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Episode 21 (10/14/16) FCRT Podcast: Views on the CFPB Decision

October 14th, 2016 by

In this episode of the Financial Consumer Rights Talk, an attorney reviews the issue of the recent decision regarding the CFPB.

We review the October 11, 2016 ruling handed down by the Circuit Court of Appeals for the District of Columbia which involved fines that the Consumer Financial Protection Bureau (CFPB) levied on NJ mortgage lender and loan servicing company, PHH, in 2014.

In 2014, PHH was fined $109 million dollars by the CFPB for violating the Real Estate Procedures and Settlement Act (RESPA) by accepting illegal and undisclosed kickbacks from mortgage insurers. The fine came after the case against PHH was ruled on by an administrative judge who assessed a damage award of a paltry $6.4 million.

Next, we discuss the decision to restructure the leadership of the CFPB, the origins of the current structure and how the change still gives homeowners access to private rights of action under federal law.

Denbeaux & Denbeaux provides legal representation to help consumers who have been harmed financially, as well prosecuting cases related to predatory lending, false credit reporting, and illegal debt collection practices.

FCRT: CFPB Reveals Mortgage Servicing Problems

July 5th, 2016 by

In this episode of the FCRT Adam Deutsch discusses the CFPB supervisory report on the mortgage servicing industry. He reviews the report and provides additional insight for homeowners in relation to RESPA , the Real Estate Settlement and Procedures Act.

In this eleventh issue of Supervisory Highlights, (6/23/16) we share findings from recent supervisory examination observations in mortgage servicing.

To provide additional context for readers, we integrate these recent observations with observations from previous editions of Supervisory Highlights by subject matter – loss mitigation acknowledgement notices; loss mitigation offers and related communications; loan modification denial notices; policies and procedures; and servicing transfers.  The report also discusses Supervision’s approach mortgage to servicing exams, including a description of recent changes to the mortgage servicing chapter of the CFPB Supervision and Examination Manual.

CFPB Announcement of the Supervisory Report

Extract from the Introduction of the Report:

Mortgage servicers play a central role in homeowners’ lives by managing their mortgage loans. Servicers collect and apply payments, work out modifications to loan terms, and handle the difficult process of foreclosure. As the financial crisis made clear, weak customer support, lost paperwork, and mishandled accounts can lead to many wrongful foreclosures and other serious harm.

Since consumers do not choose their mortgage servicers they cannot take their business elsewhere. To improve practices in the servicing market, the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) imposed new requirements on servicers and gave the Consumer Financial Protection Bureau (CFPB) the authority to implement those new requirements and adopt additional rules to protect consumers.

The CFPB released rules, effective January 10, 2014, to improve the information consumers receive from their servicers, to enhance the protections available to consumers to address servicer errors, and to establish baseline servicing requirements that provide additional protections for consumers who have fallen behind on their mortgage payments. Supervisory examinations of mortgage servicers now generally focus on reviewing for compliance with these servicing rules and for unfair, deceptive, and abusive acts or practices.

 

Download the full report here from this

NJ Attorney Fights Foreclosure with Federal Laws

October 27th, 2015 by

NJ Attorney Fights Foreclosure with Federal Laws

In New Jersey, the trend in foreclosure litigation has been to narrow the defenses available to homeowners almost to the point of non-existence. In light of CFPB Director Richard Cordray’s recent remarks regarding “mandatory pre-dispute arbitration clauses”, Joshua Denbeaux explains how his firm combats this growing problem, by using federal laws enforced by the CFPB to protect NJ homeowners in foreclosure.

Consumer Finance Protection Bureau Director Richard Cordray delivered remarks to the Consumer Advisory Board last week regarding “arbitration’s role in resolving consumer complaints.”


Director, Richard Cordray

“Companies have been able to use these obscure clauses to rig the game against their customers to avoid group lawsuits. Group lawsuits can result in substantial relief for many consumers and create the leverage to bring about much-needed changes in business practices. But by inserting the free pass into their consumer financial contracts, companies can sidestep the legal system, avoid big refunds, and continue to pursue profitable practices that may violate the law and harm consumers on a large scale, ” Directory Cordray went on to say in prepared comments.

