PLI 22nd Annual Consumer Financial Services Institute – 25% Discount Available

We are pleased to invite you to the 22nd Annual Consumer Financial Services Institute, sponsored by the Practising Law Institute, March 27-28, 2017, in New York City (and by live webcast and groupcast in Atlanta and Philadelphia, Pittsburgh, and Mechanicsburg, Pennsylvania) and on May 4-5, 2017, in Chicago.

This year’s Institute will explore in detail a number of important developments in consumer financial services regulation and litigation. Alan S. Kaplinsky, Practice Leader of Ballard Spahr's Consumer Financial Services Group, is co-chairing the event once again, as he has for the past 21 years. PLI has made a special 25 percent discounted registration fee available to those who register using the link above or below.

The Consumer Financial Protection Bureau (CFPB) continues its active agenda, with the impact of the presidential election to be determined. As was the case last year, the leadoff morning session on the first day will feature a panel discussion titled "The CFPB Speaks," devoted to CFPB developments. The two-hour panel discussion will include three senior CFPB lawyers who are responsible for the most significant regulatory, supervisory, and enforcement activities at the CFPB. Alan Kaplinsky will moderate the panel by questioning the CFPB panelists. Ballard Spahr's Christopher J. Willis will be part of the Chicago panel and James Kim, a lawyer with the firm who formerly served as a senior CFPB enforcement attorney, will substitute for Chris in New York City. Chris or James, joined by another industry lawyer, will provide an industry perspective.

The first day will also include a one-hour panel titled "Federal Regulators Speak: Priorities & Coordination," which will feature representatives of the Office of the Comptroller of the Currency and Federal Trade Commission, who will be joined by a Department of Justice representative at the New York City program.

The Institute will also focus on a variety of other cutting-edge issues and developments, including:

  • Impact of the election on the CFPB, other federal and state agencies
  • Privacy and data security
  • Fair lending
  • Mortgages
  • Emerging payments
  • State regulatory initiatives and developments
  • Class action developments and settlements
  • Debt collection
  • TCPA and FCRA

We hope you can join us for this informative and valuable program. For more information, contact Danielle Cohen at 212.824.5857 or A complete description of PLI's 22nd Annual Consumer Financial Services Institute is also available at the link above or below.

PLI Registration – 25 Percent Discount

Event Information

New York:
March 27-28, 2017 - 9:00 AM ET
PLI New York Center, 1177 Avenue of the Americas, New York, NY 10036

May 4-5, 2017 - 9:00 AM CT
Hotel Allegro, 171 W. Randolph Street, Chicago, IL 60601

Ballard Spahr Speakers

Alan S. Kaplinsky, Practice Leader (New York City and Chicago)
Consumer Financial Services

Christopher J. Willis, Partner (Chicago)
Consumer Financial Services

James Kim, Of Counsel (New York City)
Consumer Financial Services

CFPB Speakers

Anthony ("Tony") Alexis (New York City)
Assistant Director for Enforcement

Kristen Donoghue (Chicago)
Principal Deputy for Enforcement

Diane E. Thompson (New York City or Chicago)
Managing Counsel, Office of Regulations

Peggy L. Twohig (New York City and Chicago)
Assistant Director for Supervision Policy

This program is approved for 14.0 hours CLE-NY Credits, and 11.75 hours CLE-IL Credits.

D.C. Circuit Grants PHH’s Motion for Leave to File Supplemental Response

The D.C. Circuit entered an order on January 13 granting PHH’s motion for leave to file a supplemental response to the CFPB’s petition for rehearing en banc. PHH and the United States had filed responses on December 22 to the CFPB’s petition with the D.C. Circuit.

In its motion for leave to file a supplemental response, PHH asserted that, in its response, the United States argued that the D.C. Circuit should grant the CFPB’s petition for en banc rehearing on several grounds that were not pressed in the CFPB’s petition and that PHH was therefore seeking an opportunity to be heard on the views expressed by the United States. PHH’s motion was opposed by the CFPB.

The D.C. Circuit’s per curiam order gives PHH until January 27 to file its supplemental response, thereby effectively ending speculation that the court might have ruled on the petition for rehearing en banc before January 20. The order limits PHH’s response to no more than 15 pages.   

The order also indicates that “Chief Judge Garland did not participate in this matter.” We understand that Chief Judge Garland recused himself from deciding cases while his U.S. Supreme Court nomination was pending. However, since his nomination formally expired on January 3 when the 114th Congress was adjourned, we find it puzzling that he did not participate in the decision to grant PHH’s motion. As we previously reported, D.C. Circuit rules provide that a majority of the circuit judges who are in regular active service and who are not disqualified may order that an appeal be reheard by the court en banc. There are currently 11 active judges, of whom seven, including Chief Judge Garland, were appointed by either President Obama or President Clinton.

