In This Issue:
- CFPB Asks SCOTUS to Review Fifth Circuit Ruling That CFPB’s Funding Is Unconstitutional and Hear Argument in April 2023.
- SCOTUS Grants CFSA Extension To File Opposition to CFPB’s Certiorari Petition Seeking Review of Fifth Circuit Ruling That CFPB’s Funding Is Unconstitutional; CFSA Opposes SCOTUS Hearing Case This Term if Certiorari is Granted
- New Litigation Challenges CFPB’s Subpoena Authority Based on Fifth Circuit Decision Holding CFPB’s Funding Mechanism Is Unconstitutional
- Consumer Finance Monitor Podcast Launches Initiative To Feature Women as Podcast Guests
- Podcast: Mortgage Redlining: A Look At Ongoing Challenges for Banks and Non-Banks, with Abby Hogan, Regulatory Attorney and Former Analyst in the Office of Fair Lending and Equal Opportunity, Consumer Financial Protection Bureau
- CFPB Fall 2022 Supervisory Highlights Looks at Auto Servicing, Consumer Reporting, Credit Card Account Management, Debt Collection, Deposits, Mortgage Origination, Mortgage Servicing, and Payday Lending
- HUD Issues Final Rule Permitting Private Flood Insurance with FHA Loans
- CFPB Lawsuit Against All American Check Cashing Ends in Settlement
- CFPB Issues Circular on Investigation of Consumer Reporting Disputes
- Ninth Circuit Puts New Limits on Aggregate Statutory Awards Following Remand of Nearly $1 Billion TCPA Judgment
- CFPB Highlights Accuracy Problems in Two Reports on Tenant Background Screening Reports
- CFPB Expands Consumer Complaint Access to Local Governments
- Pennsylvania Attorney General Files Lawsuit Against Lead Generator for Role in Assisting Unlawful Telemarketing Calls
- Vermont Sets Declared Rate for 2023
- Did You Know?
- Looking Ahead
The CFPB has filed a certiorari petition with the U.S. Supreme Court seeking review of the Fifth Circuit panel decision in Community Financial Services Association of America Ltd. v. CFPB that held the CFPB’s funding mechanism violates the Appropriations Clause of the U.S. Constitution. Given the daunting odds the CFPB would have faced in seeking to have the decision reversed by an en banc Fifth Circuit, it is not surprising that it chose to proceed directly to the Supreme Court. The CFPB likely will ask the Fifth Circuit to stay the issuance of its mandate pending the outcome of the certiorari petition, and if the Fifth Circuit denies a stay, seek a stay from the Supreme Court.
Under Supreme Court rules, CFSA’s opposition to the certiorari petition must be filed within 30 days (i.e. by December 14), unless it obtains an extension. There is no time limit for the CFPB to file a reply brief. However, because the certiorari petition and opposition brief are distributed to Supreme Court justices 14 days after the opposition brief is filed, a petitioner will invariably file its reply brief within the 14-day period. In its petition, the CFPB notes that “to facilitate consideration of this case this Term,” it filed the petition less than one month after the Fifth Circuit decision was issued (under Supreme Court rules it had 90 days to file the petition) and “plans to waive the 14-day waiting period after the brief in opposition is filed, which will enable the Court to consider the petition at its January 6, 2023, conference and hear the case during its April 2023 sitting.” In stating that it plans to waive the 14-day waiting period, the CFPB presumably means that it plans to waive the opportunity to file a reply brief so that the petition and opposition brief can be distributed immediately once the opposition brief is filed.
Pursuant to the Dodd-Frank Act, the CFPB receives its funding through requests made by the CFPB Director to the Federal Reserve, subject to a cap equal to 12 percent of the Federal Reserve’s budget, rather than through the annual Congressional appropriations process. In its petition, the CFPB asserts that Congress’s enactment of a statute explicitly authorizing the CFPB to use a specified amount of funds from a specified source for specified purposes satisfies the requirement of the Appropriations Clause that no money can be paid from the Treasury “but in Consequence of Appropriations made by law.”
