Well Thank Goodness: Collateral Estoppel Does Apply to N.C. Foreclosures

The current good economy (going on almost 10 years now) has meant that North Carolina appellate decisions affecting lenders trying to collect defaulted debt have been few and far between in the last couple of years. The North Carolina Court of Appeals changed that with its March 26 decision in Gray v. Fannie Mae, an opinion that lenders will cheer for making clear that collateral estoppel applies to non-judicial foreclosure orders.  Continue Reading

Important Consumer Rights Take Effect as Part of Dodd-Frank Modifications

The Economic Growth, Regulatory Relief, and Consumer Protection Act takes effect on Friday, September 21. The act modifies the Dodd-Frank Wall Street Reform and Consumer Protection Act in a variety of ways, including with important changes in the area of consumer protection. Continue Reading

CDFI Fund Issues $3.5 Billion Notice of Allocation for New Markets Tax Credits

The annual application period has opened for businesses and other organizations that want to invest in distressed communities with the help of federal tax credits.

This week, the Community Development Financial Institutions (CDFI) Fund is publishing its Notice of Allocation Availability (NOAA) for the calendar year 2018 round of the New Markets Tax Credit (NMTC) program. The NOAA pertains to a total of $3.5 billion in NMTC authority for this year’s round. Continue Reading

Should N.C. Restrictive Covenants Prohibit Solicitation of Prospective Customers?

We routinely encounter language in North Carolina employment contracts that prohibits the employee from soliciting the company’s customers or prospective customers for a period of time following separation from employment, which can be a big issue in the banking industry. In many cases, this language appears to have been lifted from old contracts or from agreements written for use in other states. Attempts to broadly prohibit solicitation of prospective customers in North Carolina can risk invalidation of the agreement’s non-solicitation prohibitions.

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After Congress Kills CFPB Arbitration Rule, What’s Next?

Congress has passed – and the Trump administration has signaled that the president will sign – a bill to roll back the Consumer Financial Protection Bureau’s sweeping arbitration rule, which the White House has called “uninformed and ineffective policy.” As we explained in our previous blog post, the rule would have banned many financial service companies from using mandatory arbitration clauses in contracts with consumers, opening the door to class action lawsuits against banks, mortgage lenders and servicers, credit card companies, and others who extend credit.

The rule’s opponents criticized it as being more favorable to class action plaintiffs’ attorneys than consumers. Or as the White House put it:

“Under the rule, consumers would have fewer options for quickly and efficiently resolving financial disputes. Further, the rule would harm our community banks and credit unions by opening the door to frivolous lawsuits by special interest trial lawyers.” Continue Reading

What Financial Firms, Fintech Companies Need to Know About New CFPB Guidance

As more consumers are choosing to share their financial data to take advantage of innovative fintech products, the financial services industry faces critical questions: Who gets to decide whether financial data is shared? How should that sharing occur? And who is responsible for keeping the information safe?

After soliciting industry comments almost a year ago, the Consumer Financial Protection Bureau has given its initial answers to those questions. It released a set of nine “Consumer Protection Principles” last week designed to help banks, fintech companies, credit unions, credit card companies, and other financial service providers navigate the sharing of consumers’ financial data when consumers request it. Continue Reading

The Practical Effects of LIBOR’s Phase Out

Trillions of dollars’ worth of financial documents use the London Interbank Offered Rate, or LIBOR, to set the interest rate of a transaction. The ICE Benchmark Administration currently maintains a reference for LIBOR by averaging banks’ estimates of how much it costs to borrow from another bank for term periods of one day up to a few months. But the rate that has served as a global benchmark for nearly half a century is now on its way out.

At the end of 2021, the U.K. Financial Conduct Authority (FCA) will no longer require banks to submit their quotes for LIBOR rates. The question – “What will replace LIBOR?” – allows for much speculation at this point, though work has been done to pick a replacement. In the United States, the Alternative Reference Rates Committee (ARRC) has chosen a broad Treasuries repo financing rate as its preferred LIBOR alternative, which is tied to the cost of overnight borrowing collateralized by U.S. Treasury securities. In the U.K., the Risk-Free Rate Working Group (RFRWG) has chosen the Sterling Overnight Index Average (SONIA) as its preferred alternative to LIBOR, which is based on actual transactions in the U.K. overnight unsecured lending and borrowing market. Continue Reading

Faulty Foreclosure Service Results in Lienholder Having to Pay Property Owner

When a lienholder starts a foreclosure, it usually is focused on getting money into its pocket. Yet a recent opinion from the North Carolina Court of Appeals (In re: Ackah – Sept. 5, 2017) should provide a warning to all lienholders – make sure you get proper service in the foreclosure or you may end up with significant money going out of your pocket instead. And if you have an email address for the property owner, make sure to use it to send notice of the foreclosure.

The Facts

Gina Ackah owned residential property in an HOA community near Raleigh. Ms. Ackah moved to Africa and leased the residential property to a tenant while she was gone but did not tell the HOA of her move. Her mail was forwarded to her uncle in South Carolina. In 2014, Ms. Ackah failed to pay her HOA dues and the HOA commenced a foreclosure. The HOA made numerous attempts to send certified mail notices of the foreclosure to Ms. Ackah at her mother’s and uncle’s addresses, but these notices were all unclaimed. The HOA then posted the foreclosure notice on the front door of the property. Even though the HOA had Ms. Ackah’s email address, it never sent the foreclosure notice to her via email. Continue Reading

CFPB’s New Arbitration Rule and How It’ll Likely Be Challenged

On July 10, 2017, the Consumer Financial Protection Bureau (CFPB) announced a new rule that may have significant ramifications for the financial industry. The rule aims to stop a now common feature in financial services contracts: provisions directing customers to private, individual arbitration rather than the courts to settle disputes.

The sweeping rule would ban many financial service companies from using mandatory arbitration clauses in contracts with consumers. The rule does not prohibit such clauses outright, but instead will prevent companies from relying on any arbitration agreement to block a consumer from joining or initiating a class action. The result would be to open the door to class action lawsuits against the vast majority of businesses that extend credit to consumers, including banks, mortgage lenders and servicers, and credit card companies.

In addition, companies will face reporting requirements under the rule for any arbitrations that still happen, either under agreements entered into before the rule becomes effective or for non-class disputes. Parties may then lose the benefit of confidentiality that arbitration can provide. Under the rule, the CFPB would begin posting arbitration data to its public website, starting in July 2019. Continue Reading

The Debt Buying Industry Breathes a Sigh of Relief: Supreme Court Rules for Debt Buyer on FDCPA Claim

Here we are nearing the end of another U.S. Supreme Court term, and it has been a busy one in the creditors’ rights arena – and a particularly good one for debt buyers. Yesterday (June 12, 2017), the Supreme Court issued its second Fair Debt Collection Practices Act (FDCPA) decision of the term: Henson v. Santander Consumer USA Inc. (See our previous blog post about this case after the Fourth Circuit ruled on it in 2016.)

The Supreme Court’s opinion is noteworthy as the first opinion from the newest member of the court, Justice Neil Gorsuch, and for its opening alliterative lines:

“Disruptive dinnertime calls, downright deceit, and more besides drew Congress’s eye to the debt collection industry. From that scrutiny emerged the Fair Debt Collection Practices Act …”

But most memorable for debt buyers is the ruling that the FDCPA does not apply to companies that purchase debt from others and then collect that debt on their own behalf.  Continue Reading