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Consumer Financial Services Answer Book 2012-13

 by Dykema Gossett PLLC, Richard E. Gottlieb, Arthur B. Axelson, Thomas M. Hanson
 
 Copyright: 2012-2013
 Last Updated: February 2013

 Product Details >> 

Product Details

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  • ISBN Number: 9781402418129
  • Page Count: 818
  • Number of Volumes: 1
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  • The purchase of PLI titles may include Basic Upkeep Service, whereby
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The “Consumer Financial Protection Act of 2010” (CFPA), Title X of the Dodd-Frank Act, made major changes in how consumer financial services are regulated, and many of these important changes are now in effect.  The Consumer Financial Services Answer Book 2012-13 describes in concise detail the new regulatory structure and requirements.  This new publication describes:

  • Updated requirements under such federal statutes as the Truth in Lending Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, and many others
  • The regulatory authority, and the limits on that authority, of the newly created federal Bureau of Consumer Financial Protection, as well as the changed authority of existing financial services regulators
  • The current federal requirements for mortgage loan servicing, foreclosure and eviction
  • The changes to the federal preemption, which require specific findings before preemption may be invoked

The Consumer Financial Services Answer Book 2012-13 helps the practitioner, through an easy question and answer format, understand the revised regulations in such areas as:

  • The secondary loan market, including securitization and assignee liability
  • Mortgage loan servicing
  • Automotive financing
  • Privacy and identity theft

In addition, the Consumer Financial Services Answer Book 2012-13 provides practical insight on litigation practices in this area, including special coverage on e-filing and document retention requirements as well as expert, practical insights into consumer financial class actions and other issues of emerging concern.

  Preface
Chapter 1: Consumer Loan Products and the Federal Regulation of Consumer Credit Donald C. Lampe ~ Dykema Gossett PLLC
  • Q 1.1 : What is a consumer loan?2
  • Q 1.2 : Who is a consumer?2
  • Q 1.3 : What is a loan?3
    • Q 1.3.1 : What is the difference between an unsecured and secured loan?3
    • Q 1.3.2 : What is the difference between open-end and closed-end credit?3
    • Q 1.3.3 : What is the difference between a loan and a retail installment sales contract?4
  • Q 1.4 : What is a security interest?4
  • Q 1.5 : What interest rates may be charged on consumer loans?4
  • Q 1.6 : What are the basic types of consumer loan products?5
  • Q 1.7 : What is a personal loan?5
  • Q 1.8 : What is a “payday” loan?5
  • Q 1.9 : What is a “mortgage loan”?6
    • Q 1.9.1 : What is a mortgage?6
    • Q 1.9.2 : Are there differences between residential and non-residential mortgage loans?6
    • Q 1.9.3 : What is a mortgage lien?6
    • Q 1.9.4 : What is a mortgage note?7
    • Q 1.9.5 : What is an adjustable rate mortgage?7
    • Q 1.9.6 : What is a home equity line of credit?7
    • Q 1.9.7 : What is a reverse mortgage?7
  • Q 1.10 : What is a credit card plan?8
    • Q 1.10.1 : What is a credit card issuer?8
    • Q 1.10.2 : What is a credit card?8
    • Q 1.10.3 : What is a cardholder?8
  • Q 1.11 : What is a student (or “educational”) loan?9
    • Q 1.11.1 : How do student loan repayments vary from conventional personal loans?10
    • Q 1.11.2 : Is a student loan technically a “consumer loan”?10
  • Q 1.12 : Who provides credit to consumers?10
  • Q 1.13 : What is a bank?11
  • Q 1.14 : What is a bank holding company?11
  • Q 1.15 : What is a credit card bank?11
  • Q 1.16 : What is a non-depository institution?11
  • Q 1.17 : What is a credit union?11
  • Q 1.18 : What is a savings & loan association, and how does it differ from other depository institutions?12
  • Q 1.19 : What is an industrial loan company?12
    • Q 1.19.1 : Do any laws address the potential non-supervision of ILCs?12
  • Q 1.20 : What is a mortgage banker?12
    • Q 1.20.1 : Is a mortgage company also a bank?13
    • Q 1.20.2 : What is a mortgage broker?13
    • Q 1.20.3 : What is the difference between a mortgage banker and a mortgage broker?14
    • Q 1.20.4 : Does the Dodd-Frank Act affect the mortgage broker industry?14
  • Q 1.21 : What is a consumer finance company?14
    • Q 1.21.1 : What is an auto finance company?15
    • Q 1.21.2 : What is a captive auto finance company?15
  • Q 1.22 : What is a government-sponsored enterprise?15
    • Q 1.22.1 : What are Fannie Mae and Freddie Mac?15
    • Q 1.22.2 : Do Fannie Mae and Freddie Mac make loans directly to consumers?15
    • Q 1.22.3 : What is the role of the Federal Housing Finance Agency in the operations of Fannie Mae and Freddie Mac?16
    • Q 1.22.4 : Is there a government-sponsored entity for the Federal Housing Administration and Department of Veterans Affairs Home Loan Program for Veterans?16
    • Q 1.22.5 : Is there a government-sponsored entity for student loans?16
  • Q 1.23 : What is a loan servicer?17
  • Q 1.24 : Are retailers covered by consumer finance laws?17
  • Q 1.25 : What federal agencies regulate consumer lending?18
  • Q 1.26 : What is the Bureau of Consumer Financial Protection?19
    • Q 1.26.1 : What statutes does the Bureau administer?19
    • Q 1.26.2 : What is the scope of the Bureau’s authority?19
    • Q 1.26.3 : Do Bureau rules preempt state law?20
    • Q 1.26.4 : Does Bureau authority extend beyond depository institutions?20
    • Q 1.26.5 : Does the Bureau enforce most consumer lending regulations formerly promulgated by the Federal Reserve Board?21
  • Q 1.27 : What authority remains with other federal agencies?22
    • Q 1.27.1 : What is the Office of the Comptroller of the Currency?22
    • Q 1.27.2 : What is the Federal Reserve?22
    • Q 1.27.3 : What is the Federal Deposit Insurance Corporation?22
    • Q 1.27.4 : What is the National Credit Union Administration?23
    • Q 1.27.5 : What happened to the authority of those agencies from whom authority has been transferred to the Bureau?24
  • Q 1.28 : What is the Consumer Credit Protection Act?24
  • Q 1.29 : What federal laws apply to lenders at the time the loan is underwritten and made?25
  • Q 1.30 : What is the Truth in Lending Act?25
    • Q 1.30.1 : What is the scope of TILA?25
    • Q 1.30.2 : What federal regulations implement TILA?26
    • Q 1.30.3 : Are retail installment sales covered by TILA?26
    • Q 1.30.4 : Are there any state laws that supplement or supplant TILA?26
  • Q 1.31 : What is the Equal Credit Opportunity Act?27
    • Q 1.31.1 : What is the scope of the ECOA?27
    • Q 1.31.2 : Who has regulatory authority over the ECOA?27
    • Q 1.31.3 : What is “fair lending”?27
  • Q 1.32 : What is the Fair Credit Reporting Act?27
    • Q 1.32.1 : Who is covered by the FCRA?28
    • Q 1.32.2 : What is a consumer reporting agency?28
    • Q 1.32.3 : Who has regulatory authority over the FCRA?28
  • Q 1.33 : What is the FTC Holder Rule?28
    • Q 1.33.1 : Are there any exceptions to the FTC Holder Rule?29
    • Q 1.33.2 : Is an assignee or purchaser liable for disclosure errors that are not apparent on the face of the loan?29
  • Q 1.34 : What is the FTC Credit Practices Rule?29
    • Q 1.34.1 : What contract provisions are prohibited under the Credit Practices Rule?29
    • Q 1.34.2 : What restrictions apply to co-signers on credit contracts?30
    • Q 1.34.3 : Does the Credit Practices Rule address late charges?30
  • Q 1.35 : What is the Community Reinvestment Act?31
  • Q 1.36 : What federal laws specifically apply just to mortgage lending?31
  • Q 1.37 : What is the Mortgage Reform and Anti-Predatory Lending Act?31
    • Q 1.37.1 : When do the Mortgage Reform Act provisions take effect?32
  • Q 1.38 : What is the Homeowners Protection Act?32
    • Q 1.38.1 : What is private mortgage insurance?32
  • Q 1.39 : What is the Home Mortgage Disclosure Act?32
    • Q 1.39.1 : What federal regulations implement the HMDA?33
  • Q 1.40 : What is the Real Estate Settlement Procedures Act?33
    • Q 1.40.1 : What federal regulations implement RESPA?33
    • Q 1.40.2 : What is a good faith estimate?34
    • Q 1.40.3 : What is a HUD Settlement Statement (or HUD-1)?34
  • Q 1.41 : What is the SAFE Act?34
  • Q 1.42 : What is the Fair Housing Act?35
