March 24, 2015

MARX STERBCOW AND CHARLES CAIN TO PRESENT AT THE 2015 NATIONAL SETTLEMENT SERVICES SUMMIT "NS3" CONFERENCE ON VENDOR MANAGEMENT FOR TITLE AGENTS

Marx Sterbcow, Managing Attorneyat Sterbcow Law Group, and Charles Cain, Of Counsel to Sterbcow Law Group and Senior Vice President to WFG National Title Insurance Company, will speak at the 2015 National Settlement Services Summit"NS3" Conference in Atlanta, Georgia on June 9, 2015. The presentation "Who's Your Vendor? Vendor Management for Title Agents" will provide in-depth analysis and guidance on how title agents can understand and monitor the risks associated with their vendor relationships. We will discuss third party vendor management expectations originating not just from the OCC/FFIEC/FDIC/CFPB but from the secondary market on closing and settlement providers.

March 24, 2015

MARX STERBCOW INVITED TO SPEAK AT THE 2015 REAL ESTATE SERVICES PROVIDERS COUNCIL ANNUAL CONFERENCE

Marx Sterbcow, managing attorney of the Sterbcow Law Group, and Jaime Kosofsky, Partner with Brady & Kosofsky, will speak at the Real Estate Service Providers Council "RESPRO" Annual Conference in San Diego, California's Andaz Hotel on April 21, 2015.

The presentation "Where the Rubber Meets the Road: Helping Your Retail Staff Understand the New Regulations" will discuss whether companies sales associates, loan officers, and settlement agents are familiar with the new TILA-RESPA integrated disclosures "TRID", RESPA Section 8 responsibilities under TRID, and other regulatory compliance logistic changes. The session will provide guidance on how to educate your retail staff on their new regulatory responsibilities in order to improve company-wide compliance and to enable them to better explain the new procedures to their clients.

March 24, 2015

ATS Secured Webinar on RESPA Section 8: Understanding Marketing & Advertising Regulations

Marx Sterbcow, Managing Attorney of the Sterbcow Law Group LLC, will be presenting on the ATS Secured & Advanced Bank Solutions Webinar Series on Tuesday, March 31, 2015 (1:30 PM - 2:30 PM CDT) on the topic of "RESPA Section 8: Understanding Marketing & Advertising Regulations." The webinar will cover the topics such as marketing agreements, advertising agreements, co-branding, lead generation, CFPB expectations on financial institutions, third party vendor management marketing concerns for financial institutions, and preparing your organization to remain RESPA compliant.

The ATS Secured & Advanced Bank Solutions Webinar Series is free and you can register by clicking on this link here

March 19, 2015

CFPB Issues TRID Update: Clarifies Loan Rate Lock Concerns

The Consumer Financial Protection Bureau "CFPB" announced an update to the TILA-RESPA regulatory implementation materials today (3/19/2015) which modified the 2013 TILA-RESPA Final Rule.

The update to the TRID rule extends the timing requirement for revised disclosures when consumers lock a rate or extend a rate lock after the Loan Estimate is provided and permits certain language related to construction loans for transactions involving new construction on the Loan Estimate.

Section 8.7: May a creditor use a revised Loan Estimate if the rate is locked after the initial Loan Estimate is provided? (§ 1026.19(e)(3)(iv)(D))

Yes. If the interest rate for the loan was not locked when the Loan Estimate was provided and, upon being locked at some later time, the interest rate as well as points or lender credits for the mortgage loan may change. The creditor is required to provide a revised Loan Estimate no later than three business days after the date the interest rate is locked, and may use the revised Loan Estimate to compare to points and lender credits charged.

