As Crisis Spreads, Ballard Spahr Forms Collection Documentation Task Force

Ballard Spahr has launched the Collection Documentation Task Force to assist clients with the rapidly developing spread of documentation-related scrutiny, from the mortgage foreclosure process to the collection of credit card, student loan, and other types of consumer debts.

The task force is composed of lawyers from Ballard Spahr’s nationally recognized Consumer Financial Services Group. It combines litigators with experience defending mortgage lenders in documentation-related lawsuits nationwide and regulatory lawyers with deep knowledge of the Office of the Comptroller of the Currency’s national bank foreclosure review process.

"We have already begun to see, and defend against, lawsuits attacking collection documentation used by non-mortgage lenders, and there is growing interest by governmental agencies and consumer advocacy groups in this issue," said Task Force Chair Christopher J. Willis, a litigation partner in the firm’s Atlanta office. "Our experience on both the regulatory and litigation side enables us to help clients avoid documentation problems and effectively defend claims by private plaintiffs and government agencies."

Joining Mr. Willis on the task force is litigators Martin C. Bryce, Jr., Burt M. Rublin, and Daniel J.T. McKenna in the Philadelphia office; and Stefanie H. Jackman, a litigation associate who works with Mr. Willis in the Atlanta office.

Members of the task force have already begun educating clients on these issues. American Banker quoted Mr. Willis in its coverage of the issue earlier this week. In November, Mr. Bryce, Mr. Willis, and Ms. Jackman hosted a webinar about the potential transfer of mortgage documentation attacks into non-mortgage collections. Mr. Willis conducted a follow-up webinar with William Rudolph and Darren Donovan, principals in the Forensic practice at the audit, tax, and advisory firm KPMG LLP, to discuss preventive measures and leading practices for non-mortgage lenders and debt collectors to help reduce documentation problems.

FTC and CFPB Announce Signing of a Memorandum of Understanding

The Federal Trade Commission and the Consumer Financial Protection Board agencies have entered into a Memorandum of Understanding—as required under the Consumer Financial Protection Act—to coordinate consumer protection efforts and avoid duplication of federal law enforcement. The CFPB and the FTC share certain regulatory responsibilities and authorities, particularly with regard to non-depository mortgage lenders.

The MOU lays out the framework for the agencies’ plan to ensure cooperation and limit duplication of efforts and resources, including:

  • Agreeing to meet regularly to coordinate upcoming law enforcement, rule-making, and other activities
  • Informing the other agency, absent exigent circumstances, prior to initiating an investigation or bringing an enforcement action
  • Consulting on rule-making and guidance initiatives, including those related to the prohibition on unfair, deceptive, and abusive acts or practices, to promote consistency and reflect the experience and expertise of both agencies
  • Cooperating on consumer education efforts
  • Sharing consumer complaints

As our colleague Chris Willis discussed on Monday in the CFPB Monitor, the MOU does present some issues, particularly with regard to the CFPB’s sharing of examination reports and Confidential Supervisory Information with the FTC. Read Chris’s blog post for his thoughts about how this could ultimately make the resolution of issues more expensive and time-consuming for industry members.

- John D. Socknat

CFPB Announces ROAM Database

The Consumer Financial Protection Bureau last week announced a joint effort with state attorneys general and the Department of Defense to create a database to track financial scams targeted toward the military community. The Repeat Offenders Against Military Database will include information from completed enforcement actions against companies suspected of perpetrating such schemes. The purpose of ROAM is to provide a central database that state and federal investigative agencies across the country can use to better track and investigate financial scams taking place in their own districts that target our military. When the database goes live, which is expected to occur in early February 2012, law enforcement officials will be able to contribute information as well as search the database.

As a part of the announcement, the CFPB circulated a letter from Kansas Attorney General Derek Schmidt and Kentucky Attorney General Jack Conway, co-chairmen of the Consumer Protection Committee of the National Association of Attorneys General. The letter strongly encourages state attorneys general to contribute enforcement information to the ROAM database by providing the CFPB with copies of complaints and final judgments or case names and docket numbers. The CFPB announced that it will "build the database incrementally, beginning with the collection of publicly available data, including final judgments, formal judicial and administrative filings, and other formal actions alleging particular kinds of relevant conduct" suggesting that the database may include non-publicly available information at some point in the future.

- Emily G. Miller



Illinois Amends Reporting Requirements and MLO Licensing Procedures

Effective January 1, 2012, the Illinois Department of Financial and Professional Regulation amended certain of its regulations pertaining to annual reporting and mortgage loan originator (MLO) licensing. Residential Mortgage Licensees must now file an annual report of Illinois loan purchasing activity, on or before March 1. This annual reporting requirement previously applied only to lending, brokering, and servicing activity.

The amended regulations impose new notification requirements for MLOs, invoked by events such as adverse regulatory action, criminal proceedings, civil judgments, or employment changes. The new regulations also establish procedures for granting an "inoperative" or "inactive" license status for MLOs who are between periods of active employment. 

- Reid F. Herlihy


Texas Enacts Disclosure Requirement for Residential Mortgage Loan Servicer Registrants

Effective January 5, 2012, the Texas Department of Savings and Mortgage Lending (SML) adopted a new disclosure requirement for Residential Mortgage Loan Servicer Registrants. A new section of the SML’s regulations requires that registrants provide the following disclosure to a borrower initially no later than 30 days after the registrant begins servicing the borrower’s loan, as well as in all other correspondence provided to the borrower:


A complaint form and instructions may be downloaded and printed from the Department’s website located at or obtained from the department upon request by mail at the address above, by telephone at its toll-free consumer hotline listed above, or by email at

-Reid F. Herlihy


Copyright © 2012 by Ballard Spahr LLP.
(No claim to original U.S. government material.)



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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.