The CFPB cites to the Constitution’s text, historical practice relating to congressional appropriations, and Supreme Court precedent to demonstrate that the Fifth Circuit’s decision is incorrect. In addition to challenging the Fifth Circuit’s interpretation of the Appropriations Clause, the CFPB also argues that the Fifth Circuit’s remedial approach (i.e. invalidating the payday lending rule) was incorrect. The CFPB asserts that even if the Supreme Court were to hold that its funding mechanism is unconstitutional, such a holding would require the CFPB to stop further spending of transferred funds but would not require the unwinding of already completed and authorized CFPB actions such as the payday lending rule.
The CFPB argues that prompt Supreme Court review is necessary because the Fifth Circuit’s ruling “threatens to inflict immense legal and practical harms on the CFPB, consumers, and the nation’s financial sector.” The CFPB lists the following “compelling reasons” for the Court to review the Fifth Circuit decision promptly:
- Supreme Court intervention is necessary because the Fifth Circuit has held that an Act of Congress violates the Constitution and the decision conflicts with the D.C. Circuit’s decision in PHH Corporation v. CFPB.
- The decision has “immense legal and practical significance” because (1) “defendants in several CFPB enforcement cases have already sought dismissal or similar relief based on the decision” and “[n]ew challenges to the Bureau’s rules and other actions can be expected to multiply in the weeks and months to come, and will presumably be filed in the Fifth Circuit whenever possible;” and (2) it will frustrate the CFPB’s work administering and enforcing consumer financial protection laws and, by vacating a past CFPB action based on the purported Appropriations Clause violation, it threatens the validity of all past CFPB actions.
- The threat to the validity of past CFPB actions raises serious concerns not only for the CFPB and consumers but for the entire financial services industry. For example, if the CFPB’s mortgage regulations are vacated, mortgage lenders would have to immediately modify annual disclosures and borrowers could rescind transactions that had relied on regulatory disclosure exceptions.
It should be noted that in addition to opposing the CFPB’s certiorari petition, CFSA can also file a cross-petition for certiorari to ask the Supreme Court to review the issues on which it obtained unfavorable rulings from the Fifth Circuit panel. Those rulings were: (1) the payday loan rule was not invalid because it was promulgated by a CFPB Director who was unconstitutionally insulated from removal by the President, (2) the CFPB acted within its UDAAP authority in promulgating the payday loan rule, (3) the payday loan rule’s payment provisions were not arbitrary and capricious in violation of the Administrative Procedure Act either as a whole or as applied to debit and prepaid card transactions or as to separate installments of multi-payment installment loans, and (4) the CFPB’s UDAAP rulemaking authority did not represent an unconstitutional delegation of legislative power by Congress because Congress provided a specific purpose, objectives, and definitions to guide the Bureau’s exercise of its rulemaking authority.
- Alan S. Kaplinsky & Michael Gordon
Last month, the U.S. Supreme Court granted the unopposed request of the Community Financial Services Association for a 30-day extension until January 13, 2023, to file its brief in opposition to the CFPB’s certiorari petition seeking review of the Fifth Circuit panel decision in Community Financial Services Association of America Ltd. v. CFPB. In that decision, the panel held the CFPB’s funding mechanism violates the Appropriations Clause of the U.S. Constitution. It is likely that the Supreme Court will consider both the CFPB’s certiorari petition and a forthcoming cross-petition for certiorari by the CFSA at its February 17, 2023, conference.
Although it had 90 days from the panel’s decision to file a certiorari petition, the CFPB filed its petition less than a month after the decision was issued. In the petition, the CFPB indicated that it had expedited the filing “to facilitate consideration of this case this Term.” In seeking the extension for filing its brief in opposition, CFSA asserted that a 30-day extension was “particularly warranted because the government chose to file its petition more than 60 days before it was due, advancing a lengthy merits argument far more extensive than the one it presented below, including new historical research.”