The revised Loan Estimate must reflect the revised interest rate as well as any revisions to the points disclosed on the Loan Estimate pursuant to § 1026.37(f)(1), lender credits, and any other interest rate dependent charges and terms that have changed due to the new interest rate. (§ 1026.19(e)(3)(iv)(D); Comment 19(e)(3)(iv)(D)-1)

Continue reading "CFPB Issues TRID Update: Clarifies Loan Rate Lock Concerns" »

February 12, 2015

CFPB CONSENT ORDER: NEWDAY FINANCIAL AND EXPANSION OF RESPA VIA UDAAP

The Consumer Financial Protection Bureau “CFPB” announced another Consent Order with NewDay Financial, LLC on February 10, 2015 where they agreed to settle allegations that NewDay engaged in deceptive acts or practices by failing to disclose payments to a veteran’s organization that endorsed NewDay for reasons other than for NewDay’s consumer service. The CFPB also said NewDay made payments to third parties in connection with the marketing of home loans that constituted illegal payments for referrals of mortgage origination business under section 1053 and 1055 of the Consumer Financial Protection Act of 2010 (CFPA).

This CFPB Consent Order opens up new compliance territory with respect to consumer disclosure involving agreements between settlement service providers because it expands UDAAP into RESPA for the first time. However, this consent order is not the model of clarity that we were hoping for because it raises a number of new compliance issues outside of this particular arrangement.

The CFPB alleged that NewDay contracted with a third party marketing and lead generation company (i.e. “broker company”) whose business services included licensing the use of a Veterans’ Organization mailing list, logo, and other proprietary marks and managed the relationship between NewDay and the Veteran’s Organization. The members of the Veterans’ Organization learned about NewDay because of its contractual relationship with the marketing and lead generation company and Veterans’ Organization. NewDay purchased the Veterans’ Organization mailing list via the broker company and sent advertisements to the members of the Veterans’ Organization who in turn contacted NewDay for mortgage products.

NewDay according to the Consent Order is a mortgage lender who is in the business of originating refinance home loans through a program where the VA guarantees a portion of home loans taken out by service members, veterans, and eligible surviving spouses. NewDay also originated government insured reverse mortgage products to seniors.

The CFPB said NewDay advertised its mortgage products to consumers primarily through direct mail campaigns. NewDay sent over 50 million solicitations by postal and electronic mail to consumers offering reverse and forward mortgages. These advertising communications were typically sent to a pre-screened list of consumers, generally veterans and older Americans, selected due to various characteristics that NewDay believed made them more likely to be potential customers for NewDay’s offerings. Consumer members who were interested in learning more were invited by these mailings to call NewDay’s call center, during which calls NewDay’s Account Executives would answer questions, provide information, and take applications.

NewDay’s relationship with the Veterans’ Organization was arranged and coordinated by marketing and lead generation company, which contracted directly with NewDay on behalf of Veterans’ Organization and which paid Veterans’ Organization a portion of the fees it received from NewDay. Pursuant to agreements and understandings between and among NewDay, Veterans’ Organization, and the marketing and lead generation company, NewDay was designated as the exclusive lender of Veterans’ Organization, and NewDay drafted and sent advertising communications by postal and electronic mail to Veterans’ Organization members, with Veterans’ Organization’s approval, that were identified as being from Veterans’ Organization. These advertising communications promoted the relationship between NewDay and Veterans’ Organization, and encouraged and recommended the use of NewDay’s mortgage products to Veterans’ Organization members.

The fees paid pursuant to agreements and understandings between and among NewDay, Veterans’ Organization, and the marketing and lead generation company included:
(1) NewDay paid marketing and lead generation company a monthly “licensing fee” of $15,000;
(2) For each referred consumer member who contacted NewDay to inquire about a reverse mortgage and who completed mandatory counseling, NewDay paid Veterans’ Organization $75 as a “lead generation fee” and NewDay paid the marketing and lead generation company $100 as a “lead generation fee.”
(3) For each referred consumer member who contacted NewDay to inquire about a 100% loan-to-value (LTV) mortgage refinancing and had his/her credit report pulled, NewDay paid Veterans’ Organization $15 as a “lead generation fee” and NewDay paid the marketing and lead generation company $20 as a “lead generation fee.”

The CFPB stated that at no point were the Veterans’ Organization members made aware of the payments by NewDay to Veterans’ Organization and the marketing and lead generation company nor has this information been available publically.

Section 1036(a)(1)(B) of the CFPA prohibits “unfair, deceptive, or abusive” acts or practices. 12 U.S.C. § 5536(a)(1)(B). A practice is “deceptive” when there is a representation or omission of information that is likely to mislead consumers acting reasonably under the circumstances, and that information is material to consumers.

