Legal Alert

Mortgage Banking Update - March 16, 2018

March 16, 2018

CFPB Finalizes Amendments to Timing Requirements for Bankruptcy Periodic Statements

The CFPB recently issued its final rule amending the timing requirements for transitioning between unmodified periodic statements and modified statements for consumers in bankruptcy. Initially proposed on October 4, 2017, the CFPB finalized the amendments without further revision. These changes will go into effect April 19, 2018, along with the other servicing-rule amendments adopted in 2016 that require sending periodic statements to consumers in bankruptcy. (Some of the 2016 amendments were implemented in October 2017, and the remaining amendments will be implemented April 19, 2018.)

Under the amended rule, the single billing cycle exemption is replaced with a more uniform single statement exemption, when a mortgage servicer transitions between an unmodified and a modified bankruptcy periodic statement. Accordingly, after a triggering event (e.g., the borrower enters bankruptcy, personal liability is discharged, or the borrower exits bankruptcy), the servicer is exempt from providing the next periodic statement or coupon book that would otherwise be required, regardless of when in the billing cycle the triggering event occurs. As previously drafted, the exemption applied for the next periodic statement or coupon book only if the payment due date for that ensuing billing cycle was 14 days or less after the triggering event.

The amendments provide welcome help to mortgage servicers by eliminating an aspect of the new bankruptcy requirements that was unnecessarily complex and difficult to operationalize.

- Reid F. Herlihy

PLI 23rd Annual Consumer Financial Services Institute – 25% Discount Available

The 23rd Annual Consumer Financial Services Institute, sponsored by the Practising Law Institute (PLI), will take place on March 26-27, 2018, in New York City (and by live webcast and groupcast in Atlanta, Cleveland, and New Brunswick, New Jersey); and on May 7-8, 2018, in Chicago. For the first time in many years, on June 25-26, 2018, the Institute will also be presented in San Francisco (by live webcast).

This year's Institute will explore in detail a number of important developments in consumer financial services regulation and litigation. I am again co-chairing the event, as I have for the past 22 years.

With the resignation of former CFPB Director Cordray and President Trump's appointment of Mick Mulvaney as CFPB Acting Director, the agenda and activity of the CFPB is already undergoing significant change. Further significant change can be expected under the new permanent Director who is eventually appointed and confirmed. At the same time, state attorneys general and regulators are threatening to fill any void created by a less aggressive CFPB.

As was the case last year, the lead-off morning session on the first day will feature a panel discussion devoted to CFPB developments. During that almost two-hour program, I will moderate a discussion among experienced industry lawyers (one of whom will be my partner Chris Willis at the New York and Chicago programs) and consumer lawyers who closely follow the CFPB’s regulatory, supervisory, and enforcement activities. If your practice involves the CFPB, you will not want to miss this panel discussion.

The first day will also include a one-hour panel titled "Federal Regulators Speak: Priorities & Coordination" that will feature representatives of the FTC and DOJ who will be joined in New York and Chicago by former Acting Comptroller of the Currency, Keith Noreika. In San Francisco, the FTC and DOJ representatives will be joined by a FDIC representative.

New to the Institute this year will be a panel on the second day that will discuss the rapidly changing landscape for marketplace lending and Fintech. My partner Scott Pearson will be part of the San Francisco panel.

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

  • Privacy and data security issues
  • FCRA/debt collection issues
  • Class action and litigation developments
  • State regulatory and enforcement developments
  • Plaintiff lawyers' perspective of regulatory and litigation issues under Trump Administration

We hope you can join us for this informative and valuable program. PLI has made a special 25% discounted registration fee available to those who register using the link that follows.

For more information, contact Danielle Cohen at 212.824.5857 or

- Alan S. Kaplinsky


Ohio Residential Mortgage Lending Act Takes Effect Next Week

The Ohio Residential Mortgage Lending Act (ORMLA) becomes effective on March 23, 2018. Passed in December 2017 (H.B. 199), the ORMLA consolidates the regulation and licensing of first- and subordinate-lien mortgage loans into the statutory chapter containing the prior Mortgage Broker Act (Ohio Rev. Code § 1322.01, et seq). The Ohio Mortgage Loan Act (Ohio Rev. Code § 1321.51, et seq), previously applicable to subordinate-lien mortgage loans, will now be limited in scope to unsecured and personal property secured loans, and will be renamed the Ohio General Loan Law.

Due to the consolidation and amended provisions under the ORMLA, various changes have been made to the substantive requirements, scope of licensable activity, and available exemptions from the prior statutes. Notably, the definitions of licensable activity under the ORMLA do not expressly cover servicing or collection activity (whereas the Mortgage Loan Act required a license to collect payments in connection with subordinate-lien mortgage loans). In addition, the prior "mortgage banker exemption" under the Mortgage Broker Act (exempting an entity that makes a mortgage loan and receives a scheduled payment on the loan) is eliminated.

All companies and individuals holding active licenses, registrations, or letters of exemption under the prior Mortgage Broker Act or Mortgage Loan Act, as of March 23, 2018, may continue to conduct business under those approvals or exemptions until they are due for renewal at the end of 2018. Additional guidance can be found in the Ohio regulator's FAQ.

- Reid F. Herlihy

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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.

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