In its extension request, CFSA indicated that it is also planning to file a cross-petition for certiorari to ask the Supreme Court to review the Fifth Circuit’s rejection of other challenges to the CFPB’s payday loan rule. It will file its cross-petition on January 13, the same day it files its opposition to the CFPB cert petition.
CFSA also indicated in its extension request that it understood that the CFPB planned to file its brief in opposition to CFSA’s cross-petition early enough to allow the Court to consider both petitions at its February 17, 2023, conference and then, if certiorari is granted, to expedite merits briefing to permit argument and decision this Term. According to CFSA, even if the Court were to grant certiorari, “it is neither necessary nor appropriate to resolve the significant and novel questions presented here this Term” for the following reasons: (1) the Fifth Circuit’s judgment only vacates the payday loan rule which never went into effect, (2) the CFPB can seek stays of relief in future cases if the Fifth Circuit’s decision “were extended in ways that more significantly impact” the CFPB, and (3) “the parties and the Court would benefit from briefing, arguing, and deciding this case in a more deliberate fashion than a January grant would permit.” Nevertheless, to facilitate the Court’s ability to consider both petitions at the February 17 conference, CFSA agreed to waive the 14-day waiting period under Rule 15.5 for distributing the cross-petition and the CFPB’s brief in opposition to the Court, which will allow distribution on February 1.
The CFPB responded to the CFSA extension request by stating that it did not oppose the 30-day extension sought by the CFSA and will respond to CFSA’s cross-petition on January 25. The CFPB reasserted its argument that the Supreme Court should grant its certiorari petition and order expedited briefing so the case can be argued and decided this Term. It stated:
Delaying resolution of this case beyond this Term—and thus likely until sometime in 2024—would severely prejudice the Consumer Financial Protection Bureau (CFPB), consumers, and the entire financial industry…. Although the court of appeals’ vacatur affects only the regulation challenged here, the court’s sweeping holdings threaten the validity of virtually every action the CFPB has taken in the 12 years since it was created—as well as its ongoing activities. Those holdings will remain governing Fifth Circuit precedent until this Court intervenes, and they have already created severe disruption and uncertainty for the CFPB and for the financial services industry, which has ordered its affairs in reliance on the CFPB’s regulations and administrative actions….If the Court does not hear the case until next fall, that disruption and uncertainty would likely persist until sometime in 2024.
The CFPB also argued that the questions to be raised in the CFSA cross-petition “have no legal or logical connection to the important question presented in the government’s petition, and there is no comparable urgency requiring that they be decided promptly,” and thus “the questions presented by the cross-petition could be briefed and argued next Term if this Court grants certiorari.” The Fifth Circuit rulings that CFSA is likely to ask the Supreme Court to review in its cross-petition are: (1) the payday loan rule was not invalid because it was promulgated by a CFPB Director who was unconstitutionally insulated from removal by the President, (2) the CFPB acted within its UDAAP authority in promulgating the payday loan rule, (3) the payday loan rule’s payment provisions were not arbitrary and capricious in violation of the Administrative Procedure Act either as a whole or as applied to debit and prepaid card transactions or as to separate installments of multi-payment installment loans, and (4) the CFPB’s UDAAP rulemaking authority did not represent an unconstitutional delegation of legislative power by Congress because Congress provided a specific purpose, objectives, and definitions to guide the Bureau’s exercise of its rulemaking authority.
On December 16, 2022, from 2 p.m. to 3:30 p.m. ET, Ballard Spahr’s Consumer Financial Services will hold a webinar, “How the Supreme Court Will Decide Threat to CFPB’s Funding and Structure.” For more information and to register, click here.