“NewDay mailed advertising communications to Veterans’ Organization members, with Veterans’ Organization’s approval and that were identified as being from Veterans’ Organization, endorsing NewDay’s products. These advertising communications articulated reasons why Veterans’ Organization selected NewDay as its lender-of-choice. NewDay also made similar statements to Veterans’ Organization members during phone conversations. The affirmative reasons offered to members created the impression that there were no other connections between NewDay and Veteran’s Organization, when, in fact, NewDay was making regular undisclosed payments, both directly and indirectly, for these endorsements.”

The paid endorsements included language such as:

1. “Veterans’ Organization chose NewDay to be our exclusive Reverse Mortgage provider after spending significant time with the company’s management team and watching its loan professionals in action.”

2. “NewDay USA is [Veterans’ Organization’s] exclusive provider of home loan programs based on their high standards for service and the excellent value of their programs. If you need money, we recommend you give them a call at 1-800-995-4193. Even easier, click here and find out more!”

3. “NewDay is the EXCLUSIVE lender for [Veterans’ Organization]. We earned this because of our focus on helping veteran’s [sic] payoff their debt, lower their interest rates and payments, or get additional cash out as well.”

The CFPB consent order state the failure to disclose material connections between NewDay and Veterans’ Organization while making affirmative statements concerning a substantive basis for the endorsements likely would have been material to consumers evaluating the weight or credibility of Veterans’ Organization’s endorsement and whether to obtain a mortgage loan from NewDay, and likely would have been misleading to reasonable consumers. Thus, these communications constitute deceptive acts or practices in violation of sections 1031(a) and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531(a), 5536(a)(1)(B).

The Bureau alleged that the paid endorsements or recommendations violated the Real Estate Settlement Procedures Act “RESPA”, 12 USC. 2607(a) which provides that no person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreements and understandings, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.
The CFPB said there was an agreement and understanding between and among NewDay, Veterans’ Organization, and the marketing and lead generation company, NewDay mailed advertising communications to individual members of Veterans’ Organization, with Veterans’ Organization’s approval, that were identified as being from Veterans’ Organization which was in violation of RESPA. These communications typically were sent to pre-screened members of Veterans’ Organization and referred recipients to NewDay by encouraging and recommending that members use NewDay for mortgage lending services.

The consent order say the agreements and understandings between and among NewDay, Veterans’ Organization, and the marketing and lead generation company, consumer members who called Veterans’ Organization’s call center for information on mortgage products were referred to NewDay. The CFPB also pointed out that the marketing and lead generation company (i.e. the “Broker Company”) maintained a website for Veterans’ Organization members (the marketing and lead generation website) which were linked to from the Veterans’ Organization website and that was identified as being part of the Veterans’ Organization website. Consumer Members who visited the marketing and lead generation website were referred to NewDay by text “recommend[ing]” NewDay as a source for home loans, along with hyperlinks to NewDay’s website and the phone number for the Veterans’ Organization’s call center.

The Consumer Financial Protection Bureau stated they found more than 3,900 payments to the Veterans’ Organization and the marketing and lead generation company (in the form of both monthly payments and “lead generation fees”) for these referral activities. The referral mechanism set up resulted in close to 400 loans being originated.

The CFPB’s consent order prohibits NewDay from engaging any payment schemes where part of the compensation is for an endorsement. The CFPB also ordered NewDay to cease entering into any business relationship that would involve third party endorsements which might be inconsistent with the Federal Trade Commission’s guidance on endorsements which can be found in 16 C.F.R. part 255. NewDay is also prohibited from violating any aspect of Section 8 of RESPA and must submit a Compliance Plan to the CFPB.

NewDay was fined $2,000,000.00 for participating in this arrangement.