Nowhere else are consumers being harmed on as large scale as in New Jersey where the foreclosure rate is the highest in the U.S., according to a report released by Realty Trac on October 15, 2015. In New Jersey, the trend in foreclosure litigation has been to narrow the defenses available to homeowners almost to the point of non-existence. To combat this growing problem, Joshua Denbeaux explains why Denbeaux and Denbeaux proactively fights for the rights of consumers in concert with the CFPB.

Josh Denbeaux, Esq. at CFPB Field Hearing

“I have a transcript where a judge in New Jersey says ‘fraud is not a defense to a foreclosure.’ It’s been said to me off the record 3 or 4 times in different counties. I have four different judges who don’t allow discovery to happen in foreclosure cases because the bank has a note and created an assignment of mortgage,” Mr. Denbeaux asserts.

Free download The Six Warning Signs of a Possible Consumer Protection Law Violation

The law firm of Denbeaux and Denbeaux is located at 366 Kinderkamack Road Westwood New Jersey 07675. Tel: 201-664-8855 or email pr(at)denbeauxlaw(dot)com.

Denbeaux and Denbeaux is a family operated law firm with a tradition of excellence in consumer rights and family law. Formed in 1989, Denbeaux & Denbeaux is a law firm dedicated to providing top level legal representation to its clients. Their work has been featured in major media sources throughout the country including CNN, MSNBC, NPR, C-SPAN, CBS Evening News, the Associated Press, The Star Ledger, and The Record.

The partners, Marcia Denbeaux and Joshua Denbeaux, represent individuals and businesses in New Jersey State and Federal Trial and Appellate Courts. The firm primarily practices civil litigation, with a concentration in , consumer fraud, commercial litigation, matrimonial law, business, insurance coverage litigation, and mortgage foreclosure defense.

Denbeaux and Denbeaux Says Passage of H.R. 3192 Puts Foreclosure Victims Rights at Risk

October 14th, 2015 by

Denbeaux and Denbeaux Says Passage of H.R. 3192 Puts Foreclosure Victims Rights at Risk

According to New Jersey law firm Denbeaux and Denbeaux, Congress buckling to pressure from industry lobbyists when recently passing H.R. 3192 the “Homebuyers Assistance Act” to give lenders immunity from loan origination abuses for several months, signals consumer’s rights at risk in the future.

On Oct. 7, the House of Representatives passed bipartisan bill H.R.3192 which could provide the mortgage origination industry with a four-month window (through Feb 1, 2016) in which it will be immune from liability in civil actions by aggrieved consumers and regulatory actions by governmental agencies including the Consumer Finance Protection Bureau for failures to comply with new standards governing the disclosure of accurate information to consumers in the mortgage origination process.

“Consumer victims of lending abuses have failed to assert their rights in large numbers under the new statutes enacted in connection with the Dodd Frank Wall Street and Mortgage Reform Act. Now those rights are at risk, ” says NJ foreclosure defense attorney, Adam Deutsch Esq.

This is especially the case in New Jersey where only a small number of foreclosure cases are contested. “Nearly 95 percent of those cases are uncontested, despite evidence in the flaws in the foreclosure process,” said New Jersey Chief Justice Stuart Rabner in the February 4th, 2015 story in NJ Spotlight, “New Foreclosure Procedures Put to Test as Number of Cases Climbs in New Jersey.”

“Buckling to pressure from industry lobbyists, Congress recently voted to give lenders immunity from loan origination abuses for several months. Industry efforts to roll back consumer rights and the enforcement powers of the CFPB demonstrate just how potent the protection statutes are and emphasize that if consumers don’t use it, they may lose it,” Mr. Deutch continued.

“Homeowners may not be contesting their foreclosure for a number of reasons,” said Denbeaux & Denbeaux Senior Associate Attorney Adam Deutsch. “Fear is certainly at the top of the list, as is how overwhelming and confusing the entire situation can be. Homeowner trust in their loan servicing companies is another cause. Homeowners report that they continue to work with their loan servicing company in the belief that their loan will be modified and their home saved without the foreclosure being completed. By the time the homeowner finds out the loan servicer will not modify their home, the foreclosure is complete and the homeowner has effectively waived their right to contest the judicial process. The earlier into the process a homeowner knows their rights and the loan servicers and lenders obligations under the law, the better the outcomes,” Mr. Deutsch went on to say.