    • Q 1.42.1 : Does the Bureau have regulatory authority with respect to the Fair Housing Act?35
    • Q 1.42.2 : Who would investigate claims of mortgage discrimination?35
  • Q 1.43 : What is the Alternative Mortgage Transactions Parity Act?35
  • Q 1.44 : Does TILA apply to consumers that buy or lease a car or truck?36
  • Q 1.45 : What is the scope of the Consumer Leasing Act?36
    • Q 1.45.1 : What entities are covered by the Consumer Leasing Act?37
    • Q 1.45.2 : What federal regulations implement the Consumer Leasing Act?37
  • Q 1.46 : What is the Electronic Fund Transfer Act?37
  • Q 1.47 : What federal regulations implement the EFTA?38
  • Q 1.48 : Do TILA and Regulation Z apply to credit cards?38
  • Q 1.49 : What is the Credit Card Accountability, Responsibility and Disclosure Act of 2009?38
  • Q 1.50 : What is the Fair Credit Billing Act?39
  • Q 1.51 : What is the Fair and Accurate Credit Transactions Act?39
  • Q 1.52 : What are PCI Standards?39
  • Q 1.53 : What state laws apply to consumer finance transactions?39
  • Q 1.54 : What laws govern the privacy of a consumer’s financial information?40
    • Q 1.54.1 : What is the Gramm-Leach-Bliley Act?40
    • Q 1.54.2 : What agency enforces the GLBA?41
    • Q 1.54.3 : What is the Right to Financial Privacy Act?41
    • Q 1.54.4 : What are the Red Flag Rules?41
    • Q 1.54.5 : What other federal statutes directly address financial privacy issues?42
  • Q 1.55 : At what point is a consumer in “default” on his or her loan obligation?42
    • Q 1.55.1 : What is acceleration?42
    • Q 1.55.2 : At what point may the lender foreclose on a mortgage or deed of trust?42
  • Q 1.56 : What federal laws apply to consumers who are delinquent or in default on their loan obligations?43
  • Q 1.57 : What is the Fair Debt Collection Practices Act?43
    • Q 1.57.1 : Was the FDCPA enacted strictly to benefit consumers?43
    • Q 1.57.2 : Is a loan servicer considered a third-party debt collector?44
    • Q 1.57.3 : Are there any regulations that supplement the FDCPA?44
  • Q 1.58 : What is the Credit Repair Organizations Act?44
    • Q 1.58.1 : Who enforces the CROA?44
Chapter 2: The Bureau of Consumer Financial Protection
  • Q 2.1 : What is the Bureau of Consumer Financial Protection?52
    • Q 2.1.1 : Is the Bureau autonomous?53
    • Q 2.1.2 : How is the Bureau funded?53
  • Q 2.2 : Who runs the Bureau?53
    • Q 2.2.1 : What new powers did the Bureau gain once a Director was appointed?54
  • Q 2.3 : What are the Bureau’s function and objectives relating to consumer financial affairs?56
  • Q 2.4 : What are the three functional units the Bureau established to assist in carrying out its consumer protections functions?56
    • Q 2.4.1 : How must the Bureau collect and track consumer complaints?57
    • Q 2.4.2 : For which products has the Bureau instituted complaint procedures and what is the complaint and response process?57
  • Q 2.5 : How has the Bureau been organized?58
  • Q 2.6 : What offices is the Bureau required to establish to carry out its duties?58
    • Q 2.6.1 : What is the Office of Fair Lending and Equal Opportunity?58
    • Q 2.6.2 : What is the Office of Financial Education?59
    • Q 2.6.3 : What is the Office of Servicemember Affairs?60
    • Q 2.6.4 : What is the Office of Financial Protection for Older Americans?61
    • Q 2.6.5 : What is the Bureau’s Consumer Advisory Board?62
  • Q 2.7 : What other offices has the Bureau created?62
  • Q 2.8 : How does the Bureau implement Federal consumer financial laws and what is its rulemaking authority?63
    • Q 2.8.1 : What requirements are imposed upon the Bureau in connection with the rulemaking authority?64
    • Q 2.8.2 : May the Bureau require additional disclosures to consumers from covered persons and service providers?64
    • Q 2.8.3 : Are mortgage loan disclosures going to change?65
    • Q 2.8.4 : What other regulatory actions has the Bureau taken?66
    • Q 2.8.5 : What regulations are anticipated regarding TILA’s Ability to Repay and the definition of Qualified Mortgage Loans?67
    • Q 2.8.6 : Is the Bureau expected to issue new regulations regarding mortgage loan servicing?68
  • Q 2.9 : What is the Bureau’s rulemaking authority regarding unfair, deceptive, or abusive acts or practices?71
    • Q 2.9.1 : Is the Bureau restricted in regard to activities it deems to be unfair?71
    • Q 2.9.2 : What limitations are placed on the Bureau in determining that an act or practice is abusive?71
    • Q 2.9.3 : Does the Dodd-Frank Act help define deceptive acts or practices?72
  • Q 2.10 : What entities fall within the scope of the Bureau’s supervisory authority?72
    • Q 2.10.1 : How is asset size determined for purposes of supervisory authority by the Bureau?73
    • Q 2.10.2 : Who is exempt from Bureau authority?73
    • Q 2.10.3 : Who are larger participants over whom the Bureau has supervisory authority?75
  • Q 2.11 : What is the Bureau’s supervisory authority?76
    • Q 2.11.1 : In supervising nondepository institutions, what activities must the Bureau undertake?77
    • Q 2.11.2 : What is the scope of the Bureau’s supervisory activities over large and small banks?77
  • Q 2.12 : What action has the Bureau taken in regard to its supervisory responsibilities?78
    • Q 2.12.1 : What does the Supervision and Examination Manual for Mortgage Servicers contain?78
    • Q 2.12.2 : What did the Bureau add to its Examination Manual regarding mortgage origination?80
    • Q 2.12.3 : What does the Examination Manual contain in regard to non-banks and payday lending?81
    • Q 2.12.4 : What guidance has the Bureau provided regarding S.A.F.E. Act compliance and examinations?81
    • Q 2.12.5 : Are large banks and non-banks responsible for their third-party service providers?82
  • Q 2.13 : What is the scope of the Bureau’s enforcement authority?83
  • Q 2.14 : What enforcement action may the Bureau take?84
    • Q 2.14.1 : What is the scope of the Bureau’s investigation and administrative discovery authority?84
    • Q 2.14.2 : May the Bureau conduct hearings and adjudication proceedings?85
    • Q 2.14.3 : What is the Bureau’s litigation authority?85
    • Q 2.14.4 : What relief may be granted in an administrative proceeding or court action brought by the Bureau?85
    • Q 2.14.5 : Will the Bureau provide notice to the subject of an intended enforcement action prior to initiating such proceedings?86
  • Q 2.15 : Has the Bureau provided any guidance regarding how it will enforce violations of the statutes and regulations under its jurisdiction?87
    • Q 2.15.1 : What guidance has the Bureau provided regarding fair lending enforcement?88
  • Q 2.16 : Has the Bureau coordinated its enforcement authority with the FTC?89
  • Q 2.17 : To what extent will the Bureau coordinate and share information with state attorneys general?90
  • Q 2.18 : Is information provided to the Bureau in connection with supervisory examinations and enforcement actions confidential?91
  • Q 2.19 : Will privileged information provided to the Bureau retain its privileged status?92
    • Q 2.19.1 : Has the Bureau issued any guidance on this subject?92
    • Q 2.19.2 : Is the Bureau position on privilege consistent with federal law?93
    • Q 2.19.3 : What is the “selective waiver” doctrine?93
    • Q 2.19.4 : What are the arguments against applicability of selective waiver to the Bureau?94
    • Q 2.19.5 : How has Congress responded to this privilege issue?95
Chapter 3: Truth in Lending Act James Golden ~ Dykema Gossett PLLC
Heather C. Hutchings ~ Dykema Gossett PLLC
  • Q 3.1 : What is the Truth in Lending Act?101
  • Q 3.2 : What is the purpose of TILA?101
  • Q 3.3 : What kinds of transactions are subject to TILA requirements?102
  • Q 3.4 : What disclosure requirements are mandated by TILA?105
  • Q 3.5 : What is a “closed-end” credit transaction?105
  • Q 3.6 : What are the required disclosures for closed-end transactions?106
  • Q 3.7 : Must the disclosures be made in a specific manner?109
  • Q 3.8 : What are the material disclosures?110
    • Q 3.8.1 : What are the finance charge disclosure requirements?111
  • Q 3.9 : When are disclosures required for closed-end credit transactions?112
  • Q 3.10 : What must be disclosed for open-end credit transactions?113
  • Q 3.11 : What disclosures are required before opening an open-end account?114
  • Q 3.12 : What disclosures must be made at the end of each billing cycle?116
  • Q 3.13 : Must the disclosures be made in a certain manner?118
  • Q 3.14 : Are there special disclosures required for home-equity plans?119