Continue reading "CFPB CONSENT ORDER: NEWDAY FINANCIAL AND EXPANSION OF RESPA VIA UDAAP" »

January 12, 2015

TILA-RESPA implementation deadline triggering warning signs for industry

The TILA-RESPA Integrated Disclosure Rule's implementation date is beginning to cause heightened concern and worry for those involved in the residential lending industry. One reason is the emerging news that a number of the 3rd party vendors engaged to write the loan originator system “LOS” software may not be able to do so until April, May, June, or even worse that some of the LOS systems that are rolled out may not be in compliance when the residential lender implements the LOS into their system. One reason for the delay by these vendors is that they were busy designing and creating other software to address the Qualified Mortgage "QM" rule that went into effect on Jan. 1, 2014 and only now are the turning to the TILA-RESPA integration.

Kate Larson, Regulatory Counsel, with the Consumer Bankers Association wrote an article for InformationWeek on the "2015 Banking Regulatory Outlook" on Jan. 7, 2015 in which she stated "Despite their diligent efforts, many of our members are concerned their systems will not be ready by the August 2015 deadline because of the limited number of vendors in the market."

The downstream impact of a delayed LOS system integration is causing many banks and mortgage bankers to have to reassess their risks associated with their third party vendor management compliance obligations with respect to the TILA-RESPA Rule. Many banks and mortgage bankers to whom we have spoken will only be utilizing one title vendor because they are concerned about the integration timeline and do not want to be left shut down in whole or in part on or after August 1st, 2015 as a result of spreading their compliance across to many vendors.

There are simply to many lenders, banks, credit unions, mortgage brokers, and others who are relying on the limited number of mortgage software companies to integrate the new TILA-RESPA LOS system. Several of the TILA-RESPA disclosure task force groups we serve on are sensing real concern by the various trade associations.

On the title side of the business, many of the title software companies have finished or are finalizing their software systems to address the compliance of their title vendors. However, finalization of these systems depend on the mortgage LOS systems integration, testing that integration, and educating the employees of both the lenders and title vendors.

The CFPB has been adamant that they will not delay the implementation date of this rule and even if by some miracle the CFPB suspends enforcement for 6 months (similar to what HUD did with the 2010 RESPA Reform Rule) this will not provide sufficient safeguards because the secondary market may not purchase loans that are not in compliance with new TILA-RESPA Rule. In sum, if something is out of compliance then the lenders face claims by investors that they have violated the reps. and warrants under their repurchase agreements, thus leaving them exposed to future mortgage buy-back claims.

We are hearing that a few of the biggest banks will be completely ready by the end of Feb. 2015 as they went in-house and designed their LOS systems due to concerns about meeting the implementation rule deadline. However, let's hope the 3rd party LOS software companies can get their systems in place, integrated & tested with their title vendor(s), and all the staff trained well in advance of August 1st, 2015.

Continue reading "TILA-RESPA implementation deadline triggering warning signs for industry" »

December 23, 2014

CFPB SUES SPRINT FOR UDAAP VIOLATIONS INVOLVING UNAUTHORIZED THIRD-PARTY CHARGES

The Consumer Financial Protection Bureau "CFPB" and Federal Trade Commission "FTC" filed suit against the Sprint Corporation in the United States District Court Southern District of New York on December 17, 2014 alleging that Sprint illegally charged its wireless customers millions of dollars in unauthorized third-party text message fees from 2004 to December of 2013. The lawsuit Consumer Financial Protection Bureau v. Sprint Corporation can be viewed here.

Third party vendor management oversight and the Unfair Deceptive or Abusive Acts or Practices Act "UDAAP" are critical issues in this lawsuit which merit attention by any and all companies subject to the jurisdiction of the CFPB.

The CFPB/FTC complaint alleges that Sprint "unfairly charged its customers by creating a billing and payment-processing system that gave third parties virtually unfettered access to its customers' accounts. This access allowed third parties to 'cram' unauthorized charges onto wireless bills."

The lawsuits states that Sprint automatically enrolled its wireless customers in its third party billing system without the consumers knowledge or consent and in many cases the consumers were unaware of the unauthorized charges. "Sprint continued to operate its flawed system despite numerous red flags, such as high refund rates and complaints from customers, law-enforcement agencies, and consumer groups."

The Bureau and FTC said that Sprint profited from this system because it shifted risks to its customers, who had to pay third-party charges under the company's Terms and Conditions of Service ("Terms & Conditions"). Sprints customers suffered losses but Sprint retained 40% of the gross revenue it collected for third-party charges which totaled hundreds of millions of dollars.