“Time is on the side of the homeowners, but only if they take action. There are numerous situations in which a homeowner has rights that a lender, bank or loan servicing company must follow. However, there is a much larger issue at stake which the lender, the homeowner, and the loan servicing company are often unaware of involving consumer protection laws enacted by Congress. These federal laws can have major impacts on a homeowner’s case, from issues relating to loan origination, misapplication of interest rates and escrow charges in loan servicing, and improper debt collection efforts. This is why it is so important to keep good records and speak to a knowledgeable attorney who can see the violations in the paperwork,” Mr. Deutsch concluded.

Briefly, these are six of the most obvious situations that homeowners may find themselves in where their rights have been violated and are in need of an attorney’s understanding of federal and NJ state laws.

  • Payments are not being accepted by a loan servicing company
  • Payments are not being recorded correctly by a servicing company or lender
  • Homeowner instructed to go into default in order to get a refinance.
  • Denial of a loan modification without proper explanation
  • Inaccurate charges of interest, penalties, and escrow fees
  • The bank falsely repeats claims that the homeowner has not provided all documents requested as part of the loan modification application process.

Request a download the whitepaper provided by the law firm of Denbeaux and Denbeaux,“The Six Warning Signs of a Possible Consumer Protection Law Violation”, for greater insight on how consumer protection laws enacted by Congress can help you.

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The law firm of Denbeaux and Denbeaux is located at 366 Kinderkamack Road Westwood New Jersey 07675. Tel: 201-664-8855 or email pr(at)denbeauxlaw(dot)com.

Denbeaux and Denbeaux is a family operated law firm with a tradition of excellence in consumer rights and family law. Formed in 1989, Denbeaux & Denbeaux is a law firm dedicated to providing top level legal representation to its clients. The partners, Marcia Denbeaux and Joshua Denbeaux, represent individuals and businesses in New Jersey State and Federal Trial and Appellate Courts.The firm primarily practices civil litigation, with a concentration in mortgage foreclosure,consumer fraud, commercial litigation, matrimonial law, business, insurance coverage litigation.

Their work has been featured in major media sources throughout the country including CNN, MSNBC, NPR, C-SPAN, CBS Evening News, the Associated Press, The Star Ledger, and The Record.

House delays consumer mortgage protections

October 12th, 2015 by

House delays consumer mortgage protection

On Oct. 7, the House of Representatives passed bipartisan bill 3192 which could provide the mortgage origination industry with a four-month window (through Feb 1, 2016) in which it will be immune from liability in civil actions by aggrieved consumers and regulatory actions by governmental agencies including the Consumer Finance Protection Bureau for failures to comply with new standards governing the disclosure of accurate information to consumers in the mortgage origination process.By including a four-month grace period in the Homebuyers Assistance Act, Congress is providing a window of opportunity for mortgage originators to make inaccurate disclosures of loan terms, use bait and switch tactics and other wrongful conduct that caused the economy to grind to a halt in 2008.  This time there is one major difference.  Today, consumers have meaningful federal statutes enacted as part of the Dodd Frank Wall Street Reform and Consumer Protection Act that provide consumer relief and serve as a deterrent to would be wrongdoers.  Now, Congress has voted to allow the bankers to act with complete immunity from the consumer protection statutes it enacted only a few short years ago.

The new mortgage origination disclosures commonly referred to as TRID are intended to eliminate confusion in the loan origination process and improve transparency.  House Financial Services Committee Chairman Jeb Hensarling (R-Texas) claims “without this bill, homebuyers could encounter delays and difficulties when they try to close on their homes.”  We are told expediency is trumping the financial future of individual Americans.  Missing from the quotes of politicians is recognition that the industry has known about the new disclosure rules since November 2013 and were originally scheduled to take effect on August 1, 2015.  During the early summer of 2015 the Consumer Financial Protection Bureau published formal guides for the mortgage lending industry to rely upon in preparing for TRID taking effect.  After concern from the industry and members of Congress were brought to the attention of Consumer Financial Protection Bureau Director Richard Cordray in June 2015, Cordray delayed the August 1, 2015 implementation of TRID to the start of October, 2015.  Accordingly, the industry has already had years of preparation and extra months added to the date upon which it must increase transparency in the lending process.