- Alan S. Kaplinsky

Letter Warning of Lien Recordation Subject to FDCPA, Ninth Circuit Holds

In Mashiri v. Epsten Grinnell & Howell, the Ninth Circuit held that the defendant law firm’s letter, warning the plaintiff that a lien would be recorded against her home if she failed to pay her annual homeowners association fees, was not exempt from the Fair Debt Collection Practices Act (FDCPA) as an attempt to perfect a security interest. 

The defendant law firm sent a collection letter to the plaintiff seeking payment of her annual association fee, as well as related late fees, administrative fees, and legal fees, and informing her that failure to pay the full amount within 35 days would result in recordation of a lien against her property. The letter also provided a validation notice under §1692g and a mini-Miranda warning. The plaintiff argued that the letter contained language that overshadowed the validation notice. The district court granted the law firm’s motion to dismiss for failure to state a claim, holding that the letter complied with the FDCPA as a matter of law, and the plaintiff appealed.

On appeal and for the first time, the defendant law firm argued that while its letter complied with the entirety of the FDCPA, the letter was only an attempt to perfect a security interest under §1692f(6) and, therefore, it was not a debt collector subject to the general validation requirements of §1692g.

The FDCPA generally defines a “debt collector” as a person whose “principal business” is debt collection or “who regularly collects or attempts to collect” consumer debts. Under certain conditions, §1692f(6) deems “taking or threatening to take any nonjudicial action to effect dispossession or disablement of property” an unfair practice. For purposes of this provision, the FDCPA’s “debt collector” definition includes persons enforcing security interests when that is the principal purpose of their business. A circuit split of authority has developed regarding this part of the definition of a debt collector. Some courts have relied on this additional definition to hold that lawyers engaged in mortgage foreclosure are only subject to the FDCPA for purposes of the unfair practice provision in §1692f(6) and are not otherwise “debt collectors” subject to other provisions of the FDCPA.

The circuit court rejected the defendant’s argument that it was enforcing a security interest and only subject to §1692f(6). Crucial to the panel’s decision was the finding that there was “no existing security interest” for the defendant to enforce at the time it sent the letter because a lien had yet to be recorded against the plaintiff’s property. Accordingly, the circuit court held that the law firm was not seeking to enforce a security interest or lien, but to “collect [plaintiff’s] overdue assessment fee and to make necessary disclosures that would perfect the [homeowners association’s] security interest and permit it to record a lien at a later date.”

The panel distinguished competing Ninth Circuit precedent in Ho v. ReconTrust Co., NA, where a trustee who sought to enforce a secured loan sent a notice of default that informed the debtor that the foreclosure process had begun, provided a timeline of future foreclosure activity, apprised the debtor of her foreclosure rights, and provided the lender’s (not the trustee’s) contact information for payment. The Ho court found that the trustee was not subject to the entirety of the FDCPA. As the circuit court summarized the Ho court’s conclusion, “where an entity is engaged solely in the enforcement of a security interest and not in debt collection . . . it is subject only to §1692(f)(6) rather than the full scope of the FDCPA.” Relying upon this distinction in Ho, the circuit court remanded the case for consideration of whether the §1692g validation provisions were overshadowed by the lien recordation statements.

- the Consumer Financial Services Group

Did you know?

by Wendy Tran

Oregon Amends MLO Pre-Licensing Requirements

The Oregon Department of Consumer and Business Services, Finance and Securities Regulation has revised its mortgage loan originator (MLO) pre-licensing requirements to be consistent with the Nationwide Mortgage Licensing System and Registry (NMLS) requirements, which include, but are not limited to, the following:

  • An applicant for an MLO must complete a minimum of 20 hours of pre-licensing education courses approved by NMLS before submitting an application to obtain an MLO license. The 20 hours must include three hours of instruction on federal law and regulations; three hours of instruction on ethics; two hours of instruction related to lending standards for the nontraditional mortgage product market; and four hours of instruction on Oregon laws and rules.
  • Pre-licensing education will expire if three years pass without receiving licensure or registration as an MLO in any jurisdiction, or if the license or registration is surrendered, not renewed, allowed to lapse, or through other action or inaction that results in an applicant lacking a valid license or registration in any jurisdiction for three years or more. 
  • If pre-licensing education expires, an applicant must retake the pre-licensing education course prior to submitting an application for an MLO license.

These provisions are effective immediately.

Additional Sate Agencies Adopted NMLS ESB

Thirteen additional state agencies adopted the Electronic Surety Bond (ESB) functionality in NMLS on January 23, 2017. They are: Alaska Division of Banking and Securities; Georgia Department of Banking and Finance; Illinois Department of Financial and Professional Regulation, Division of Banking; Indiana Secretary of State, Securities Division; Louisiana Office of Financial Institutions; Minnesota Department of Commerce; Montana Division of Banking and Financial Institutions; North Carolina Office of the Commissioner of Banks; North Dakota Department of Financial Institutions; Rhode Island Department of Business Regulation; South Dakota Division of Banking; Washington Department of Financial Institutions; and Wyoming Division of Banking.

More information on the ESB can be found here.

Copyright © 2017 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

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.