- Alan S. Kaplinsky & Michael Gordon
As the industry continues to digest the Fifth Circuit’s opinion in Community Financial Services Association of America, Ltd. v. Consumer Financial Protection Bureau, which held the Bureau’s funding mechanism to be unconstitutional, new litigation illustrates the challenges that the decision creates to the CFPB’s ability to conduct oversight and enforcement.
In a motion filed in the U.S. District Court for the District of New Jersey, third-party witnesses Christopher Gonzales and Apex Advising LLC seek to quash CFPB subpoenas in the Bureau’s enforcement action against software company Credit Repair Cloud. The respondent witnesses assert that the holding in Community Financial Services Association “is not limited to the Bureau’s rule-making power, [but] extends to any action taken by the agency, including its enforcement and adjudicative powers”—and that therefore, the third-party subpoenas are invalid. (Defendants in several other CFPB enforcement actions are currently seeking dismissal of the actions based on Community Financial Services Association.)
Only one district court in the Third Circuit has addressed the Bureau’s constitutionality: the 2017 Navient case, in which the court rejected the defendant’s attacks on both the funding mechanism and the leadership structure of the agency. Gonzales and Apex now urge the court to set aside that precedent, arguing that the Supreme Court’s 2020 Seila Law decision effectively overturned Navient, although Seila Law did not touch on the funding question. If the district court entertains the respondents’ reasoning, it would represent a potential adoption of the Fifth Circuit’s Community Financial Services Association holding in another circuit.
It remains to be seen whether the district court will reach the constitutional question or rule on other grounds, given that respondents also put forth arguments based on the undue burden of answering the subpoena. The court has indicated it intends to issue a ruling on the papers as soon as mid-December. We will continue to monitor this and other developments surrounding challenges to CFPB’s authority closely.
- Tanner Horton-Jones
Consumer Finance Monitor Podcast Launches Initiative To Feature Women as Podcast Guests
I am delighted to share with our blog readers a new initiative to feature more women as guests on weekly episodes of our Consumer Finance Monitor Podcast. We are launching the initiative with an episode this week featuring special guest Abby Hogan, a regulatory attorney and former analyst in the Office of Fair Lending and Equal Opportunity of the Consumer Financial Protection Bureau.
I became aware of Abby’s interest in being our guest through the efforts of Devina Khanna, a Congressional staffer. Ms. Khanna has created a database of women in the financial services area (lawyers and non-lawyers) who are interested in speaking opportunities. After learning of the database, I contacted Ms. Khanna who graciously agreed to share her database with me. I am pleased that we have received an overwhelming positive response from the women in the database to whom I sent invitations to be guests on our podcast. In fact, to provide more opportunities for women to be our guests, we have decided to release a new podcast episode each week during the year, including this Thanksgiving week and Christmas week. (In prior years, we released 50 podcasts each year, skipping Thanksgiving and Christmas weeks.)
We hope our podcast listeners will find these episodes interesting and informative. I welcome your ideas for topics we should cover on our podcast and for individuals we should invite as guests.
We first review the origins of mortgage redlining and discuss the concept of reverse redlining and new theories of redlining. We then look at a wide range of topics including: the application of redlining enforcement to non-banks; the use of the Equal Credit Opportunity Act and Fair Housing Act to challenge redlining; activity at state level targeting redlining; the types of evidence regulators will look for when examining for redlining or bringing an enforcement action; potential penalties for redlining violations; what steps may be required for remediation of redlining; and how a bank or non-bank can build a compliance program to avoid redlining.
Alan Kaplinsky, Ballard Spahr Senior Counsel in the firm’s Consumer Financial Services Group, hosts the conversation joined by Richard Andreano, a partner in the Group and Leader of the firm’s Mortgage Banking Group.
To listen to the podcast, click here.
- Alan S. Kaplinsky & Richard J. Andreano, Jr.