  • Q 3.15 : Are there special rules for credit card advertisements and renewals?119
  • Q 3.16 : What is the Home Ownership and Equity Protection Act?120
  • Q 3.17 : What loans does HOEPA cover?120
  • Q 3.18 : What are the disclosure obligations for HOEPA loans?121
  • Q 3.19 : What restrictions does HOEPA impose on its loan terms?122
  • Q 3.20 : What is a “higher-priced mortgage loan”?123
  • Q 3.21 : What restrictions and requirements are imposed on higher-priced mortgage loans?123
  • Q 3.22 : What is the scope of the valuation independence rule?124
  • Q 3.23 : What conduct is prohibited under the valuation independence rule?125
  • Q 3.24 : How must fee appraisers be compensated?126
    • Q 3.24.1 : What are “customary and reasonable” fees?126
  • Q 3.25 : What is a “loan originator”?127
  • Q 3.26 : What transactions are covered by the loan originator compensation rule?127
  • Q 3.27 : Can loan originator compensation be based on loan terms or conditions?127
    • Q 3.27.1 : Are there exceptions to the prohibition against compensating loan originators based on loan terms or conditions?128
  • Q 3.28 : Can a loan originator receive compensation from the creditor and the consumer on the same transaction?128
  • Q 3.29 : Can a loan originator direct a consumer to a particular transaction that will result in greater compensation to the loan originator?128
    • Q 3.29.1 : Is there a safe harbor for the anti-steering rule?128
  • Q 3.30 : What is rescission and when is it available?129
  • Q 3.31 : What loans may be rescinded?129
  • Q 3.32 : What disclosures are required?130
  • Q 3.33 : When can a borrower rescind?130
  • Q 3.34 : How does a borrower rescind a transaction?132
  • Q 3.35 : What are the effects of rescission?132
  • Q 3.36 : How is TILA enforced?133
  • Q 3.37 : What are a borrower’s remedies for TILA violations?134
    • Q 3.37.1 : What are the statutory damages?134
    • Q 3.37.2 : Can actual damages also be collected?135
    • Q 3.37.3 : Can a borrower use TILA as a defense on a collection action?136
  • Q 3.38 : What is the statute of limitations for TILA claims?136
  • Q 3.39 : What are a lender’s other defenses?137
  • Q 3.40 : How does the Dodd-Frank Act affect TILA?138
Chapter 4: Real Estate Settlement Procedures Act William L. Logan ~ Law Office of William L. Logan, PLLC
  • Q 4.1 : What is the purpose of RESPA?156
  • Q 4.2 : What transactions are subject to the requirements of RESPA?157
    • Q 4.2.1 : What is a federally related mortgage loan?157
  • Q 4.3 : What loans are exempt from RESPA?158
  • Q 4.4 : What disclosures are required?159
  • Q 4.5 : What initial disclosures are required?159
    • Q 4.5.1 : What is a Good Faith Estimate and when must it be provided?160
    • Q 4.5.2 : What fees may be charged prior to providing a GFE?161
    • Q 4.5.3 : Is the originator bound by the charges listed in the GFE?161
    • Q 4.5.4 : Can a lender cure a GFE violation?163
    • Q 4.5.5 : Is the originator obligated to disclose referrals from other settlement service providers?163
    • Q 4.5.6 : What is a Servicing Disclosure Statement?163
  • Q 4.6 : What must be disclosed at settlement?164
  • Q 4.7 : Are there also post-closing disclosure requirements?165
  • Q 4.8 : What is a Qualified Written Request?165
  • Q 4.9 : What does RESPA require with regard to escrow accounts?167
    • Q 4.9.1 : What is an Annual Escrow Account Statement?167
  • Q 4.10 : What does RESPA prohibit?169
    • Q 4.10.1 : What is a “settlement service”?169
    • Q 4.10.2 : What is a “referral”?169
    • Q 4.10.3 : What is a “thing of value”?170
    • Q 4.10.4 : What is an “unearned fee”?170
  • Q 4.11 : What is the RESPA “safe harbor”?171
  • Q 4.12 : Does RESPA permit any referral fees?172
    • Q 4.12.1 : What is an “affiliated business arrangement”?173
  • Q 4.13 : What is force-placed insurance?174
    • Q 4.13.1 : What are the new restrictions on force-placed insurance?174
    • Q 4.13.2 : Are there any disclosure requirements imposed in connection with force-placed insurance?174
    • Q 4.13.3 : When must a servicer terminate force-placed insurance?175
  • Q 4.14 : How is RESPA enforced?175
  • Q 4.15 : What are the remedies available for violations of RESPA?175
  • Q 4.16 : What are the statute of limitations periods for claims under RESPA?177
Chapter 5: Fair Lending/Non-Discrimination Brandon M Blazo ~ Dykema Gossett PLLC
  • Q 5.1 : What is the Fair Housing Act?185
  • Q 5.2 : What is prohibited by the FHA?185
  • Q 5.3 : What is “self-testing” under the FHA?187
  • Q 5.4 : What remedies are available under the FHA?188
  • Q 5.5 : What is the statute of limitations for FHA claims?188
  • Q 5.6 : What transactions are subject to the Equal Credit Opportunity Act?188
  • Q 5.7 : What types of discrimination are prohibited by the ECOA?189
  • Q 5.8 : What types of discrimination claims can be made under the ECOA?189
    • Q 5.8.1 : What must a plaintiff establish under the direct evidence of discrimination theory?190
    • Q 5.8.2 : What must a plaintiff establish under the disparate treatment theory?190
    • Q 5.8.3 : What must a plaintiff establish under the disparate impact theory?190
  • Q 5.9 : What are the ECOA rules regarding marketing and loan applications?191
  • Q 5.10 : Are creditors prohibited from requesting certain types of information?192
  • Q 5.11 : Are there limitations on requesting information about a borrower’s spouse?192
  • Q 5.12 : What are the other limitations on requesting applicant information?193
  • Q 5.13 : Are there ECOA limitations on evaluating applications?193
  • Q 5.14 : What are the ECOA restrictions on extending credit?194
  • Q 5.15 : What is an adverse action?195
    • Q 5.15.1 : What disclosures are required under the ECOA?195
  • Q 5.16 : What are the ECOA’s appraisal requirements?195
  • Q 5.17 : What government monitoring information must be requested of credit applicants?196
  • Q 5.18 : What is “self-testing” under the ECOA?197
  • Q 5.19 : What are the ECOA’s record retention requirements?198
  • Q 5.20 : What remedies are available under the ECOA?198
  • Q 5.21 : What is the statute of limitations for ECOA claims?199
  • Q 5.22 : What is the Community Reinvestment Act?200
  • Q 5.23 : What is the CRA rating system and the criteria for rating?201
  • Q 5.24 : How is the assessment area determined under the CRA?202
  • Q 5.25 : How do creditors earn loan credits under the CRA?202
  • Q 5.26 : Are there any penalties or rights of action under the CRA?203
  • Q 5.27 : What is the Home Mortgage Disclosure Act?203
  • Q 5.28 : Who is covered under the HMDA?203
  • Q 5.29 : What are the reporting and disclosure obligations under the HMDA?204
  • Q 5.30 : What data must be reported under the HMDA?204
  • Q 5.31 : Are there any penalties or rights of action under the HMDA?206
  • Q 5.32 : What are the implications or consequences of a HMDA report that implies discriminatory lending patterns?206
Chapter 6: Fair Credit Reporting Act Renee Zipprich ~ Dykema Gossett PLLC
Stephen M Mahieu ~ Dykema Gossett PLLC
Haydn J. Richards Jr. ~ Dykema Gossett PLLC
  • Q 6.1 : Which agency has regulatory and enforcement authority for the FCRA?215
  • Q 6.2 : Who is subject to the FCRA?217
  • Q 6.3 : Who is a “consumer” under the FCRA?217
  • Q 6.4 : Who is a “User” under the FCRA?217
  • Q 6.5 : Who is a “Furnisher” under the FCRA?217
  • Q 6.6 : What is a “consumer reporting agency”?218
  • Q 6.7 : What is a “consumer report”?219
  • Q 6.8 : What is an “investigative consumer report”?219
  • Q 6.9 : Does the FCRA cover consumer information that is not within the statutory definition of a consumer report?220
  • Q 6.10 : How can a User determine whether particular information is considered a consumer report for purposes of the FCRA?220
  • Q 6.11 : Does a consumer report include “credit header” information?221
  • Q 6.12 : What are the “permissible purposes” for releasing a consumer report?221
    • Q 6.12.1 : May the court order release of a consumer report?221
    • Q 6.12.2 : May a consumer directly authorize release of a report?221
    • Q 6.12.3 : May a CRA release a consumer report for use in extending credit to or underwriting insurance for the consumer?221
    • Q 6.12.4 : Under what other circumstances may a CRA release a consumer report?222
  • Q 6.13 : What are the penalties for unauthorized access of consumer credit information?222
  • Q 6.14 : What information must the User provide to the CRA before it may obtain a consumer report?223