The CFPB said that because Sprint extends credit to, and processes payments for, consumers in connection with goods and services that Sprint does not directly sell or that consumers do not directly purchase from Sprint that Sprint meets the definition of a "covered person" under the CFPA.

Some of the major takeaways from this lawsuit are the importance of third party vendor management oversight and UDAAP:
1. "Outsourcing compliance and billing functions to billing aggregators without adequate oversight."
2. Sprint's consumer complaint resolution process was unresponsive.
3. All consumer charges must be authorized by the consumer.
4. Third parties should not have access to Sprints customers and billing systems without implementing adequate compliance controls.
5. Companies should actively monitor its third parties from engaging in deceptive practices.
6. Companies should actively monitor third party advertisements and marketing techniques involving consumers.
7. Companies should have agreements in place with third parties that contain consumer protection provisions.
8. Companies must have a consumer complaint tracking management system in place.
9. The CFPB once again utilized statistical data (in this case consumer refund rates) when analyzing UDAAP and other violations.
10. Companies should not outsource their compliance or fraud-prevention functions.


Continue reading "CFPB SUES SPRINT FOR UDAAP VIOLATIONS INVOLVING UNAUTHORIZED THIRD-PARTY CHARGES" »

October 31, 2014

RESPA Webinar: "Marketing Services Agreements in the New Era of RESPA Enforcement"

October Research has scheduled a webinar for Tuesday, November 18, 2014 from 2:00-3:30 PM EST in which Marx Sterbcow of the Sterbcow Law Group; Charles Cain who is the Senior Vice President Midwest Agency Manager of WFG National Title Insurance Company; and Phil Schulman who is a Partner with K&L Gates, will discuss the latest developments involving the use of Marketing Services Agreements (MSAs).

The webinar will provide insights into the latest Consumer Financial Protection Bureau CFPB enforcement action involving Lighthouse Title, HUD Audit of Cornerstone Mortgage, and litigation cases revolving around the use of MSAs. A review of RESPA Sections 8(a) and 8(c)(2) and HUD's 2010 RESPA Interpretive Rule, language terminology Do's & Don'ts for MSAs, and the likelihood of additional CFPB investigations and enforcement activity will be addressed in this 90 minute webinar.

September 30, 2014

CFPB ANNOUNCES RESPA MSA ENFORCEMENT ACTION

The Consumer Financial Protection Bureau (CFPB) announced today, September 30, 2014, that they had entered into a Consent Order with Lighthouse Title, a Michigan title insurance agency, for entering into Marketing Service Agreements (MSAs) with various real estate brokers with the understanding that the companies would refer mortgage closing and title insurance business to Lighthouse Title.

The CFPB found that Lighthouse Title violated the Real Estate Settlement Procedures Act (RESPA) which prohibits providing something of value to any person with an agreement or understanding that the person will refer real estate settlement services.

The CFPB noted that Lighthouse's MSA agreements made it appear as if the payments would be based on marketing services the companies were supposed to provide to Lighthouse Title. "Lighthouse actually set the fees it would pay under the MSAs, in part, by considering the number of referrals it received or expected to receive from each company." The Consumer Financial Protection Bureau's investigation found that the companies on average referred significantly more business to Lighthouse Title when they entered into MSAs than when they did not enter into them.

The CFPB issued a civil money penalty against Lighthouse Title in the amount of $200,000.00; prohibited Lighthouse Title from entering into any Marketing Service Agreements in the future; ordered Lighthouse to terminate all existing MSAs; and Lighthouse must document for a period of five years all exchanges of things of value worth $5.00 or more with persons in a position to refer business.

Continue reading "CFPB ANNOUNCES RESPA MSA ENFORCEMENT ACTION" »

September 29, 2014

Wells Fargo announces RESPA-TILA Integrated Disclosure Form Plans

Wells Fargo announced that effective August 1, 2015 it will control the generation and delivery of the borrower's Closing Disclosure form in anticipation of the TILA-RESPA Integrated Disclosure Rule. The new Closing Disclosure is a mix of the existing Truth-in-Lending (TIL) disclosure and the Settlement Statement (HUD-1). Wells Fargo stated in the Wells Fargo Settlement Agent Communications newsletter on September 24, 2014 they will be taking over this process in order to meet internal compliance and governmental regulator compliance expectations on the bank.