The CFPB has released the Fall 2022 edition of its Supervisory Highlights. The report discusses the Bureau’s examinations in the areas of auto servicing, consumer reporting, credit card account management, debt collection, deposits, mortgage origination, mortgage servicing, and payday lending that were completed between January 1, 2022, and June 31, 2022. Accordingly, this represents the first edition of Supervisory Highlights in which all of the examinations discussed in the report took place under the leadership of Director Chopra.
Key findings by CFPB examiners are described below.
Auto Servicing
Servicers were found to have engaged in deceptive or unfair acts or practices by:
- Failing to ensure that consumers received refunds for unearned fees related to add-on products such as GAP products upon early pay off (but the CFPB does not state what further steps were required “to ensure” that refunds were actually received);
- Representing to consumers that modifications were preliminarily approved pending a “good faith” payment equal to the standard monthly payment when in fact most modification requests were denied;
- Double-billing consumers for collateral protection insurance (CPI) by purchasing CPI and billing consumers and then erroneously charging consumers again for the CPI;
- Activating starter interrupter devices when consumers were not past due on payments due to errors with the servicers’ internal systems; and
- Telling delinquent consumers that their respective driver’s licenses and tags would or might be suspended if prompt payment was not made despite the servicer’s lack of authority to take such action and telling consumers that their accounts had been, or would be, transferred to the legal department when, in fact, consumers’ accounts were not at imminent risk of referral.
Consumer Reporting
Nationwide consumer reporting agencies (NCRAs) were found to have violated FCRA requirements regarding the actions that NCRAs must take in response to certain consumer complaints transmitted by the CFPB to the NCRC. Examiners found that, based on their unsubstantiated suspicions that the complaints were submitted by unauthorized third parties such as credit repair organizations, NCRCs failed to report to the CFPB determinations about whether all legal obligations had been met and actions taken in response to the complaints.
Furnishers were found to have violated the FCRA or Regulation V by:
- In the case of auto loan furnishers:
- Inaccurately reporting information to consumer reporting agencies (CRAs) despite knowing or having reasonable cause to know that the furnished information was inaccurate because it did not accurately reflect information in the furnishers’ account servicing systems (such as by reporting an account as delinquent despite placing the account in deferment during the time periods for which delinquent status was furnished.) Examiners “also found that the prohibition on furnishing inaccurate information under [the FCRA] applied because the furnishers did not clearly and conspicuously specify to consumers an address for notices relating to inaccurately furnished information.” Instead of providing an address for consumers to send notices about inaccurate credit reporting information, furnishers had disclosed a general purpose corporate address on their websites and/or provided instructions on their websites for submitting complaints or general concerns;
- Failing to promptly correct or update CRAs after having placed consumer accounts into retroactive deferments and updating their systems to reflect that the accounts did not have payments due until a deferment began, and therefore had not been delinquent;
- Using policies and procedures that did not document the basis on which dispute agents should determine consumer direct disputes reasonably qualify as frivolous or irrelevant and did not provide for records to be retained for a reasonable period of time to substantiate the accuracy of furnished information that was subject to dispute investigations; and
- Not conducting reasonable investigations or sending notices that disputes were frivolous or irrelevant where direct disputes may have been prepared by credit repair organizations and the notices contained all of the information needed to conduct a reasonable investigation.
- In the case of debt collection furnishers:
- Failing to conduct reasonable investigations by not reviewing relevant underlying information and documents; and
- Using policies and procedures that did not provide for records to be retained for a reasonable period of time to substantiate the accuracy of furnished information that was subject to dispute investigations.
- In the case of other furnishers:
- Failing to send updated or corrected information to CRAs after determining that furnished information was not complete or accurate, such as continuing to report accounts as subject to an open dispute investigation when in fact the furnisher had determined that the accounts were no longer being investigated after completing the dispute investigations; and
- Failing to establish and follow reasonable procedures to report an appropriate date of first delinquency, resulting in the reporting of inappropriate dates of first delinquency on collection accounts that arose from unpaid utility accounts.