  • Q 6.15 : What are a User’s obligations with respect to investigative consumer reports?223
  • Q 6.16 : When a person obtains a consumer report on an individual, is that person required to provide a copy of the report to the individual?224
  • Q 6.17 : Is a person required to provide the consumer with a credit score when such person makes or arranges mortgage loans on behalf of such consumer?224
  • Q 6.18 : When must any required disclosure of a credit score to the consumer take place?225
  • Q 6.19 : What is “adverse action”?225
  • Q 6.20 : What information must be provided to a consumer if adverse action is taken in connection with a consumer report?226
    • Q 6.20.1 : Is there a different rule for adverse action based on information obtained from third parties that are not CRAs?227
    • Q 6.20.2 : Does a User have any special obligation when it takes adverse action based on information obtained from a User’s corporate affiliates?228
  • Q 6.21 : What are the reporting obligations under the FCRA?228
  • Q 6.22 : What are the obligations of Furnishers?228
  • Q 6.23 : Are there special rules governing identity theft?229
  • Q 6.24 : What is “negative information”?230
  • Q 6.25 : What are a CRA’s obligations under the FCRA?231
  • Q 6.26 : Does the FCRA impose any obligation on CRAs to maintain reasonable procedures to ensure compliance?231
  • Q 6.27 : What are the limits that the FCRA places on CRAs and on the information contained in consumer reports?232
  • Q 6.28 : How does a consumer correct misreported information?233
  • Q 6.29 : Are there instances where a Furnisher is not required to conduct a reasonable investigation upon receiving a direct dispute from a consumer?234
  • Q 6.30 : Is the CRA obligated to conduct a reinvestigation under any circumstances?234
  • Q 6.31 : What are the obligations of a Furnisher once the consumer disputes the matter directly to the CRA?235
  • Q 6.32 : What are the penalties for misreporting information?236
  • Q 6.33 : What is a pre-screened offer of credit?238
  • Q 6.34 : What are the requirements for sending pre-screened offers of credit?239
  • Q 6.35 : What disclosure is required in connection with firm offers of credit?242
  • Q 6.36 : Do consumers have a cause of action for violation of the clear and conspicuous disclosure requirements?243
  • Q 6.37 : What is the risk-based pricing notice requirement?243
  • Q 6.38 : What types of credit are impacted by the risk-based pricing notice requirements?243
  • Q 6.39 : What is required in connection with the risk-based pricing notice requirement?244
  • Q 6.40 : Who is required to provide the notice?244
  • Q 6.41 : Is there a particular form that must be utilized?244
  • Q 6.42 : What content must be included in a risk-based pricing notice in order to meet the requirements of the rule?244
  • Q 6.43 : How can it be determined if notice is appropriate?245
  • Q 6.44 : What is the Direct Comparison Method?245
  • Q 6.45 : What is the Credit Score Proxy Method?246
  • Q 6.46 : What is the Tiered Pricing Method?246
  • Q 6.47 : Are there any exceptions to providing the notice?247
  • Q 6.48 : What is the Specific Terms Exception?247
  • Q 6.49 : What is the Adverse Action Notice Exception?248
  • Q 6.50 : What is the Pre-Screened Solicitation Exception?248
  • Q 6.51 : What is the Consumer Report and Credit Score Notice Exception for Residential Real Property Loans?248
  • Q 6.52 : What is the exemption for General Consumer Report and Credit Score Notice when a Credit Score is not available?249
  • Q 6.53 : If a credit score is not available, what information must be included in the notice to the consumer?250
  • Q 6.54 : When must the notice be provided to a consumer?251
  • Q 6.55 : Are there any special rules governing identity theft?251
  • Q 6.56 : What is a “red flag”?252
  • Q 6.57 : What does the Red Flags Rule generally require?252
  • Q 6.58 : When did the Red Flags Rule become effective?253
  • Q 6.59 : What are the penalties for failing to implement a “red flag” program?253
  • Q 6.60 : Is an employer permitted to access its employees’ credit information?254
  • Q 6.61 : What are an employer’s obligations to a job applicant or employee when taking “adverse action”?254
  • Q 6.62 : What recourse does an aggrieved party have against employers or potential employers?255
Chapter 7: Automobile Sales and Leasing: Requirements and Disclosures; And Appendix 7A: Regulation M, 12 C.F.R. Part 1013 Donald C. Lampe ~ Dykema Gossett PLLC
Katarzyna Brozynski ~ Dykema Gossett PLLC
  • Q 7.1 : What laws govern the disclosures required in consumer leasing and consumer sales on credit?264
  • Q 7.2 : Does TILA apply to automobile sales?265
    • Q 7.2.1 : Does TILA apply to auto advertising?265
    • Q 7.2.2 : What disclosures are required in auto credit applications?266
    • Q 7.2.3 : What disclosures are specifically required in a consumer auto purchase?267
    • Q 7.2.4 : What is a Retail Installment Sales Contract?268
    • Q 7.2.5 : Is the dealer also the lender?268
    • Q 7.2.6 : What is the Rule of 78’s?268
    • Q 7.2.7 : What if the borrower overpays interest on a Rule of 78’s loan?269
    • Q 7.2.8 : Where does the dealer obtain the money to advance moneys to a purchaser?269
  • Q 7.3 : What are the general disclosure requirements for a consumer lease?269
  • Q 7.4 : What must be included in the disclosures?270
  • Q 7.5 : How do you determine whether a rebate to the lessee is required in an early termination of the lease and how must you disclose the method?276
  • Q 7.6 : What if the transaction involves more than one lessor or lessee?278
  • Q 7.7 : What if the lease is renegotiated, extended, or assumed?278
  • Q 7.8 : How does one comply with the CLA and Regulation M in leasing advertisements?279
  • Q 7.9 : What are the penalties for noncompliance with the CLA and Regulation M?279
  • Q 7.10 : What defenses are available to a dealer?280
  • Q 7.11 : What if the state law is inconsistent with the CLA and Regulation M?280
  • Q 7.12 : What recent developments have occurred with the CLA and Regulation M?280
  • Q 7.13 : What is the “Used Car Rule”?281
  • Q 7.14 : What are the general requirements of the Used Car Rule?282
  • Q 7.15 : How does the FTC define a “used car”?282
  • Q 7.16 : What does the Buyer’s Guide need to contain?282
  • Q 7.17 : How must the Buyer’s Guide be made available?283
  • Q 7.18 : Does the “window sticker” information override information in the contract of sale?284
  • Q 7.19 : Is anyone exempt from the Used Car Rule?284
  • Q 7.20 : What warranty information must be disclosed?284
  • Q 7.21 : What is a “full warranty”?285
  • Q 7.22 : What systems must be covered, and for how long?286
  • Q 7.23 : What if the manufacturer’s warranty still applies?286
  • Q 7.24 : Where should negotiated warranty changes be included?287
  • Q 7.25 : How are service contracts different from warranties?287
  • Q 7.26 : What must the dealer provide the buyer at sale?288
  • Q 7.27 : May the Buyer’s Guide serve as the written warranty?288
  • Q 7.28 : What disclosures should the dealer make if the dealer offers a 50/50 warranty or another type of split cost warranty?289
  • Q 7.29 : What are the penalties for noncompliance with the Used Car Rule?290
  • Q 7.30 : Do consumers have a cause of action against dealers for violation of the Used Car Rule?290
  • Q 7.31 : What is the Federal Odometer Act?291
  • Q 7.32 : What are the general requirements of the FOA?291
  • Q 7.33 : What transactions are exempted from the FOA?292
  • Q 7.34 : What vehicles are exempted from the FOA’s requirements?292
  • Q 7.35 : What are the penalties for noncompliance?293
  • Q 7.36 : What is the FTC Holder Rule?293
  • Q 7.37 : What does the FTC Holder Rule require?294
  • Q 7.38 : Who is excluded from the Holder Rule?294
  • Q 7.39 : What recent developments have occurred with the Holder Rule?295
  • Q 7.40 : What is a “Spot Delivery Agreement”?295
  • Q 7.41 : How may a dealership avoid TILA liability under Spot Delivery Agreements?296
  • Q 7.42 : What is “GAP Insurance”?297
  • Q 7.43 : How is GAP Insurance properly excluded from the finance charge?297
  • Appendix 7A : Regulation M, 12 C.F.R. Part 1013305
Chapter 8: Fair Credit Billing Act Theodore W. Seitz ~ Dykema Gossett PLLC
Aaron L. Vorce ~ Dykema Gossett PLLC
  • Q 8.1 : What is the Fair Credit Billing Act?322
  • Q 8.2 : What is the FCBA’s purpose?322
  • Q 8.3 : Who is a “creditor” and what is an “open-end credit plan” under the FCBA?323
