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Sherwin Root is an attorney in the Corporate Practice Group in the firm's Los Angeles office.

Recently, the United States Court of Appeals for the 4th Circuit held that a mortgage servicer’s failure to provide a required disclosure informing borrowers of their three-day right to rescind the loan under the Truth in Lending Act (TILA) does not relieve borrowers of their obligation to return disbursed loan proceeds upon an effective rescission. The ruling reversed a West Virginia District Court’s ruling against the mortgage servicer in a purported class action.

Continue Reading 4th Circuit: Borrower Must Return Loan Proceeds After Rescission Despite Lender’s Failure to Meet TILA Requirements

On May 9, the CFPB released an advisory opinion affirming that ECOA and its implementing rule, Regulation B, protect not only those persons actively seeking credit, but also those who have sought and received credit.  The CFPB stated in the opinion that “[d]espite this well-established interpretation, the Bureau is aware that some creditors fail to acknowledge that ECOA and Regulation B plainly apply to circumstances that take place after an extension of credit has been granted, including a revocation of credit or an unfavorable change in the terms of a credit arrangement.”  In addition, the Bureau states that it is “aware that some creditors fail to provide applicants with required notifications that include a statement of the specific reasons for the adverse action taken or disclose an applicant’s right to such a statement.”
Continue Reading CFPB Affirms that ECOA Protects Consumers After Receiving Credit

On April 28, Governor Newsom signed Senate Bill 577 which will, among other things, bring back the California Financing Laws (CFL) licensing exemption which permits a lender to make a single commercial loan within a 12-month period without first obtaining a license.  The previous law, which contained this exemption, had expired by its terms on December 31, 2021.  The California Department of Financial Protection and Innovation has seen an uptick in California finance lender license applications this year, and speculation is that one of the reasons for that was the loss of this exemption.  The new law takes effect immediately as an emergency statute.  The exemption does not apply to consumer loans.
Continue Reading California Reinstates Licensing Exemption for Single Commercial Loan Made During 12-month Period

On March 22, HUD announced the delivery of the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) Action Plan to President Biden.  The PAVE Action Plan outlines actions that are intended to substantially reduce racial bias in home appraisals, and to promote generational wealth creation through home ownership.  According to the Task Force’s executive summary, “[o]n average, homes in majority-Black neighborhoods are valued at less than half of those in neighborhoods with few or no Black residents.”  The PAVE Task Force is composed of thirteen federal agencies and offices.
Continue Reading Interagency Task Force Unveils Action Plan to Address Racial Discrimination in Home Appraisals

On February 23, the CFPB outlined a proposal for upcoming joint rulemaking to prevent algorithmic bias in automated home valuation models (AVMs).  Here, the CFPB is specifically focused on the potential for AVMs to pose fair lending risks to homebuyers and homeowners.  The CFPB issued the outline pursuant to a requirement under the Small Business Regulatory Enforcement Fairness Act that includes “collecting small entities’ advice and recommendations on the potential impacts of the proposals under consideration and feedback on regulatory alternatives to minimize these impacts.”
Continue Reading CFPB Seeks to Prevent Algorithmic Bias in Automated Home Valuation Models

Last month, the FTC issued an advisory opinion clarifying that the Holder Rule does not preempt any state laws that put more liability on banks that are the “holders” of a loan contract, and in particular, the rule does not limit recovery of attorneys’ fees and costs when state law authorizes awards against a holder (we previously discussed the advisory opinion in an earlier Consumer Finance & FinTech Blog post here).
Continue Reading Auto Finance Companies May Face Risk From Holder Rule, Pending California Supreme Court Case

Section 1033 of the Dodd-Frank Act states that consumers have the right to access their own bank account and transaction data in a usable electronic format.  This provision mandates that the CFPB adopt a rule relating to data access.  However, the timeline for this rule has been fluid, in part due to the CFPB’s full agenda and the time needed by Rohit Chopra, the CFPB’s new director and a former member of the Federal Trade Commission, to make his own determinations about the rule.

Continue Reading CFPB Likely to Delay Data Sharing Rule Until 2023

The CFPB has amended Regulation Z to address the anticipated sunset of LIBOR, which is expected to be discontinued in June 2023.  Some creditors currently use LIBOR as an index for calculating rates for open-end and closed-end products.  The effective date of this final rule is April 1, 2022.


Continue Reading CFPB Published Reg. Z Amendments to Facilitate Libor Transition

On November 16, the California DFPI released Version 2.0 of its Annual Report of Finance Lenders, Brokers and PACE Administrators Licensed under the California Financing Law (CFL).  The Annual Report examined unaudited data gathered from finance lenders, brokers, and Property Assessed Clean Energy (PACE) administrators licensed under the CFL, as well as new data from the “buy now, pay later” or BNPL industry.

Continue Reading DFPI Reports Increase in Consumer Loans Under $2,500, Decrease in Consumer Loans Between $2,500 and $10,000

On October 28, newly approved CFPB director, Rohit Chopra, made his first appearance before the House Financial Services Committee since his narrow approval by the Senate.  Director Chopra focused on topics with bipartisan appeal:  the Bureau’s enforcement efforts aimed at large companies, ways it may try to help small businesses (including small financial companies) and the importance of strong relationships between banks and customers.
Continue Reading CFPB Director Chopra Appears at First House Hearing Since Approval as Director

By a narrow 50-48 vote along party lines, Rohit Chopra was confirmed yesterday by the U.S. Senate to become the Director of the Consumer Financial Protection Bureau.  Chopra previously served as the Bureau’s assistant director and was its first student loan ombudsman.  Most recently, Chopra served as a commissioner of the Federal Trade Commission for the past three years where he conveyed his penchant for aggressive enforcement of larger institutional violators and advocated for monetary relief from violators outside of the authority provided under Section 13(b) of the FTC Act (we previously discussed Section 13(b) in earlier Consumer Finance & FinTech Blogs here, here, and here).

Continue Reading Chopra Confirmed as CFPB Director