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Jan 15, 2015

Breaking up isn’t that hard to do: a letter is enough to rescind mortgage, Supreme Court rules

Home buyers aren’t required to file a lawsuit to back out of a mortgage when the lender has violated the Truth in Lending Act, the Supreme Court has ruled, according to a recent article in The Columbus Dispatch. The unanimous decision “came in a case involving Larry and Cheryle Jesinoski, a Minnesota couple who refinanced their home in 2007 with Countrywide Home Loans, Inc., now part of Banc of America Corp.” The couple claims the company did not provide some disclosures required under federal law, so they “sent a written notice of rescission within three years after the loan closed.” A federal judge ruled against them, saying they should have filed a lawsuit instead of sending a letter, and the 8th U.S. Circuit Court of Appeals upheld that decision. Writing for the court, Supreme Court Justice Antonin Scalia said that the law does not specify how the borrower must exercise the right to rescind, and that mailing a notice before the three-year deadline “is all that a borrower must do in order to exercise his right to rescind.” For more, read the full article

Posted by Jessica Branner in  Case Law Summary  Federal News   |   Permalink


Mar 19, 2014

Seventh Circuit agrees with CFPB and FTC in FDCPA time-barred debt collection case

On March 11, 2014, the Seventh Circuit reversed the trial court’s dismissals of two Fair Debt Collection Practices Act (FDCPA) actions that challenged dunning (collection) letters offering to settle debts subject to the statute of limitations. Debt collectors often send dunning letters seeking repayment of time-barred debts and the Third and Eight Circuits have held that dunning letters of this type do not violate the FDCPA unless litigation is threatened.

The Seventh Circuit, however, has created a split as it held that offers to “settle” time-barred debts may falsely suggest that the debt is actually legally enforceable. McMahon v. LVNV Funding, LLC and Delgado v. Capital Mgt. Servs., LP, Nos. 12-3507, 13-2030 (7th Cir. Mar. 11, 2014). The court noted that the FDCPA prohibits “actions that the collector cannot take” and prohibits any “misleading representation” from being provided to consumers.  

Importantly, both the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) filed amicus briefs in McMahon. Both agencies have likewise filed supporting briefs in the Sixth Circuit case Buchanan v. Northland Group, Inc. No. 13-2523.  

At field meetings, Director Cordray has reiterated the CFPB’s focus on debt collection practices as illustrated by the CFPB’s Advance Notice of Proposed Rulemaking (ANPR) for regulating the debt collection industry. State attorneys general are following suit. Thus, it is critical for the debt collection industry and debt buyers alike to evaluate communications with consumers in light of these decisions.

Posted by Bricker Consumer Financial Services Group in  Case Law Summary  Consumer Financial Protection Bureau   |   Permalink


Jun 19, 2013

U.S. Supreme Court agrees to hear a case challenging disparate-impact discrimination theory

Monday, the U.S. Supreme Court agreed to hear Mt. Holly Gardens Citizens in Action v. Mt. Holly, which challenges the controversial anti-discrimination tool known as "disparate impact," Forbes reports. Disparate-impact discrimination theory involves the use of statistical analyses to pursue discrimination claims against governments, lenders and others "even if they had no intent of mistreating members of minority groups."

In Mt. Holly, a federal court rejected claims made by residents of a poor New Jersey neighborhood that the town's redevelopment plan to replace "hundreds of units of inexpensive housing with middle-income homes" was discriminatory "simply because some black and Latino residents would no longer be able to afford to live" in that neighborhood. Reversing the federal court's decision, the Third Circuit Court of Appeals rejected the township's argument "that virtually any redevelopment project in a minority neighborhood would fail to comply with the Fair Housing Act under disparate-impact analysis" — an opinion the Obama administration supported in a friend-of-the-court brief.

This case will potentially have a significant impact on the consumer lending industry as it "will be a key test of whether the government can use such statistical analysis to pursue discrimination claims." For more, read the full story.

Posted by Bricker Consumer Financial Services Group in  Case Law Summary  Federal Regulatory   |   Permalink


Jun 03, 2013

Ohio Supreme Court bars voluntary dismissals after trial court enters foreclosure judgment and order of sale

In a unanimous decision, the Supreme Court of Ohio recently held that after a court has entered judgment granting a foreclosure decree and ordering the sale of a foreclosed property, the plaintiff cannot later dismiss the action under Ohio Civil Rule 41(A)(1)(a). Countrywide Home Loans Servicing v. Nichpor stems from a foreclosure action filed by Countrywide in the Wood County Court of Common Pleas. On May 18, 2009, the court entered a default judgment in the case in Countrywide’s favor. The court subsequently issued a writ ordering that the home be sold at a sheriff’s sale. The sale was held later and the property was purchased by a third party. Critically, following the sale but before an order confirming the sheriff sale, the plaintiff filed a voluntary dismissal, without prejudice, under Ohio Civil Rule 41(A)(1)(a). For more, read the full story.