  • Q 8.4 : What are the FCBA’s billing dispute resolution procedures?324
    • Q 8.4.1 : What is an “extension of consumer credit”?324
    • Q 8.4.2 : Does the FCBA’s billing error procedures apply only to open-end credit?325
  • Q 8.5 : What is a billing error under the FCBA?326
  • Q 8.6 : How must a cardholder notify a creditor of a billing error?327
  • Q 8.7 : What are the creditor’s obligations after receiving a billing error notice?328
  • Q 8.8 : Is the creditor required to investigate the billing error?329
  • Q 8.9 : What is a “reasonable investigation”?329
  • Q 8.10 : What restrictions apply when a billing error is pending?331
  • Q 8.11 : What is the penalty for non-compliance with the FCBA?331
  • Q 8.12 : Is there a private right of action under the FCBA?332
  • Q 8.13 : What are the creditor’s obligations regarding billing periods and payments under the FCBA?333
  • Q 8.14 : What are the creditor’s obligations regarding limits on interest rates, fees, and finance charge increases applicable to outstanding balances?333
  • Q 8.15 : What rights and obligations do sellers have under the FCBA?335
  • Q 8.16 : Is the card issuer subject to the cardholder’s claims and defenses against a seller?336
  • Q 8.17 : May a card issuer offset the cardholder’s indebtedness against funds held on deposit with the card issuer?337
  • Q 8.18 : Does the FCBA preempt state law?337
Chapter 9: A Guide to the 2006 Alta Loan Policy of Title Insurance ; And Appendix 9A: American Land Title Association Loan Policy Michael Gilman ~ Dykema Gossett PLLC
  • Q 9.1 : What is title insurance?344
  • Q 9.2 : What are the components of the 2006 Loan Policy form?345
    • Q 9.2.1 : What is Schedule A?345
    • Q 9.2.2 : What is Schedule B?345
    • Q 9.2.3 : What are endorsements?346
  • Q 9.3 : What is the term of the policy?347
  • Q 9.4 : Who is an insured under the 2006 Loan Policy?348
  • Q 9.5 : What are a title insurer’s primary obligations?350
  • Q 9.6 : What are covered risks?350
  • Q 9.7 : What are the exclusions from coverage?354
  • Q 9.8 : What is the scope of the duty to defend?355
  • Q 9.9 : What is an “acceptance of a claim with a reservation of rights”?356
  • Q 9.10 : Does the title insurer have a duty to defend against all counts of a complaint?357
  • Q 9.11 : How does an insured tender the defense of an action?358
  • Q 9.12 : Who selects counsel to defend the insured?358
  • Q 9.13 : How does an insured make a claim?358
  • Q 9.14 : What are the title insurer’s options upon receipt of a claim?359
  • Q 9.15 : How are the insured’s losses or damages determined?361
    • Q 9.15.1 : What is the “Amount of Insurance”?362
    • Q 9.15.2 : What is the “Indebtedness”?362
    • Q 9.15.3 : What is the “difference between the value of the title as insured and the value of the title subject to the risk insured against under the policy”?363
  • Q 9.16 : As of what date is the loss determined?363
  • Q 9.17 : When must the title insurer pay a loss?364
  • Q 9.18 : What is the extent of the title insurer’s subrogation rights?364
  • Q 9.19 : How should an insured respond to a denial of a claim?365
  • Q 9.20 : What is an insured’s recourse for a denial of a claim?365
  • Q 9.21 : May an insured compel arbitration of a dispute with the insurer under the policy?366
  • Appendix 9A : ALTA Loan Policy of Title Insurance Issued by Blank Title Insurance Company371
Chapter 10: Secondary Market/Securitization Darrell W Pierce ~ Dykema Gossett PLLC
  • Q 10.1 : What are “secondary market” transactions?389
  • Q 10.2 : What is the difference between a loan assignment and a loan participation?391
  • Q 10.3 : What is “structured finance”?393
  • Q 10.4 : What is an SPE?393
  • Q 10.5 : What is “securitization”?394
  • Q 10.6 : What purposes does securitization serve?394
  • Q 10.7 : What assets are appropriate for securitization?395
  • Q 10.8 : How does securitization reduce the risk of a sponsor’s bankruptcy?395
  • Q 10.9 : How does one achieve bankruptcy-remote status?396
  • Q 10.10 : What entity form should an SPE have and how is it organized?397
  • Q 10.11 : What characteristics should be reflected in an SPE’s organizational documents?398
    • Q 10.11.1 : What is the role of “independent directors” in the management of an SPE?398
    • Q 10.11.2 : What other characteristics should be reflected in so-called “separateness covenants”?399
  • Q 10.12 : When will entity separateness be ignored?399
  • Q 10.13 : What is “piercing the corporate veil” under state law?400
  • Q 10.14 : What is substantive consolidation under the Bankruptcy Code?400
    • Q 10.14.1 : What is a “non-consolidation opinion” and under what circumstances can it be rendered?401
  • Q 10.15 : When will a court recognize that a sponsor has sold assets to an SPE?402
  • Q 10.16 : What is a “recharacterization risk”?402
    • Q 10.16.1 : What are the characterization options of a transaction designated by the parties as a sale?403
    • Q 10.16.2 : What characteristics are required for a “true sale” or “absolute conveyance”?403
  • Q 10.17 : Will a bankruptcy court take a different view, even on a temporary basis?404
  • Q 10.18 : What are the features of a typical transaction in which financial assets are securitized?405
  • Q 10.19 : How does securitization reallocate the cash flows generated by, and attendant risks associated with, the subject assets to different investors?407
    • Q 10.19.1 : What is “pooling”?407
    • Q 10.19.2 : What is “tranching”?407
    • Q 10.19.3 : What is the “waterfall”?408
    • Q 10.19.4 : What credit enhancement techniques might be used in addition to pooling and tranching?408
    • Q 10.19.5 : What techniques are used to identify and segregate cash collections?409
    • Q 10.19.6 : Must a separate collection account be used?409
    • Q 10.19.7 : What are typical representations, covenants and defaults included in structured finance and securitization transactions?410
  • Q 10.20 : Is one SPE enough, or is a trust required?411
    • Q 10.20.1 : What role do trusts play in securitization?411
    • Q 10.20.2 : What are the rights and duties of trustees?411
  • Q 10.21 : Do the underlying deal documents need to be amended?411
    • Q 10.21.1 : Do assignments of mortgages need to be recorded?412
    • Q 10.21.2 : Do vehicle titles need to be assigned and re-issued?412
    • Q 10.21.3 : What is a “titling trust”?413
    • Q 10.21.4 : Do obligors need to be notified?413
  • Q 10.22 : What is the role of the servicer?414
  • Q 10.23 : Under what standards does the servicer act?414
  • Q 10.24 : What is a “back-up” servicer?414
  • Q 10.25 : What does the servicer enforce?415
    • Q 10.25.1 : Who should have what in order to enforce?415
    • Q 10.25.2 : Is a separate custodian required?416
  • Q 10.26 : Who indemnifies whom, and for what?417
  • Q 10.27 : What happens when lenders are paid or the portfolio has wound down?417
  • Q 10.28 : What if there aren’t enough collections?418
  • Q 10.29 : What is a “clean-up call”?418
  • Q 10.30 : Are there SEC rules or regulations specific to issuance of asset-backed securities, mortgage-backed securities, and collateralized debt obligations?419
  • Q 10.31 : How are securitization transactions accounted for, generally speaking?420
Chapter 11: Mortgage Loan Servicing Brett J Natarelli ~ Dykema Gossett PLLC
  • Q 11.1 : What is servicing, and who is a mortgage loan servicer?428
  • Q 11.2 : How is a loan servicer different than the originator?429
  • Q 11.3 : How is a loan servicer different from an investor/owner?429
  • Q 11.4 : What is a “master servicer”?430
  • Q 11.5 : Do RESPA’s servicing requirements apply to all consumer credit loans?431
  • Q 11.6 : What disclosures does RESPA require when servicing rights are transferred?432
  • Q 11.7 : What must the transferring entity disclose?432
  • Q 11.8 : When does the transferor servicer have to provide the notice?433
  • Q 11.9 : Does the transferee entity have a disclosure obligation?433
  • Q 11.10 : What if the borrower submits a payment to the transferor servicer after the effective date of transfer?434
  • Q 11.11 : What liability do servicers have for violations of law that occurred at loan origination?434
  • Q 11.12 : What federal obligations apply to crediting payments?435
  • Q 11.13 : What are “reasonable requirements for payments”?435
  • Q 11.14 : What happens if a creditor accepts a non-conforming payment?435
  • Q 11.15 : What is a Qualified Written Request?436
  • Q 11.16 : What constitutes a valid QWR? What does not?436