Wells Fargo said the reason they will be delivering the Closing Disclosure Form is because they want to maintain evidence the borrower received the disclosure at least three days prior to the closing since this is a critical compliance requirement they must meet. The bank disclosed that having readily accessible data for internal and external compliance audits was another major reason for this decision.

Wells Fargo disclosed that their view under the new rules is "...that the settlement agent continues to be responsible for the Seller's information and will prepare and deliver the Seller's Closing Disclosure. A copy must be provided [by the Settlement Agent] to Wells Fargo for our loan file in order to comply with the final rules."

One of Wells concerns in the newsletter is back to back closings or in situations where you have multiple closings all connected with different lenders and settlement agents which would encounter problems if the first closing experiences a disclosure form problem and a re-disclosure is required.

We are expecting numerous other banks and lenders to announce that they will also be generating and delivering their own Closing Disclosure forms due to litigation risks and enforcement concerns stemming from the RESPA-TILA Integrated Disclosure rules. How will this play out with Unauthorized Practice of Law (UPL) concerns? The Consumer Financial Protection Bureau appears to be ready to take on this issue and claim federal preemption in favor of the lending industry.

August 29, 2014

CFPB ENFORCEMENT: IS THE CFPB LOOKING AT RESIDENTIAL MORTGAGE ONLINE LEAD GENERATION COMPANIES?

The Consumer Financial Protection Bureau often provides subtle clues as to where they may be headed on the enforcement front and on November 6, 2013 they addressed the topic on their website about online Lead Generation and consumer safety involving payday loans. The topic "Is applying for a payday loan online safe?"

The CFPB stated that anytime a consumer gives out sensitive personal and financial information on the Internet there are risks involved to the consumer. They warned consumers that if a consumer applies online for a payday loan online, the consumer could be increasing their risk significantly. The CFPB stated the reason for this is because many websites that advertise payday loans are not lenders. They are businesses known as "lead generators" which make money primarily by finding customers for lenders.

The Bureau expressed concern that the online application or form that consumers filled out could be sold to a lender who offers to make the consumer a loan. The Bureau also indicated they have concerns as well that multiple lenders or other service providers could pay for this information causing the them to contact or email the consumer.

"Lead generators might not find you the lowest cost loans, and you should be cautious of sites that promise they will. Many consumers can also be confused about who actually made the loan, which makes getting help when the you [the consumer] need it harder."

They even provided a tip to consumers on what to look out for "Key phrases can help you spot a lead generator. It can be hard to tell if the website you click on is a lead generator or an actual lender. Lead Generators might disclose that they are not lenders somewhere on their site, but this information can be hard to find. In addition, look for phrases like "matching you with lenders," "connecting you with a network of participating lenders," or "something similar, as an indication that you [the consumer] is on a lead generator's site."

The CFPB also dropped another hint as to payday loan lead generators which should bear careful examination to everyone in the residential lending industry who is purchasing leads from an lead generation company. Another CFPB webpage titled "What is the difference between an online payday lender and one with a storefront?" said consumers need to make sure the online website is licensed to do business in the consumer's state and whether they follow the state's payday lending laws.

If the CFPB starts looking at online Lead Generation industry involving residential mortgage loans will they apply an even stricter standard to those lead generation companies who solicit mortgage information or a mortgage conversation from consumers and sell it or even pass it on to a lender? Will the CFPB take the position that the Lead Generation companies are violating the SAFE Act if they aren't licensed in the state they are operating in? And if they are licensed under the SAFE will they be violating the broadly defined Loan Officer Compensation Rule?

Will the Bureau deem website statements like "We can help you find a mortgage, call us!" by a Lead Generation company to be a advertising and soliciting a mortgage conversation from a consumer? In a number of states this could be considered a violation of the SAFE act even if no payment is made by the lender or loan officer to the Lead Generation company because this type of solicitation would trigger a license.