We must not allow short memories to place the future of individual Americans, and the financial recovery of the nation at risk.  On Oct. 6, the White House issued a Statement of Administration Policy setting forth the intention of President Obama to veto H.R. 3192 should it be presented to the president for signature.  Knowing the legislation is likely to be blocked is a relief, but a bitter taste lingers that Congress seeks to place the consumer at risk and grant immunity to the mortgage banking industry for it to repeat the ills of loan origination during the 2000s.

CFPB to Mortgage Industry: Get Out of MSAs

August 17th, 2015 by

CFPB to mortgage industry: Get out of MSAs

Industry calls move regulation by enforcement

Trey Garrison
July 31, 2015 3:50PM

http://www.housingwire.com/articles/34641-cfpb-to-mortgage-industry-get-out-of-msas

“The Consumer Financial Protection Bureau wants mortgage lenders to stop using marketing services agreements, and it’s using the stick rather than the rules process to do so.

Two major players in the mortgage space announced this morning that they are discontinuing marketing activities that depend on MSAs because of regulatory uncertainty, recent interpretations of RESPA, and a generally toxic enforcement environment, and that appears to be exactly what the CFPB wants.”

Regulatory uncertainty, toxic environment drive Wells Fargo, Prospect out of MSAs

Recent RESPA interpretation cited as top concern

Trey Garrison and Ben Lane July 30, 2015 1:52PM

http://www.housingwire.com/articles/34640-regulatory-uncertainty-toxic-environment-drive-wells-fargo-prospect-out-of-msas

“Two major players in the mortgage space are discontinuing marketing activities that depend on marketing services agreements because of regulatory uncertainty, recent interpretations of RESPA, and a generally toxic environment because of inconsistent Consumer Financial Protection Bureau enforcement.

Prospect Mortgage and Wells Fargo (WFC) today each announced decisions to discontinue MSAs.”

Episode 8 – Financial Consumer Rights Talk – Know Your Rights Part II (RESPA). Loss Mitigation and Loan Modification Through the Real Estate Settlement Procedures Act

June 29th, 2015 by

Episode 8 – Know Your Rights Part II. Loss Mitigation and Loan Modification Through the Real Estate Settlement Procedures Act (RESPA)

In episode 8 of the FCRT we discuss regulations governing loan modifications.  The podcast highlights homeowner rights relating to RESPA and loss mitigation procedures including how to appeal a denial of a loan modification application, and rules that prohibit banks from conducting a foreclosure sale while a loss mitigation application is under review.

Real Estate Settlement Procedure Act Regulation X 12 C.F.R. 1024.41 

https://www.law.cornell.edu/cfr/text/12/1024.41

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Foreclosure defense and loss mitigation boot camp

http://www.nbi-sems.com/Details.aspx/R-69347ER%7C?ctname=SPKEM

Congressional efforts to thwart Consumer Finance Protection Bureau and must be stopped

June 5th, 2015 by

Congressional efforts to thwart CFPB and must be stopped

by Adam Deutsch

As published in the The Hill.

http://thehill.com/blogs/congress-blog/civil-rights/243915-congressional-efforts-to-thwart-cfpb-and-must-be-stopped

Need a sign that the Consumer Financial Protection Bureau (“CFPB”) is quickly becoming the most effective regulatory arm of the Federal Government?  Look no further than the absolute panic being shown by the home loan industry over changes to the disclosures that must be provided to persons entering into mortgage loan agreements.