  • Q 11.17 : What are the timing requirements for responding to a QWR?438
  • Q 11.18 : How should a servicer respond to a QWR?438
  • Q 11.19 : What actions can a servicer take during the pendency of a QWR?439
  • Q 11.20 : What is force-placed insurance?439
  • Q 11.21 : Under what circumstances can a servicer impose force-placed insurance?440
  • Q 11.22 : Does the Dodd-Frank Act impose new requirements for force-placed insurance?441
  • Q 11.23 : What rights do servicers have to casualty insurance proceeds?442
  • Q 11.24 : Are servicers subject to the Fair Debt Collection Practices Act?443
  • Q 11.25 : What federal requirements apply to the maintenance of escrow accounts?443
  • Q 11.26 : What is a “target balance”?444
  • Q 11.27 : What is an escrow account analysis?444
  • Q 11.28 : What is the escrow account “cushion”?445
  • Q 11.29 : How is an escrow account analysis conducted?446
  • Q 11.30 : What is the difference between a shortage and a deficiency?447
  • Q 11.31 : What must the servicer do in the event of a shortage?447
  • Q 11.32 : What must the servicer do in the event of a deficiency?448
  • Q 11.33 : What must the servicer do in the event of a surplus?448
  • Q 11.34 : What obligations does the servicer have to make timely payments?448
  • Q 11.35 : What are the servicer’s record-keeping obligations for escrow accounts?449
  • Q 11.36 : Is there a private right of action for failure to adhere to the RESPA and Regulation X escrow obligations?449
  • Q 11.37 : What changes does the Dodd-Frank Act make to escrow obligations?450
  • Q 11.38 : How are servicing rights impacted by a borrower’s bankruptcy filing?451
  • Q 11.39 : What do servicers need to know about the Home Affordable Modification Program?452
  • Q 11.40 : What is HAMP?453
    • Q 11.40.1 : What are the threshold borrower qualifications?453
    • Q 11.40.2 : What does HAMP do for borrowers?453
  • Q 11.41 : What happens if the borrower gets denied?454
  • Q 11.42 : What happens if the borrower is approved?455
  • Q 11.43 : Can borrowers sue servicers for violating HAMP guidelines?455
  • Q 11.44 : What are the most important aspects of HAMP for a servicer’s compliance department?457
  • Q 11.45 : What is the future for HAMP and other government-endorsed homeowner rescue plans?458
Chapter 12: Fair Debt Collection Practices Act Amy R Jonker ~ Dykema Gossett PLLC
Theodore W. Seitz ~ Dykema Gossett PLLC
  • Q 12.1 : What is the Fair Debt Collection Practices Act?467
  • Q 12.2 : Who enforces the FDCPA?467
  • Q 12.3 : What role will the Consumer Financial Protection Bureau play?467
  • Q 12.4 : Does the FDCPA preempt state law?468
  • Q 12.5 : What debts are covered under the FDCPA?468
  • Q 12.6 : Must a debt be in default for the FDCPA to apply?469
    • Q 12.6.1 : When is a debt in default?469
  • Q 12.7 : Who is a debt collector under the FDCPA?469
    • Q 12.7.1 : Who is included in the definition of debt collector?469
    • Q 12.7.2 : What qualifies as a person whose principal purpose is the collection of debt?470
    • Q 12.7.3 : What qualifies as a person who regularly collects debts owed to another?470
    • Q 12.7.4 : Who is excluded from the definition of debt collector?471
    • Q 12.7.5 : Is a creditor ever a debt collector?472
    • Q 12.7.6 : Is a debt buyer a debt collector?472
    • Q 12.7.7 : Is a lawyer a debt collector?472
    • Q 12.7.8 : Can a mortgage servicer or assignee of a mortgage be a debt collector?473
    • Q 12.7.9 : Is a foreclosure considered debt collection?474
  • Q 12.8 : Who is a consumer under the FDCPA?476
    • Q 12.8.1 : Who qualifies as a person who “allegedly” owes the debt?476
    • Q 12.8.2 : Are only consumers permitted to sue under the FDCPA?476
  • Q 12.9 : What practices are prohibited under the FDCPA?477
  • Q 12.10 : What constitutes harassment or abuse?477
  • Q 12.11 : What constitutes false or misleading representation?478
  • Q 12.12 : What is meaningful attorney involvement?480
  • Q 12.13 : What constitutes unfair practices?481
  • Q 12.14 : What is considered a communication under the FDCPA?482
    • Q 12.14.1 : What does it mean to convey information regarding a debt?482
  • Q 12.15 : How many phone calls constitute harassment?483
  • Q 12.16 : At what times may a debt collector call a consumer under the FDCPA?484
  • Q 12.17 : How must a collector identify himself during a phone call?484
  • Q 12.18 : What are the requirements for an initial communication?485
    • Q 12.18.1 : What does the amount of the debt include?486
    • Q 12.18.2 : How must the amount of debt be stated where interest or other charges are accruing?486
  • Q 12.19 : Is a lawsuit or a privacy notice considered an initial communication?487
  • Q 12.20 : How should a debt collector respond to a consumer’s response to an initial communication?487
  • Q 12.21 : What is overshadowing?487
    • Q 12.21.1 : How do debt collectors avoid overshadowing?488
    • Q 12.21.2 : Is filing a lawsuit considered overshadowing?488
  • Q 12.22 : Are subsequent communications subject to any requirements?490
  • Q 12.23 : When may a consumer dispute a debt?490
  • Q 12.24 : How may a consumer dispute a debt?490
  • Q 12.25 : What constitutes a dispute?490
  • Q 12.26 : How should a collection agency respond to a verbal dispute?490
  • Q 12.27 : How should a collection agency respond to a written dispute?491
  • Q 12.28 : What triggers the verification requirement?491
    • Q 12.28.1 : Why is the verification requirement triggered merely by a dispute?492
    • Q 12.28.2 : What constitutes verification of a debt?492
  • Q 12.29 : How should a disputed debt be credit-reported?493
  • Q 12.30 : What must a debt collector avoid saying when communicating with a consumer?493
  • Q 12.31 : When must a debt collector cease communications with a consumer?494
  • Q 12.32 : Are there exceptions to communicating with the consumer once a cease communications request has been received?494
  • Q 12.33 : At what time does the “cease communications” request become effective?495
  • Q 12.34 : Are debt collectors allowed to communicate with third parties?495
  • Q 12.35 : For what permissible purpose is a debt collector allowed to communicate with a third party concerning the consumer?496
  • Q 12.36 : What are the consequences to debt collectors who leave messages on a consumer’s voicemail or answering machine?497
  • Q 12.37 : Does a debt collector have a duty to communicate with a consumer’s attorney?500
  • Q 12.38 : What happens if the debtor retains an attorney?500
  • Q 12.39 : What are the requirements for taking legal action against a consumer?501
  • Q 12.40 : Is a debt collector liable for false statements if the false statement is not material?501
  • Q 12.41 : Are there any defenses to FDCPA violations?501
    • Q 12.41.1 : How can a debt collector prove the bona fide error defense?502
  • Q 12.42 : What remedies or penalties may be imposed under the FDCPA?503
  • Q 12.43 : If the debt is not subject to the FDCPA, are there any other restrictions on collection practices?504
Chapter 13: Residential Foreclosures and Evictions Nadav Ariel ~ Dykema Gossett PLLC
Brett J Natarelli ~ Dykema Gossett PLLC
Nasseem S Ramin ~ Dykema Gossett PLLC
K J Miller ~ Dykema Gossett PLLC
  • Q 13.1 : What is a foreclosure?516
  • Q 13.2 : What gives a lender the right to foreclose?516
  • Q 13.3 : What is the difference between a mortgage and a deed of trust?517
  • Q 13.4 : Who has standing to bring a foreclosure action?517
  • Q 13.5 : What is MERS?518
  • Q 13.6 : What is the difference between a judicial and a non-judicial foreclosure?518
  • Q 13.7 : What is strict foreclosure?519
  • Q 13.8 : How is the foreclosure process initiated?520
    • Q 13.8.1 : What happens after the loan is accelerated?520
    • Q 13.8.2 : Must lenders/servicers exhaust loan modification efforts prior to foreclosing?520
    • Q 13.8.3 : What effect do loss mitigation efforts have on foreclosure?520
  • Q 13.9 : What can stop or delay a foreclosure?521
  • Q 13.10 : What percentage of cases become contested?522
  • Q 13.11 : How long does a foreclosure take?523
  • Q 13.12 : What is the status of foreclosures in state/local governments that have implemented a “moratorium” on foreclosures?523
  • Q 13.13 : What remedies does a borrower have against a wrongful foreclosure?523
  • Q 13.14 : What is the right to redemption?524
  • Q 13.15 : What is a deficiency judgment?525
  • Q 13.16 : What is an eviction?525
  • Q 13.17 : Who has standing to evict?526