Credit Card Account Management
“Certain entities” were found to have violated Regulation Z billing error resolution by actions that included failing to mail or deliver written acknowledgments to consumers within 30 days of receiving a billing error notice and failing to resolve disputes within two complete billing cycles, or no later than 90 days after receiving a billing error notice. Issuers were found to have violated Regulation Z requirements for reevaluating accounts after a rate increase by:
- Failing to consider appropriate factors when performing rate reevaluations, such as by using both the original factors method and the acquisition rate for new customers as one of the variables (improperly mixing original factors and acquisition factors);
- Failing to reduce the rate below the higher of the consumer’s pre-default interest rate or the lowest current acquisition rate, after determining that a consumer’s rate should be reduced;
- Failing to evaluate the full rate increase for certain accounts converted from fixed to variable rate;
- Failing to reevaluate all credit accounts subject to the reevaluation requirement at least once every six months; and
- Improperly removing accounts from the reevaluation process before the consumer’s rate was reduced to a rate comparable to the rate immediately before the increase or the current rate for new customers with similar credit characteristics.
“Certain entities” were found to have engaged in various deceptive acts or practices in connection with the marketing, sale, and servicing of credit card add-on products such as claiming that consumers could cancel the product simply by calling a toll-free number when additional steps were required. These entities were found to have engaged in unfair acts and practices in connection with the marketing, sale, and servicing of credit card add-on products by omitting disclosure of burdensome administrative requirements for submitting benefit claims and failing to cancel products on the date of the consumer’s request and failing to issue pro rata refunds based on the date of request. “Certain entities” were also found to have engaged in deceptive acts or practices by inaccurately representing to consumers enrolled in their fixed payment option that the entities would automatically withdraw from the consumer’s bank account an amount equal to the minimum payment due whenever the payment exceeded the fixed amount designed by the consumer.
Debt Collection
Debt collectors were found to have engaged in the following FDCPA violations:
- Violations of the FDCPA provision that prohibits collectors from engaging in harassing or abusive conduct as a result of continuing to engage consumers in telephone conversations after the consumer stated that the communication was causing them to feel annoyed, harassed or abused, such as by continuing to engage a consumer after the consumer stated multiple times that he or she was driving and needed to discuss the account at another time or continuing a call after the consumer stated that he was unable to pay, had COVID-19, and was unemployed and that the call was making him agitated; and
- Violations of the FDCPA prohibition of third party communications by communicating with someone who had a name similar or identical to the consumer.
Deposits
Examiners found unfairness risks at multiple financial institutions due to policies and procedures that may have resulted in the prohibited setoff or garnishment of protected unemployment insurance or pandemic relief benefits, including processing garnishments in violation of applicable state prohibitions against out-of- state garnishments and failing to apply appropriate state exemptions after receiving garnishment notices. (The CFPB noted that a similar practice was the subject of a recent CFPB enforcement action. Click here to listen to our podcast about takeaways for banks from the enforcement action.)
Mortgage Origination
Lenders were found to have violated the Regulation Z prohibition on compensating a mortgage loan originator in an amount based on the terms of the transaction or a proxy for such terms. Although the rule includes a limited exception that permits an originator’s compensation to be decreased due to unforeseen increases in settlement costs, examiners found the exception did not apply to certain transactions. In those transactions, Loan Estimates were issued to consumers based on fee information provided by the loan originator. At closing, the consumers received a lender credit when the actual cost of certain fees exceeded the applicable tolerance thresholds. The loan originator’s compensation was subsequently reduced by the amount provided to cure the tolerance violations. Examiners determined that the originator knew the correct fee amounts at the time of the estimates (because the settlements service had been performed) and that the fee information was incorrect due to a clerical error. The originator had entered a cost that was unrelated to the actual charges that the originator knew had been incurred, thereby resulting in information being entered that was not consistent with the best information reasonably available at the time of the estimate.