Posted by Bricker Consumer Financial Services Group in  Case Law Summary   |   Permalink


May 21, 2013

Industry update: recent Ohio Supreme Court decision finds residential mortgage servicing is not covered by the Ohio Consumer Sales Practice Act

On May 14, 2013, the Ohio Supreme Court took a significant stance in favor of mortgage servicers. In Anderson v. Barclay’s Capital Real Estate, Slip Opinion No. 2013-Ohio-1933, the Court answered two certified questions of state law: 1) whether the servicing of a borrower’s residential loan constituted a “consumer transaction” under the Ohio Consumer Sales Practices Act (CSPA), R.C. § 1345.01(A); and 2) whether entities that service residential mortgage loans are “suppliers” within the meaning of the CSPA, R.C. 1345.01(C). The Court answered both questions in the negative. For more, read the full story.

Posted by Bricker Consumer Financial Services Group in  Case Law Summary  Ohio Regulatory   |   Permalink


May 15, 2013

Ohio Supreme Court rules that mortgage servicing and servicers are not subject to the Ohio Consumer Sales Practices Act

In a 5-2 decision handed down yesterday, the Supreme Court of Ohio ruled that as the terms are defined in the Ohio Consumer Sales Practices Act (CSPA), "the servicing of a borrower's residential mortgage is not a 'consumer transaction,' and a business entity that services residential mortgages is not a 'supplier,'" Court News Ohio reports. The questions arose when Ohio homeowner Sondra Anderson filed suit against Barclay's Capital Real Estate Inc., d.b.a. HomEq, alleging that the mortgage servicer had "engaged in unfair or unconscionable business practices in its dealings with her while acting as servicing agent for the financial institution that held Anderson’s home's mortgage." The case is still pending, but when the U.S. District Court for the Northern District of Ohio was unable to find any definitive court decisions interpreting these two sections of the Ohio CSPA, it asked the Ohio Supreme Court to decide "that state law question itself." The high court ruled that because it does not involve the "transfer of a service to a consumer," mortgage servicing is instead considered a "collateral service" like appraisal or title services. Mortgage servicers are not suppliers, the court found, because they do not "engage in the business of effecting or soliciting consumer transactions." For more, including the decision, read the full story.

Posted by Pramila Kamath in  Case Law Summary  Ohio Regulatory   |   Permalink


Nov 15, 2012

Ohio Supreme Court holds that foreclosure must be dismissed if plaintiff does not have standing when lawsuit is commenced

On October 31, 2012, the Ohio Supreme Court released its decision in Federal Home Loan Mortgage Corporation v. Schwartzwald, Slip Opinion No. 2012-Ohio 5017. In the decision, the Court resolved a conflict among several Ohio appellate courts and unanimously held that a foreclosing plaintiff that receives assignment of a promissory note and mortgage subsequent to the filing of a foreclosure action but prior to the entry of judgment does not cure a lack of standing to originally file the action. Furthermore, this lack of standing requires dismissal of the foreclosure action without prejudice. The Court also clarified that while the lack of standing requires dismissal of the lawsuit, the dismissal is without prejudice. Thus, the dismissal is not on the merits and will not preclude the foreclosing plaintiff from filing a new foreclosure action. For more, read the full story.

Posted by Nelson Reid in  Case Law Summary   |   Permalink


Nov 01, 2012

Ohio Supreme Court holds that a foreclosing party must first have standing

In a unanimous decision, the Ohio Supreme Court reversed the decision of the Second District Court of Appeals when it “dismissed a decree of foreclosure granted to the Federal Home Loan Mortgage Corporation (FHLMA)” against the home of two former Xenia residents because FHLMA did not have “some real interest in the subject matter of the action,” Court News Ohio reports. FHLMA commenced a foreclosure action against the home of Duane and Julie Schwartzwald on April 15, 2009, but it wasn’t until May 15, 2009, that Wells Fargo assigned the promissory note and mortgage to FHLMA, the article said. The Supreme Court agreed to hear the case because the appellate court position that while FHLMA “lacked standing at the time it commenced the foreclosure action, it cured that defect by the assignment of the mortgage and transfer of the note prior to entry of judgment” conflicted with earlier decisions in other districts, the article said. For more, read the full story.

Posted by Bricker Consumer Financial Services Group in  Case Law Summary   |   Permalink


Jun 20, 2012

ADA-ATM class action against credit union dismissed

A class action lawsuit alleging that the ATMs of Pittsburgh-based Century Heritage FCU violated the Americans with Disabilities Act (ADA) was recently dismissed before a federal court in Pennsylvania, according to a Credit Union National Association (CUNA) press release. The credit union signed a consent decree in which it agreed to update its ATMs within 90 days to comply with ADA requirements, the release said. The plaintiff filed similar suits against at least seven other financial institutions. For more, read the CUNA press release.  