  • Q 13.18 : What happens when a mortgagor refuses to vacate the property?526
  • Q 13.19 : How long does an eviction take?527
  • Q 13.20 : What happens to a holdover tenant’s possessions upon eviction?527
  • Q 13.21 : What are the borrower’s remedies for wrongful eviction?527
Chapter 14: Special Litigation Issues: Document Retention/E-Discovery Brett J Natarelli ~ Dykema Gossett PLLC
Edward Weil ~ Dykema Gossett PLLC
  • Q 14.1 : How is electronically stored information different from paper materials?534
  • Q 14.2 : Why is ESI so much more voluminous than paper records?534
  • Q 14.3 : How much more expensive is production of ESI than traditional paper-based discovery?535
  • Q 14.4 : What is “metadata”?536
  • Q 14.5 : Why is spoliation such a big issue for ESI?536
  • Q 14.6 : What needs to be done at the outset of a case?536
  • Q 14.7 : What is a litigation hold memo and what should it contain?537
  • Q 14.8 : What are the sanctions for spoliation?538
  • Q 14.9 : What happens when documents are not destroyed, but are found after they were supposed to be produced?540
  • Q 14.10 : What are the most common mistakes made in e-discovery?541
    • Q 14.10.1 : What are some common mistakes with regard to document preservation and litigation holds?541
    • Q 14.10.2 : What are some common mistakes with regard to reviewing ESI?543
  • Q 14.11 : What does an ESI consultant do? When should one be hired?545
  • Q 14.12 : What makes one ESI consultant/vendor different from another?546
  • Q 14.13 : Are there formal rules governing ESI?547
  • Q 14.14 : What are the formal statutes/rules regarding ESI?547
  • Q 14.15 : What ESI advantages can be gained from the Rule 26 Conference?549
  • Q 14.16 : What does case law say?550
  • Q 14.17 : What is the takeaway from the Zubulake decisions?551
  • Q 14.18 : Is there an alternative authority when both case law and the rules seem vague?553
  • Q 14.19 : What is metadata?556
  • Q 14.20 : What is “native format”?557
  • Q 14.21 : What is meant by full-text searching or OCR?558
  • Q 14.22 : Do spreadsheets require any special handling?559
  • Q 14.23 : Will disclosing metadata to the other side be disastrous?560
  • Q 14.24 : Can one side compel the other to produce in native format?561
  • Q 14.25 : Can the opposing side manipulate and edit metadata?562
  • Q 14.26 : How can I ensure that I get the ESI format I want in offensive discovery?562
  • Q 14.27 : Are there specific ESI concerns for financial services providers?563
  • Q 14.28 : How should loan-level data be produced when it is stored in a database that includes personal identifying information about borrowers?563
  • Q 14.29 : Is there a cost-effective way to produce raw loan-level data without revealing proprietary information (such as underwriting formulas)?564
  • Q 14.30 : Can I destroy paper documents and only retain an electronic image (for example, of loan files)?564
Chapter 15: Special Litigation Issues: Class Actions J. K. Snyder ~ Dykema Gossett PLLC
  • Q 15.1 : How is a class action different from an individual action?570
  • Q 15.2 : Are all suits brought by multiple similarly situated plaintiffs class actions?571
  • Q 15.3 : When may class actions be removed to federal court?572
  • Q 15.4 : Which party has the burden to prove that a class action is removable to federal court?573
  • Q 15.5 : Is a class action waiver in loan documents or in an arbitration agreement enforceable?575
  • Q 15.6 : What are the federal requirements for certification of a class action?577
  • Q 15.7 : Is the discovery process in class actions different from individual actions?583
  • Q 15.8 : May a plaintiff conduct discovery concerning the identity of putative class members before the class is certified?584
  • Q 15.9 : May a defendant challenge a case proceeding on a class basis before the plaintiff files the motion for certification?586
  • Q 15.10 : On what grounds may a defendant challenge a case proceeding on a class basis before the plaintiff files the motion for certification?587
  • Q 15.11 : Does the court consider the merits of a claim when ruling on class certification?589
  • Q 15.12 : What is the plaintiff’s burden of proof when moving for certification?589
  • Q 15.13 : What does it mean when a class action is certified?590
  • Q 15.14 : Are there any special requirements for settling class action lawsuits?592
  • Q 15.15 : What is a coupon settlement?593
  • Q 15.16 : What is a class action objector?594
  • Q 15.17 : What happens to excess settlement funds?595
  • Q 15.18 : What are some of the common class action claims being litigated against consumer financial services companies today?595
Chapter 16: Privacy and Identity Theft Melissa C Brown ~ Dykema Gossett PLLC
  • Q 16.1 : What is the Gramm-Leach-Bliley Act?605
  • Q 16.2 : What privacy interest does GLBA protect?606
    • Q 16.2.1 : What is “nonpublic personal information”?606
  • Q 16.3 : What is a “financial institution” under GLBA?607
    • Q 16.3.1 : What does “significantly engaged in financial activities” mean, and why does it matter?607
  • Q 16.4 : What activities are restricted under the GLBA privacy provisions?609
    • Q 16.4.1 : Are there instances when a financial institution may share nonpublic personal information without notice and a chance to opt-out?609
  • Q 16.5 : What notices or disclosures are required under the Gramm-Leach-Bliley Act?610
  • Q 16.6 : Do the disclosure requirements differ for “customers” and “consumers”?612
    • Q 16.6.1 : What is the distinction between a customer and a consumer?612
  • Q 16.7 : What privacy notices are required for customers?613
  • Q 16.8 : What privacy notices are required for consumers?613
  • Q 16.9 : What information is a financial institution prohibited from disclosing?614
  • Q 16.10 : How is GLBA enforced?614
  • Q 16.11 : Is there a private right of action under GLBA?615
  • Q 16.12 : Does GLBA supersede state laws?616
  • Q 16.13 : What are “Fair Information Practice Principles”?616
  • Q 16.14 : What is the Right to Financial Privacy Act?617
    • Q 16.14.1 : Who must comply with the RFPA, and how?618
    • Q 16.14.2 : Who is protected by the RFPA?618
  • Q 16.15 : What are the restrictions on a financial institution’s release of a customer’s financial information and records?619
    • Q 16.15.1 : Under what circumstances may financial information be released to government agencies?619
  • Q 16.16 : What penalties does a financial institution risk for violation of the RFPA?620
  • Q 16.17 : What is the “Red Flags Rule”?620
  • Q 16.18 : Who must comply with the Red Flags Rule?621
    • Q 16.18.1 : Who is a “creditor” under the Red Flags Rule?621
    • Q 16.18.2 : What is a “financial institution” under the Red Flags Rule?622
    • Q 16.18.3 : What is a “covered account” under the Red Flags Rule?622
  • Q 16.19 : Are there requirements regarding the administration of the Identity Theft Prevention Program?623
  • Q 16.20 : What are the elements of an effective identity theft prevention program under the Red Flags Rule?624
    • Q 16.20.1 : How are Red Flags identified?624
    • Q 16.20.2 : What categories of Red Flags does the program need to address?625
    • Q 16.20.3 : How can Red Flags be detected?625
    • Q 16.20.4 : How should identity theft be mitigated?625
    • Q 16.20.5 : How often does the program need to be updated?626
  • Q 16.21 : What are the penalties for non-compliance with the Red Flags Rule?626
Chapter 17: Electronic Fund Transfer Act and Regulation E
  • Q 17.1 : What is the Electronic Fund Transfer Act and what is its purpose?634
  • Q 17.2 : Which financial institutions are covered by the EFTA?634
  • Q 17.3 : What is an electronic fund transfer?635
  • Q 17.4 : What is an account for purposes of the EFTA?635
  • Q 17.5 : What is an access device?635
    • Q 17.5.1 : Under what circumstances can an access device be issued?636
  • Q 17.6 : Are financial institutions and others subject to administrative enforcement under the EFTA?637
  • Q 17.7 : What is a preauthorized electronic fund transfer and are they regulated by the EFTA?637
  • Q 17.8 : How can a consumer initiate preauthorized EFTs?637
  • Q 17.9 : What notices are required by the financial institution in connection with a preauthorized EFT?637
  • Q 17.10 : Can a consumer stop payment of a preauthorized EFT?638
  • Q 17.11 : When must a preauthorized EFT be credited?639
  • Q 17.12 : Can a lender require that loan payments be made using preauthorized EFTs?639
  • Q 17.13 : To what degree are the consumer and the financial institution liable for unauthorized EFTs?639