Lenders were found to have engaged in a deceptive act or practice by using a loan security agreement containing a provision providing that borrowers who signed the agreement waived their right to initiate or participate in a class action. Examiners concluded that the language was misleading because a reasonable consumer could understand the provision to waive their right to bring a class action on any claim, including federal claims in federal court. (Regulation Z prohibits waivers of federal claims in mortgage agreements.)
Mortgage Servicing
Servicers were found to have engaged in abusive acts or practices by charging consumers $15 fees for making payments by phone with customer service representatives when representatives did not disclose the fees’ existence or cost during the phone call. The CFPB indicated that general disclosures provided by the servicers “prior to making the payment” that indicated that consumers might incur a fee for phone payments did not sufficiently inform consumers of the material costs.
Servicers were found to have engaged in deceptive acts or practices by misrepresenting that certain payment amounts were sufficient for consumers exiting forbearances to accept deferral offers when, in fact, they were not. The servicers at issue sent consumers documents allowing them to accept a post-forbearance deferral offer by making a specified payment that was often higher than the consumers’ previous monthly payments due to updated escrow payments. However, when those consumers contacted the servicer to verify that payment amount, they were incorrectly told their previous mortgage payment amount would be sufficient to accept the offer. Certain consumers relied on these incorrect statements from customer service representatives to their detriment.
Servicers were found to have engaged in unfair acts or practices by charging fees prohibited by the CARES Act to consumers receiving CARES Act forbearances and failing to process requests for forbearances as required by the CARES Act. The CFPB does not provide further detail on the nature of these violations, such as the types of fees at issue.
Servicers also were found to have violated Regulation X by failing to maintain policies and procedures reasonably designed to inform consumers of all available loss mitigation options or to properly evaluate consumers for all available loss mitigation options. The details provided for these violations are minimal, but they appear to involve post-forbearance deferral options.
Payday lenders. Payday lenders were found to have failed to maintain records of call recordings necessary to demonstrate compliance with conduct provisions in consent orders generally prohibiting misrepresentations.
- John L. Culhane, Jr., Richard J. Andreano, Jr., Reid F. Herlihy & Michael Gordon
HUD Issues Final Rule Permitting Private Flood Insurance with FHA Loans
The U.S. Department of Housing Urban Development (HUD) recently issued a final rule permitting the use of private flood insurance policies with FHA-insured mortgage loans. HUD also issued Mortgagee Letter 2022-18 addressing with regard to FHA-insured loans general flood insurance requirements, flood insurance requirements for condominiums, manufactured homes and home equity conversion mortgage (HECM) loans (i.e., reverse mortgage loans), and private flood insurance requirements. Both the final rule and Mortgagee Letter are effective December 21, 2022.
As previously reported. in February 2019 federal regulators issued a joint final rule (the Joint Final Rule) to implement provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 (the Act) that require regulated financial institutions to accept private flood insurance policies. The regulators are the Farm Credit Administration, Federal Deposit Insurance Corporation, Federal Reserve Board, National Credit Union Administration, and Comptroller of the Currency. Although the Joint Final Rule took effect on July 1, 2019, it does not apply to FHA-insured loans. HUD notes in the preamble to the final rule that the Act does not impose requirements on FHA-insured loans. Prior to the HUD final rule, HUD only accepted flood insurance policies issued under the National Flood Insurance Program (NFIP). Addressing the rationale for allowing private flood insurance policies with FHA-insured loans, HUD states in the preamble to the final rule that an FHA lender’s “acceptance of private flood insurance policies would provide borrowers with more flood insurance choices, promote consistency with industry standards, reduce the regulatory restrictions on flood insurance for FHA-insured loans, and harmonize FHA policies with the congressional intent expressed in the. . . Act to encourage an expanded private flood insurance market.”