Posted by Bricker Consumer Financial Services Group in  Case Law Summary   |   Permalink


May 17, 2012

Certification battle in Ohio MERS class action heats up

On April 23, 2012, the plaintiff in State of Ohio ex rel. David P. Joyce, Prosecuting Attorney of Geauga County Ohio v. MERSCORP, Inc., et al., N.D. Ohio Case No. 1:11-cv-02474, filed its motion seeking an order certifying the action as a class action. The plaintiff is attempting to bring the case on behalf of all 88 Ohio counties for relief relating to the allegedly unlawful failure of MERS and its member institutions to record millions of mortgages and mortgage assignments throughout Ohio.

In response, the numerous defendants jointly filed both a motion to strike the class allegations, as well as a memorandum in opposition to the certification motion, asserting a litany of legal grounds as to why the case is not suitable for class adjudication. The principal argument advanced by the defendants against certification is that Geauga County and its prosecutor lack the legal authority to represent the interests of other Ohio counties.

However, on May 13, 2012, the federal court remanded the case to the Geauga County Court of Common Pleas, where the action was originally filed, finding that the requirements for diversity jurisdiction had not been satisfied. The question of class certification remains undecided at this time.

For more, read the full article.

Posted by Daniel Gibson in  Case Law Summary   |   Permalink


Dec 28, 2011


Posted by Anthony Sharett in  Case Law Summary   |   Permalink


Dec 28, 2011


Posted by Anthony Sharett in  Case Law Summary   |   Permalink


Dec 28, 2011


Posted by Anthony Sharett in  Case Law Summary   |   Permalink


Dec 15, 2011

Individual inquiry dooms class certification

A denial of class certification involving a case brought against Fifth Third Bank in the Southern District of Ohio is heading to the Sixth Circuit. In Arlington Video Productions, Inc. v. Fifth Third Bank, 2008 U.S. Dist. LEXIS 51196, the district court declined to certify a class whereby the class representative alleged that Fifth Third failed to properly identify the nature of fees deducted from the class members’ banking accounts.

These class claims were tethered to a breach of contract claim concerning the signature cards class members signed to open their banking accounts. Holding that the “delving” into the account information for each class member would not be practical, the district court held that Arlington Video failed to meet any of the class requirements.

Attempting to obtain recovery for alleged fees that the bank collected, Arlington Video attempted to certify a class of:

All individuals and entities who have or have had checking accounts with Fifth Third Bank in the United States, who were charged and paid a fee for a service that was not listed on a then current Fifth Third Fee Schedule, or was in an amount that was different from that stated on a then current Fifth Third Fee Schedule, prior to the assessment of the charge, during the applicable limitations period.

Notably, plaintiffs excluded Fifth Third employees, officers, directors, and other bank representatives from the proposed class. Further, Arlington Video acknowledged that the 12 states where Fifth Third has branch locations apply different statute of limitations to breach of contract claims. Thus, Arlington Video sought to certify subclasses of customers who banked at Fifth Third that were allegedly charged “undisclosed fees” by grouping them based on the limitations period applicable in those states.

With respect to numerosity, the district court carefully analyzed the requirements under the Truth in Savings Act and explained: 1) the Act only pertains to consumer and not business accounts; and 2) the Act did not require certain fee disclosures when Fifth Third decided to alter its fees. Importantly, the district court opined that determining which account holders qualified as class members would require “delving into the account information of each of those customers” to understand whether prior notices about fees were received by the account holders. In other words, because extensive factual inquiries would be required, the district court determined that class certification is improper.

As for commonality, the district court plainly stated that there is no uniform way to determine if valid notice of a new fee was provided to a customer in any particular case. This feasibility conclusion tied directly to the concerns the district court had with the numerosity element.

Next, the district court determined that Arlington Video’s failure to specifically allege that Fifth Third failed to notify customers concerning fee changes severely undermined the class claim. As courts have determined, typicality determines whether a sufficient relationship exists between the injury to the plaintiff and the conduct impacting the class. The district court determined that typicality is lacking where in individual inquiry to establish liability is necessary.

Finally, the district court agreed with Fifth Third and held that the class representative could not represent the interest of the class through qualified counsel. In addition to the concerns of typicality and commonality, the district court explained that there were 75 different types of banking accounts, with “infinite potential for variations” in those agreements based on the customers’ needs. The Sixth Circuit will certainly grabble with the individual inquiries highlighted by the district court that dominated the holding in Fifth Third’s favor.

Posted by Bricker Consumer Financial Services Group in  Case Law Summary   |   Permalink






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