CFPB, Regulatory, and Legal news - plywood endangered in Ohio

By rchrisman@robchrisman.com

It is incredibly unlikely that the Dodd-Frank, and thus the CFPB, will be eliminated. It protects consumers, remember? But its way of doing business and structure may change, and in a letter sent to Majority Leader McConnell and Minority Leader-elect Schumer, the Consumer Bankers Association, the Credit Union National Association, the Independent Community Bankers of America, and the National Association of Federal Credit Unions urge Congress to pass legislation to create a five-member commission to run the CFPB.

 And here's one person's take on, "How Easy Will it be for Donald Trump to Dismantle Dodd-Frank?".

 Yes, residential lending can't ignore changes in the regulatory or legal environment. A few weeks ago, in a closely watched case involving dual agency, the California Supreme Court ruled unanimously that a real estate agent representing the seller of a property owes a fiduciary duty to both the seller and the buyer if the buyer's agent works for the same brokerage firm. Reporter Kathleen Pender writes, "The case involved the sale of a luxury home overlooking the Pacific Ocean in Malibu where the square footage was in dispute. The buyer and seller were represented by agents from different Coldwell Banker offices. Under California law, a broker may act as a dual agent for both the seller and the buyer in a real estate transaction, provided both parties consent to the arrangement after full disclosure that the broker owes a fiduciary duty to both.

 "What was at dispute in the case was whether that duty extends to 'associate licensees,' who are the individual agents/salespeople who operate under that broker's license. The court ruled 7-0 that it does. The seller of the home, a family trust, was represented by Chris Cortazzo, a salesman in Coldwell Banker's Malibu West office.

 And when is it appropriate for a seller to regain possession of a property from a buyer by filing an unlawful detainer action? In one case, the seller and buyer entered into an agreement entitled "Contract of Sale Residential Property". The buyer was to maintain possession and make probationary installment for 60 months which did not go toward the purchase price. When the buyer defaulted on the probationary installments, it went to court.

 The Law Offices of Peter Brewer noted, "The gist is, even though the agreement was entitled 'contract of sale,' the contract was primarily a lease agreement, with the contract for sale being secondary and taking effect after the 60-month term. Trial court sided with the seller and the Court of Appeals affirmed the lower courts' decision as well. The terms of the agreement were readily the same as those found in tenancy agreements. The buyer's possession of the home was conditioned upon satisfactory installment payments. Essentially, the payments represented 'rent' until the probationary installment was reached. These hybrid contracts can be affordably attractive in today's high-priced market, but buyer beware and consult with a real estate attorney to better understand what you are truly getting in too."

 

From the Ohio Legislature came news that HB463 was passed. The bill contains clarifications of the changes to the sheriff sale process and the fast track foreclosure process found in HB390, which went into effect at the end of September. HB463 also includes two new provisions in Ohio law, those being a good funds provision for escrow agents, and the banning of plywood in the window boarding process in property preservation. For a copy of the Legislative Service Commission's summary, click HERE.

 And the Lenders Compliance Group answered a question regarding marketing. "We are a large mortgage banker with several origination platforms, a servicing entity, and a few affiliates. Recently, we were cited for a violation of the Telemarketing Sales Rule because of not complying with the Do Not Call rules. How do these rules apply across our origination platforms?"

 The answer? "Financial institutions with multiple origination platforms, including their servicing units, are particularly vulnerable to Do Not Call violations. Years ago, in 1995, the original Telemarketing Sales Rule ("TSR") contained a provision that prohibited calls to any consumer who previously asked not to get calls from or on behalf of a particular seller. Amendments to the TSR since then retain that provision, but now also prohibit calls to any numbers consumers have placed on the National Do Not Call Registry maintained by the Federal Trade Commission (FTC). The multiplatform vulnerability to TSR violations often occurs due to violations of the so-called "Entity-Specific Do Not Call Provision."

 Employees increasingly are taking to an anonymous chat app called Blind to vent about their employers. Since there's nothing companies can do to ban Blind, they'd be wise to monitor the app and use it to improve their compliance efforts, employment lawyers say.

 A story from the NY Times spread the word that big banks have gone to the Supreme Court to fight tens of billions of dollars of potential legal costs linked to at least a dozen pending lawsuits arising from the financial crisis. Did regulators take too long to file their claims? Banks like Wells Fargo, Credit Suisse and Deutsche Bank, have asked the Supreme Court to review a lower court decision that said the regulators filed their claims on time despite a Depression-era securities law that gave them only a three-year window. Obviously the Justice Department is pushing back, saying that the banks' argument lacks merit and asked the court not to take up the case.

Damages related to some $37.5 billion in securities are at stake in the pending lawsuits, the banks say, in addition to billions of dollars in disputed prejudgment interest. That sum includes nearly $32 billion for cases in the Court of Appeals for the Second Circuit, which most commonly decides securities cases. The banks say these lawsuits should have been barred under the strict three-year window and extensions should not have been allowed.

 Shifting from one wonderful topic to another, anyone hoping mortgage rates would go down to where they were two months ago were once again disappointed. In fact, one could easily argue that the markets are globally beginning to quietly shut down for 2016, and that there are only two major macro events left - Yellen's speech Mon 12/19 and the Bank of Japan decision Tuesday morning 12/20.

 U.S. Treasuries ended Thursday with the 5 and 10-year yields hit multi-year highs and the U.S. Dollar Index traded to its best level in 13 years. The good news is that the economic data releases were better than expected - so the economy continues to chug along. Of particular interest was some news that came from the builders: the NAHB Housing Market Index jumped to 70 for December (from 63 in November) which was the highest since 2005.

 Today the only data out was November's Housing Starts and Building Permits, down nearly 19% and 5% respectively - mostly due to a drop in multifamily activity. If you're looking at rates, we closed the 10-year last night at 2.60% and this morning it is 2.57% and current coupon agency 30-year MBS prices are better by .250.