  • Q 17.14 : What is an unauthorized EFT?639
  • Q 17.15 : What is a consumer’s liability for an unauthorized EFT?640
    • Q 17.15.1 : What is a consumer’s liability upon loss or theft of an access device?640
    • Q 17.15.2 : What is a consumer’s liability for unauthorized EFTs appearing on a periodic statement?641
    • Q 17.15.3 : How must a consumer notify the financial institution?641
  • Q 17.16 : Are there procedures that a financial institution must follow to resolve errors?642
  • Q 17.17 : What is an error for purposes of the EFTA and Regulation E?642
  • Q 17.18 : What must a consumer’s notice contain in order to trigger the error resolution procedures?643
  • Q 17.19 : What are the financial institution’s responsibilities regarding notice of an error?643
  • Q 17.20 : Does the EFTA require any disclosures to consumers?645
  • Q 17.21 : What are the initial disclosure requirements?646
  • Q 17.22 : What are the periodic statement requirements under the EFTA?647
  • Q 17.23 : What is an error resolution notice and when must it be provided?648
  • Q 17.24 : What is required if a financial institution changes any of the terms disclosed in the initial disclosure?649
  • Q 17.25 : What does the EFTA require in connection with EFTs at electronic terminals?649
  • Q 17.26 : Are disclosure requirements imposed on operators of ATMs?650
  • Q 17.27 : Does the EFTA impose restrictions on overdraft services?651
  • Q 17.28 : What is an overdraft service?651
  • Q 17.29 : When may a financial institution impose a fee in connection with an overdraft service?651
  • Q 17.30 : Are there additional rules regarding the consumer’s right to opt-in to an overdraft service?652
  • Q 17.31 : Are gift cards, gift certificates, or similar prepaid devices regulated by the EFTA?653
  • Q 17.32 : What types of gift or prepaid devices are regulated under the EFTA?653
    • Q 17.32.1 : What is a gift certificate?653
    • Q 17.32.2 : What is a gift card?654
    • Q 17.32.3 : What is a general-use prepaid card?654
    • Q 17.32.4 : What is a loyalty, award, or promotional gift card?654
  • Q 17.33 : Are disclosures required in connection with these devices?655
    • Q 17.33.1 : What disclosures must be made prior to purchase?655
    • Q 17.33.2 : What disclosures must be made on the certificate or card?656
  • Q 17.34 : What are the restrictions on the imposition of fees in connection with these devices?657
  • Q 17.35 : Can a gift certificate or card have an expiration date?658
  • Q 17.36 : Does the EFTA regulate financial institutions offering payroll card accounts?658
  • Q 17.37 : What is a payroll card account?658
  • Q 17.38 : Must the financial institution provide the same disclosures with regard to payroll card accounts as it does for other EFTs?659
  • Q 17.39 : Are the liability provisions for payroll card accounts the same as for other EFTs?660
  • Q 17.40 : Have the error resolution procedures been modified for payroll card accounts?661
  • Q 17.41 : What is a remittance transfer?661
  • Q 17.42 : What must be disclosed in connection with a remittance transfer?661
    • Q 17.42.1 : What must a pre-payment disclosure contain?662
    • Q 17.42.2 : What must be contained in the receipt?662
    • Q 17.42.3 : May the pre-payment disclosure and receipt be combined?663
    • Q 17.42.4 : What information must the error resolution and cancellation notice contain?664
  • Q 17.43 : Are there procedures that a remittance transfer provider must follow to resolve errors?664
    • Q 17.43.1 : What is an error in regard to remittance transfers?664
    • Q 17.43.2 : What type of notice triggers the error resolution procedures?666
    • Q 17.43.3 : What actions must a remittance transfer provider take upon receiving a notice of an error?666
  • Q 17.44 : May a sender cancel a remittance transfer and obtain a refund?668
  • Q 17.45 : May a sender schedule a remittance transfer in advance?669
Chapter 18: State and Federal Licensing and the Nationwide Mortgage Licensing System & Registry Haydn J. Richards Jr. ~ Dykema Gossett PLLC
  • Q 18.1 : What types of companies must be licensed in order to conduct business?675
  • Q 18.2 : What types of activities potentially may be considered licensable activity?676
  • Q 18.3 : What is the Nationwide Mortgage Licensing System & Registry (NMLS)?676
    • Q 18.3.1 : What types of licenses are issued through the NMLS?677
    • Q 18.3.2 : What is an NMLS Record?677
    • Q 18.3.3 : What is the NMLS Consumer Access website?678
  • Q 18.4 : What is a consumer loan?678
  • Q 18.5 : What is a small loan?678
  • Q 18.6 : What is a debt collector or debt collection agency?679
  • Q 18.7 : What activities potentially might require our company to obtain a money transmitter license?679
  • Q 18.8 : What activities typically require an entity to be licensed as a check casher?679
  • Q 18.9 : What is a payday lender?679
    • Q 18.9.1 : Do states have separate licensing requirements for payday lenders?680
  • Q 18.10 : What is a sales finance company?680
    • Q 18.10.1 : What is a retail installment sales contract?680
  • Q 18.11 : Who regulates consumer financial services companies?681
    • Q 18.11.1 : What should businesses in the consumer financial services area expect from the Bureau?681
  • Q 18.12 : What is a state mortgage license?681
    • Q 18.12.1 : Is a license required in order to make residential mortgage loans?682
    • Q 18.12.2 : Is a license required in order to broker residential mortgage loans?682
    • Q 18.12.3 : Is a license required in order to service residential mortgage loans?682
    • Q 18.12.4 : Is a license required in order to process or underwrite residential mortgage loans for third parties?682
    • Q 18.12.5 : Is a license required in order to buy, sell, or hold already-funded and closed residential mortgage loans?683
    • Q 18.12.6 : Is a license required in order to conduct lead generation activities?683
  • Q 18.13 : What are the ramifications of conducting business without the appropriate license approval?683
  • Q 18.14 : What is the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”)?684
    • Q 18.14.1 : Pursuant to the SAFE Act, who is permitted to register as a Mortgage Loan Originator?684
    • Q 18.14.2 : What requirements must an individual meet in order to be registered as a Mortgage Loan Originator?685
    • Q 18.14.3 : Pursuant to the SAFE Act, who is required to be licensed as a Mortgage Loan Originator?685
    • Q 18.14.4 : Are there any individuals who are exempt from registration or licensing requirements under the federal SAFE Act?685
    • Q 18.14.5 : What are “administrative or clerical tasks” for purposes of the SAFE Act?686
    • Q 18.14.6 : What requirements must an individual meet in order to be licensed as a Mortgage Loan Originator?686
    • Q 18.14.7 : After an individual holds a state mortgage loan originator license, is he or she required to complete any continuing education requirements?687
    • Q 18.14.8 : Does the SAFE Act require loan processors and underwriters to be individually licensed as mortgage loan originators?687
    • Q 18.14.9 : Does the SAFE Act require individuals who modify residential mortgage loans to be licensed or registered?688
    • Q 18.14.10 : Does the SAFE Act require individuals who engage in loss mitigation and loan modification activities on behalf of their mortgage servicer employer to be licensed or registered?689
    • Q 18.14.11 : What is an individual’s Unique Identifier?689
    • Q 18.14.12 : Why did states pass their own versions of the SAFE Act?690
    • Q 18.14.13 : Are there differences between the federal SAFE Act and the state versions of the SAFE Act?690
    • Q 18.14.14 : What is the primary difference between the federal SAFE Act and the state versions of the SAFE Act?690
    • Q 18.14.15 : What agencies are responsible for oversight of the SAFE Act?691
    • Q 18.14.16 : Are there regulations that have been promulgated regarding the federal SAFE Act?691
    • Q 18.14.17 : What obligations arise by holding a state mortgage license?691
  • Q 18.15 : What is the Mortgage Call Report?692
  • Q 18.16 : Which regulatory agencies have authority to examine state-licensed mortgage companies?692
    • Q 18.16.1 : What is a Multi-State Mortgage Examination?693
    • Q 18.16.2 : What resources should be consulted to prepare for future examinations?693
Chapter 19: Index to Consumer Financial Services Answer Book 2012-13

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