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Moorari Shah

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Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices.

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Today, the Consumer Financial Protection Bureau (CFPB) issued a report, consumer advisory, and filed an amicus brief addressing the risks associated with home equity contracts (HECs)—financial products often marketed as home equity “investments.” The Bureau highlighted the high costs, complexity, and risks these products pose to homeowners, including the potential for financial distress and forced home sales if repayment obligations become unmanageable. The Bureau’s amicus brief, filed in a lawsuit currently ongoing in the United States District Court for the District of New Jersey, is discussed in detail below.Continue Reading CFPB Issues Warning on Risks of Home Equity Contracts, Takes Legal Action to Ensure Compliance with TILA

As 2024 concludes, financial markets are witnessing significant shifts, particularly within the world of cryptocurrency. As crypto investors profit, many cash out from more volatile assets, such as Bitcoin, to safer options such as real-world asset (“RWA”) tokens—tokenized representations of tangible assets traded on a blockchain, and stablecoins—assets pegged to traditional currencies like the U.S. dollar. The regulation of digital currencies is an ongoing focus for federal and state regulators (previously discussed here, here, and here). As stablecoin and RWA token products gain popularity with consumers, it will be interesting to see how consumer finance regulators choose to address the novel risks that these products pose.Continue Reading Riding the Wave: How the Crypto Surge is Influencing Finance

On August 26, the United States District Court for the Southern District of Texas issued a decision upholding the legality of the CFPB Small Business Lending Rule (the “Rule”) (designed to implement section 1071 of the Dodd-Frank Act) in a lawsuit filed by plaintiff trade associations challenging the CFPB’s authority in promulgating the Rule (previously discussed here and here).Continue Reading Federal Court Upholds CFPB’s Small Business Lending Rule

On July 22, a Texas-based lease-to-own company filed suit against the CFPB in Federal District Court for the Eastern District of Texas alleging that its “illegal and unconstitutional investigation” into the company’s business falls outside the Bureau’s authority. Continue Reading Lease-to-Own Fintech Sues the CFPB, Claiming it’s Unconstitutional 

On June 28, the United States Supreme Court overturned a decades-old precedent, Chevron v. Natural Resources Defense Council, Inc., 467 U. S. 837, a ruling that instructed judges about when they could defer to federal agencies’ interpretations of law in rulemaking. In Loper Bright Enterprises v. Raimondo, the Court held that the Administrative Procedure Act “requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority.” Continue Reading Supreme Court Strikes Down Chevron: What Now?

On May 21, the Massachusetts Attorney General entered into an Assurance of Discontinuance (“AOD”) with a California-based fintech alleging that it was the “true lender” of its consumer installment loans. Under the terms of the settlement, the fintech is required to pay $625,000 in restitution, request deletion of tradelines on credit reports for loans reported to credit bureaus, and cease doing business in the state. Continue Reading Massachusetts AG Forces Fintech from State as Part of “True Lender” Settlement

The CFPB is continuing its crusade against so called “junk fees,” and now is looking at credit reporting fees. In a May 20 speech to the Mortgage Bankers Association, Director Rohit Chopra highlighted the rising costs of obtaining credit reports which he stated affects both lenders and consumers. Chopra criticized FICO’s recent move to a flat fee pricing model for credit scores, stating that it led to a 400% increase in costs for many lenders. He also complained about FICO’s policy of charging the same fee for both soft and hard credit inquiries, despite the fact that there are significant differences in the amount of information provided.Continue Reading CFPB Director Targets Credit Reporting Fees

On May 16, the United States Supreme Court, in a 7-2 ruling, held that the CFPB’s funding mechanism does not violate the Appropriations Clause of the U.S. Constitution. As we previously discussed in greater detail here, under the Dodd-Frank Act, Congress provided a standing source of funding for the CFPB outside the ordinary annual appropriations process—the Bureau draws from the Federal Reserve System an amount determined by its Director, subject only to an inflation-adjusted cap. Plaintiffs had argued the structure violated the Appropriation’s Clause as it did not go through an annual appropriations process and was effectively “double insulated” from congressional oversight. Continue Reading CFPB Wins at the Supreme Court

On April 9, 2024, seven states filed suit against the Biden administration in an attempt to block its new “SAVE” plan, an income-driven repayment plan that leads to eventual loan forgiveness. The case is pending in the U.S. District Court for the Eastern District of Missouri.Continue Reading States Sue the Biden Administration to Stop Loan Relief Plan

On March 29, the CFPB and the FTC jointly filed an amicus brief with the Eleventh Circuit in a matter involving a dispute under the Fair Credit Reporting Act. The case involves a consumer who filed disputes with a consumer reporting agency (CRA) after discovering multiple errors in her credit file, including incorrect personal information. However, the CRA failed to delete the disputed information, notify any furnishers of the consumer’s dispute, or provide the sources of the disputed information. The consumer sued, alleging the CRA violated the FCRA’s reinvestigation requirement by failing to reinvestigate her dispute regarding her name, address, and SSN information. The CRA claimed the text of the CRA did not require it to reinvestigate incorrect personal identifying information. At summary judgment, the district court found that while the reinvestigation requirement applied to personal identifying information, the CRA did not “willfully or negligently” violate the FCRA because its interpretation of the reinvestigation requirement was not objectively unreasonable.Continue Reading CFPB and FTC Argue Consumer Reporting Companies Have an Obligation to Correct Errors in Joint Amicus Brief