Under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), homeowners are entitled to receive disclosures that provide clarity and transparency to the finance terms of a loan prior to closing.  Roughly 18 months ago the CFPB announced a streamlining of disclosure forms known as the TILA-RESPA Integrated Disclosure (“TRID”), which goes into effect August 1, 2015.  TRID is not a new set of regulations, but rather a consolidation of four existing disclosure rules required under the TILA and RESPA.  In other words, the new rule simplifies the disclosure process for loan originators and brokers, while providing homeowners more clarity in being able to understand the contents of disclosures accompanying loan documents.

Over the past 18 months, the CFPB has gone above and beyond its obligation to provide the industry with education materials to help prepare for the rule change.  The materials include video and written tutorials, compliance guides, uniform templates for disclosures, and timelines explaining when various disclosures must be made.  In April 2014, the CFPB began providing the lending industry with written guide materials.  Despite having substantial notice to prepare for the rule change, the industry has moved into panic mode, defiantly turning to Congress to help give the industry permission to mislead homeowners.

As a result of industry lobbying efforts, on April 27, 2015, a bill was introduced in the House of Representatives (H.R.2213) which seeks to legislate a safe harbor provision following implantation of the August 1, 2015 TRID rules.  The bill is sponsored by Reps. Steve Pearce (R-N.M.) and Brad Sherman (D-Calif.).  If adopted, the TRID regulations “may not be enforced against any person until January 1, 2016 and no suit may be filed against any person for a violation of such requirements occurring before such date, so long as such person has made a good faith effort to comply with such requirements.”  The effect of the bill would be catastrophic.  As drafted, the bill would strip homeowners of their private right of action for actual damages and statutory damages suffered by virtue of a mortgage broker or lender’s failure to provide accurate and timely loan disclosures.

A month later, appearing unlikely that H.R.2213 will be adopted, 255 Members of Congress signed a letter to CFPB Director Richard Cordray requesting that the CFPB itself delay implementation of TRID by adding a grace period allowing the industry to make errors without liability.  The letter states “Even with significant advance notice, understanding how to implement and comply with this regulation will only become clear when the industry gains experience using these new forms and processes in real-life situations.”  Congressional signatories to the letter have drawn a line in the sand declaring that the rights of their constituents are trumped by the rights of the non-voting businesses.

The proposed House of Representatives bill and the May 20 letter to Richard Cordray ask that the lending industry be provided a window of immunity.  This is immunity not only from enforcement by the CFPB, but also from private rights of action from borrowers who are directly harmed by the mortgage loan industry’s conduct.  The Congress members who support the safe harbor have learned nothing from the collapse of the housing market in late 2007.  A safe harbor provision would provide a green light for mortgage brokers and loan originators to return to practices of old, seeking to do as much damage as possible during the immunity period.  Americans should be outraged by the suggestion of providing immunity to lenders from legislation that promotes financial literacy and transparency.  The panic is a sign that the CFPB is producing meaningful and effective legislation pursuant to its authority as created by Congress.  At a minimum, this is a sign that even as Congress ignores its constituents in an effort to follow money, the financial rights of consumers are being guarded by the federal government.

Deutsch, senior associate attorney at Denbeaux & Denbeaux in Westwood, New Jersey, is currently concentrating his practice on consumer rights litigation. 

http://thehill.com/blogs/congress-blog/civil-rights/243915-congressional-efforts-to-thwart-cfpb-and-must-be-stopped

Discussion: Notice of Error, a New Tool Under Federal Law to Fix Mortgage Account Errors.

April 27th, 2015 by

Notice of Error, a New Tool Under Federal Law to Fix Mortgage Account Errors

In January 2014 homeowners with mortgage loans obtained a significant tool for disputing errors in the collection and application of their mortgage loans.  The tool in question is known as a Notice of Error, which was made part of the Real Estate Settlement Procedures Act (RESPA), originally enacted in 1974.  Drafted by the Consumer Financial Protection Bureau, Regulation X which includes the Notice of Error rule is a great tool that should be utilized by aggrieved homeowners seeking to fix errors on their mortgage loan accounts.

