Enforcement Litigation

Enforcement Litigation

These afternoon sessions focused on recent enforcement actions principally on behalf of the CFPB. While the CFPB continues its focus on TILA and RESPA enforcement actions, it has stepped up enforcement actions against lenders and others under the Unfair and Deceptive Practices Act (UDAAP).  Some highlights follow:

1. Recent enforcement actions under RESPA for ABA violations include Consumer Financial Protection Bureau v. Borders & Borders, PLC, 2015 WL 631196 (W.D. Ky. 2015), which addresses the defense that an affiliated business need not be a bona fide service provider.  Defendant’s motions for judgment in that action were denied.

2. UDAAP provisions governing “abusive” practice was discussed and it appears from several recent Consent Orders and enforcement actions that the CFPB is no closer to defining the criteria of an allegedly abusive lending practice, but instead continues to apply the “I know when I see it” standard.  Unfortunately, this rather unspecified standard has resulted in significant Consent Orders including:

  • Ocwen Financial $2 Billion
  • SunTrust Mortgage $540 Million
  • Flagstar Bank $37.5 Million
  • Green Tree Lending $68 Million

Despite a lack of clarity, penalties include $1 Million per day, injunctive relief and restitution for allegedly abusive lending practices

3. In a recent action in the Middle District of Georgia, the CFPB appears to be setting its sights on collection law firms despite an express exclusion for attorneys in the regulations.  In Consumer Financial Protection Bureau v. Frederick J. Hanna & Assoc., P.C., et al., 2014 WL 3611846 (N.D.Ga.), the CFPB is prosecuting an enforcement action against a collection firm for a variety of allegedly abusive and deceptive practices.  The outcome of this litigation will likely have far-reaching ramifications.

4. The Quicken Litigation is similarly dominating many sessions throughout the conference.  See Quicken Loans, Inc. v. United States of America, 2:15-cv-11408-MAG-RSW (E.D. Mich. April 17, 2015); United States of America v. Quicken Loans, Inc., 1:15-cv-00613-RBW (D.D.C. April 23, 2015).  These battling lawsuits pit Quicken Loans’ allegations that several federal agencies are abusing their powers against allegations of FHA insurance fraud against the largest residential mortgage loan company in the country. 

5. Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc., No. 13-1371.  The Supreme Court granted certiorari to consider whether the Fair Housing Act recognizes a disparate-impact theory of liability for acts performed without any intent to discriminate simply because the acts have a disproportionately adverse effect on groups sharing certain statutorily-defined characteristics.

It is anticipated that the CFPB will issue regulations governing disparate impacts in lending pursuant to its rule-making authority under 15 U.S.C.A. § 1639b(c)(3)(C) (the CFPB “shall prescribe regulations to prohibit . . . abusive or unfair lending practices that promote disparities among consumers of equal credit worthiness but of different race, ethnicity, gender, or age.”)

For more information on this session recap or to discuss your questions, please contact Donald A. Rea.