Even if the Lead Generation is properly licensed under a particular state's SAFE Act if they sell that lead to an unlicensed lender in that state then the CFPB could pursue an action against the Lead Generation company because the Lead Generation company assisted or facilitated a consumers information to be sold to an unlicensed entity under the various third party vendor management bulletins.

Some states already require Lead Generation companies collecting information be licensed as "mortgage brokers" such as Arizona and Virginia. Most of the payday lenders in Ohio for example have become Mortgage Brokers under the SAFE Act as it takes them out of the state usury statute for payday lenders.

What types of online Lead Generation companies could be issues of concern?
(1) those unlicensed lead generation companies who tell the consumer whether they are "Qualified for a Loan or Not";
(2) those online Lead Generation companies who collect any sort of non-public data (the definition of what non-public data is varies from state to state) and who fail to inform and obtain the consumers consent that their information will be shared with a third party; and
(3) those online Lead Generation companies where the lead generation company has spoken directly with the consumer and then transfers the "Live Handoff" over to the lender or Loan Officer (especially if the Lead Generation company is not licensed) If they act a "sub-mortgage broker" then it may be best to stay away because this could violate the Loan Officer Qualifying Rule effective Jan. 1, 2014.

Additionally, the CFPB has broad authority to enforce the Fair Lending Laws, Telemarketing Sales Rule, Mortgage Lending and Regulations, Mortgage Acts and Practices Advertising Rule, and the most important law the Unfair, Deceptive or Abuses Act or Practices (UDAAP).

So what might the CFPB examine if a lender or loan officer uses a lead generation company? They will look to see if the relationship is properly disclosed; review privacy and how the consumers data was shared; identify whether party is a third party provider or not; review the lead generation website or advertising portal itself; and they could to review all fees, terms, and conditions associated with the lead generation process.

So is the CFPB investigating Lead Generation companies involving residential loans? The answer is YES they are and any companies involved in the lead generation business should be on alert and actively assess the compliance risks associated with the online lead generation industry.

Sometimes the past provides a good glimpse of the future so remember the name Steven Antonakes when it comes to online Lead Generation and CFPB enforcement. Mr. Antonakes was the former Commissioner of the Massachusetts Department of Banks. He is also on the governing board for the Nationwide Mortgage Licensing System (NMLS). When he was the Commissioner of Banks in Massachusetts he was involved number consent orders with unlicensed online Lead Generation companies.

Where is Steven Antonakes now? He is the Deputy Director of the Consumer Financial Protection Bureau whose responsibility is supervision, enforcement, and fair lending.

August 29, 2014

Marx Sterbcow achieves the AV Preeminent Rating from Martindale-Hubbell

New Orleans, LA (PR Newswire) August 29, 2014 - Martindale-Hubbell® has confirmed that attorney Marx David Sterbcow has been given an AV Preeminent Rating, Martindale-Hubbell's highest possible rating for both ethical standards and legal ability.

The AV Preeminent rating is an objective indicator designed to help buyers of legal services identify, evaluate and select the most appropriate lawyer. The reviews are based on evaluations of lawyers by other members of the bar and the judiciary in North America. AV Preeminent® (4.5-5 out of 5) is a significant rating accomplishment – a testament to the fact that a lawyer’s peers rank him or her at the highest level of professional excellence.

Mr. Sterbcow and his firm have had an extensive real estate and financial services law practice since the firm was founded in 2004. He represented the National Association of Mortgage Brokers in its suit against the Federal Reserve Board and has litigated matters involving RESPA, mortgage fraud, and antitrust in several federal jurisdictions. Mr. Sterbcow is also listed to Superlawyers and New Orleans Magazine's Top Lawyers.

For more than 130 years, lawyers have relied on the Martindale-Hubbell AV Preeminent® rating while searching for their own expert attorneys. This rating represents the pinnacle of professional excellence. It is achieved only after an attorney has been reviewed and recommended by their peers - members of the bar and the judiciary. Congratulations go to Marx David Sterbcow who has achieved the AV Preeminent® Rating from Martindale-Hubbell®.