A Notice of Error is merely a written letter sent to the loan servicing company that sets forth an explanation of the alleged error and includes sufficient identifying information for the servicing company to determine what account the problem relates to.  Errors covered by the rule are those having to do with loan servicing.  By way of example this includes monthly payments that are not properly credited to the account, a modification agreement that is not honored following a change in loan servicing company, errors with tax and insurance disbursements and fees that are inappropriately assessed to an account.  A notice of error does not include claims of errors that occurred at the time the loan was originated.

By issuing a Notice of Error, a homeowner can compel a loan servicing company to conduct an investigation of the error.  The loan servicer must complete its investigation within 30-45 business days and provide the homeowner with a written response.  In responding to a Notice of Error the loan servicer must correct the error or provide the homeowner with a detailed letter explaining the reasons why no error was found.  Thus, if the servicing company disagrees with the homeowners allegations, they must explain what research was done in finding that no error occurred.  The loan servicer must also make available upon request and at no cost, documents reviewed by the servicing company during its investigation.  This allows a homeowner to obtain a level of transparency that was not previously available.

If the loan servicer fails to respond to the Notice of Error or otherwise fails to conduct an investigation in the manner and time required by the rule, a homeowner can seek relief in court.  RESPA provides that a successful plaintiff homeowner will be entitled to the Notice of Error investigation and will recover attorney fees and costs incurred pursuing the case.  In some circumstances the homeowner might also be entitled to damages of up to $2,000 per violation of the RESPA requirements by the loan servicing company.

Homeowners who have been subject to an error by their loan servicer may have found themselves in financial trouble as a result of the error, or even worse, facing a foreclosure.  Using the Notice of Error early on can prevent the snowball effect of an error.  For more information including an in-depth discussion regarding notices of error, listen to Episode 6 of the Financial Consumer Rights Talk which can be found in the podcast section of www.Denbeauxlaw.com.

Episode 6 – Financial Consumer Rights Talk – Notice of Error: New Tool Under Federal Law to Fix Mortgage Account Errors

April 27th, 2015 by

Notice of Error, a New Tool Under Federal Law to Fix Mortgage Account Errors

By Adam Deutsch

In January 2014 homeowners with mortgage loans obtained a significant tool for disputing errors in the collection and application of their mortgage loans.  The tool in question is known as a Notice of Error, which was made part of the Real Estate Settlement Procedures Act (RESPA), originally enacted in 1974.  Drafted by the Consumer Financial Protection Bureau, Regulation X which includes the Notice of Error rule is a great tool that should be utilized by aggrieved homeowners seeking to fix errors on their mortgage loan accounts.

A Notice of Error is merely a written letter sent to the loan servicing company that sets forth an explanation of the alleged error and includes sufficient identifying information for the servicing company to determine what account the problem relates to.  Errors covered by the rule are those having to do with loan servicing.  By way of example this includes monthly payments that are not properly credited to the account, a modification agreement that is not honored following a change in loan servicing company, errors with tax and insurance disbursements and fees that are inappropriately assessed to an account.  A notice of error does not include claims of errors that occurred at the time the loan was originated.

By issuing a Notice of Error, a homeowner can compel a loan servicing company to conduct an investigation of the error.  The loan servicer must complete its investigation within 30-45 business days and provide the homeowner with a written response.  In responding to a Notice of Error the loan servicer must correct the error or provide the homeowner with a detailed letter explaining the reasons why no error was found.  Thus, if the servicing company disagrees with the homeowners allegations, they must explain what research was done in finding that no error occurred.  The loan servicer must also make available upon request and at no cost, documents reviewed by the servicing company during its investigation.  This allows a homeowner to obtain a level of transparency that was not previously available.

If the loan servicer fails to respond to the Notice of Error or otherwise fails to conduct an investigation in the manner and time required by the rule, a homeowner can seek relief in court.  RESPA provides that a successful plaintiff homeowner will be entitled to the Notice of Error investigation and will recover attorney fees and costs incurred pursuing the case.  In some circumstances the homeowner might also be entitled to damages of up to $2,000 per violation of the RESPA requirements by the loan servicing company.

Homeowners who have been subject to an error by their loan servicer may have found themselves in financial trouble as a result of the error, or even worse, facing a foreclosure.  Using the Notice of Error early on can prevent the snowball effect of an error.