) published a final rule eliminating certain exemptions to the state's mortgage licensing and registration requirements. The rule narrows the definition of "exempt organization" by excluding nonbanking subsidiaries of bank holding companies, including, for example, subsidiaries acting as insurance, escrow, or title companies. Such subsidiaries now will be required to either register or become licensed with the DFS before soliciting, negotiating, placing, processing or making mortgage loans. Newly covered entities must file an application for licensure or registration by April 3, 2012 and complete such processes by July 2, 2012. The rule allows the DFS Superintendent to adjust the compliance dates.

    Mortgage Licensing

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  • Texas Finance Commission Adopts New Rules Regarding Mortgages and Consumer Credit

    Consumer Finance

    On December 30, the Finance Commission of Texas published two sets of rules impacting (i) mortgage lenders and servicers, (ii) credit access businesses, and (iii) debt management companies. The first set of rules reorganizes mortgage-related regulations to republish as Chapter 76 all regulations previously published as Chapter 79 of the Texas Administrative Code. This set of rules also establishes certain new regulations as Chapter 79 to implement SB 17 regarding residential mortgage loan servicers. Among the new rules are those to establish registration and bonding requirements for servicers.

    The second set of rules includes two that implement HB 2594 and HB 2592, which require the Commission to establish licensing for credit access businesses that provide payday loans or title loans, and to design new consumer notice disclosure and notice requirements for such firms. These regulations, among other things, set up a process for provisional licenses and a transition period to allow businesses to continue operating while obtaining a full license. Another rule sets new requirements related to standard payoff statement forms for mortgage servicers responding to requests from title insurance companies. Finally, this set of rules revises credit counseling standards for debt management service providers to remove certain obsolete language.

    For a copy of the rules as proposed, click here.

    Payday Lending

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  • FTC Obtains Agreement from Payment Processor to Prohibit Use of New Payment Method


    On January 5, the FTC announced a settlement with a payment processor and two of its principals that will prohibit the company from using a new payment method, through which accounts were debited without account-holder consent. The FTC alleged that the company actively promoted the method as a way to avoid scrutiny associated with other payment methods, and ignored red flags - such as payment-rejection rates exceeding 80 percent - that its merchant customers were seeking to defraud account-holders. As a result, according to the FTC, consumers incurred significant costs, including for overdraft fees. In addition to banning the use of this payment process, the settlement requires, among other things, that the company monitor client return rates and investigate rates exceeding 2.5 percent.

    FTC Payment Systems

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  • Final FCPA Enforcement Action for 2011 Provides Useful Benchmarks for Anti-corruption Compliance Program Reviews

    Financial Crimes

    On December 29, Deutsche Telecom and Magyar Telekom settled FCPA enforcement matters with the US DOJ and SEC for a combined sanction exceeding $95 million. Part of the resolution recited specified minimum compliance program elements that Magyar Telekom is required to institute. BuckleySandler's most recent FCPA Update describes the settlement fully and links to a list of these anti-corruption program elements, which are useful for counsel structuring a corruption risk assessment or compliance program review.


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  • Florida AG Seeks to Advance Unfair and Deceptive Foreclosure Case


    On December 30, Florida Attorney General Pam Bondi (AG) filed a motion in the Fourth District Court of Appeal seeking to advance the state's investigation into whether certain law firms engaged in misconduct while foreclosing on Florida homeowners. In April, the appeals court ruled that the AG did not have authority to subpoena records from one of the law firms under investigation. The state cannot appeal that decision to the Florida Supreme Court unless it is certified as an issue of great public importance. Therefore, the AG has asked the Fourth District to certify to the state supreme court as such an issue the question of whether the creation of invalid assignments of mortgages by a law firm and subsequent use of such documents to foreclose constitutes an unfair and deceptive practice under Florida law that may be investigated by the AG.


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  • Tenth Circuit Confirms MERS Has Authority to Foreclose


    Recently, the U.S. Court of Appeals for the Tenth Circuit affirmed separate lower court rulings that Mortgage Electronic Registration Systems, Inc. (MERS) had authority to foreclose under Utah law even though the notes at issue had been sold by the original lenders and securitized. Commonwealth Property Advocates v. Mortgage Elec. Reg. Sys, Inc., Nos. 10-4182, 10-4193, 10-4215, 2011 WL 6739431 (10th Cir. Dec. 23, 2011). In each of the underlying cases, the deed of trust contained the usual language naming MERS as the "nominee" for both the original lender and the lender's "successors and assigns," and providing MERS with authority "to foreclose and sell the Property" on behalf of those entities. The plaintiff (a firm that acquired title to each of the properties from delinquent borrowers) based its challenge to MERS' authority to foreclose on a Utah statute providing that the "transfer of any debt secured by a trust deed shall operate as a transfer of the security therefor." Utah Code Ann. § 57-1-35. According to the Plaintiff, the statute meant that sale and securitization of the notes deprived "original 'nominees,' such as MERS," of any right to exercise any power under the deeds of trust absent authorization by the new owners of the debt, i.e., the security-holders. The Tenth Circuit, relying on prior Utah and federal-court decisions, rejected that argument. It held that the statute merely codifies the well-established rule that a lender's transfer of a note also transfers that lender's interest in the associated security instrument. The statute in no way impacted MERS' explicit authority under the deeds of trust to continue to act as the "nominee" of each successive buyer of the note and to foreclose on each such buyer's behalf.


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