The final rule applies to Title I manufactured home loans, Title II single-family home loans, and HECM loans. Consistent with the Joint Final Rule, to qualify as private flood insurance under the HUD final rule a policy must be issued by an insurance company that meets certain conditions, and the policy must provide flood insurance coverage that is at least as broad as the coverage provided under a standard flood insurance policy (SFIP) issued under the NFIP for the same type of property, including when considering deductibles, exclusions, and conditions offered by the insurer. The final rule sets forth specific requirements that a policy must meet to be considered to provide coverage at least as broad as a SFIP.
The Joint Final Rule requires an institution subject to the rule to accept a qualifying private flood insurance policy. In proposing the rule for FHA-insured loans, HUD expressly sought comment on whether the final rule should permit, or should require, a lender to accept a qualifying private flood insurance policy with an FHA-insured loan. HUD decided to adopt a permissive approach. Thus, lenders may, but are not required to, accept a qualifying private flood insurance policy with an FHA-insured loan.
The final rule permits a lender to determine that a private flood insurance policy is a qualifying policy, without further review of the policy, if the following statement, referred to as a “compliance aid statement,” is included within the policy or as an endorsement to the policy: “This policy meets the definition of private flood insurance contained in 24 CFR 203.16a(e) for FHA-insured mortgages.” In the preamble to the final rule, HUD explains that a lender may elect not to rely on the statement and make its own determination if the policy is a qualifying policy. HUD also advises in the preamble and Mortgagee Letter 2022-18 that a lender may not reject a policy solely because it is not accompanied by the statement.
Unlike the Joint Final Rule, the HUD final rule does not permit lenders to exercise discretion to accept private flood insurance policies that do not meet the definition and requirements for a private flood insurance policy, or to accept flood coverage issued by mutual aid societies, in connection with FHA-insured loans.
In Mortgagee Letter 2022-18, HUD advises that to be eligible for an FHA-insured loan, a property that is located in a special flood hazard area (SFHA) “must be in a community that participates in the [NFIP] and has NFIP available.” Thus, even if a lender is willing to accept a qualifying private flood insurance policy with an FHA-insured loan, the security property must be located in such a community.
With regard to the servicing of FHA-insured Title II loans and HECM loans, the Mortgagee Letter provides that a servicer must (1) for properties in a SFHA with flood insurance, annually review if the flood insurance is sufficient, and (2) annually review all properties to determine if a property is located in a SFHA.
CFPB Lawsuit Against All American Check Cashing Ends in Settlement
The CFPB and All American Check Cashing have agreed to a settlement in the CFPB’s enforcement action filed against All American in 2016 for alleged violations of the CFPA’s UDAAP prohibition in connection with check cashing services and small dollar loans offered by All American. The settlement comes less than a month after a Fifth Circuit panel ruled in Community Financial Services Association v. CFPB (CFSA Case) that the CFPB’s funding structure violated the Appropriations Clause of the U.S. Constitution.
The Final Settlement Order requires Michael Gray, All American’s owner and president, to pay a civil money penalty of $899,350 to the Bureau “by reason of the [UDAAP violations] alleged in the Complaint.” However, the amount Mr. Gray must pay is remitted by $889,350 as a result of his payment “of that amount in fines to the Mississippi Department of Banking and Consumer Finance.” The Settlement Order includes the statement that the acts and practices alleged in the complaint resulted in harm to consumers equal to the amount of fees paid to cash checks and to borrow pursuant to certain lending programs and the amount of overpayments that were not refunded. The district court also entered a separate order dismissing the lawsuit with prejudice.
The case had been remanded to the district court after the en banc Fifth Circuit ruled that the CFPB’s enforcement action against All American could proceed despite the unconstitutionality of the CFPB’s single-director-removable-only-for-cause-structure at the time the enforcement action was filed. However, in a concurring opinion, five judges expressed their agreement with All American’s argument that the unconstitutionality of the CFPB’s funding mechanism required dismissal of the enforcement action. Following the remand, the district court ordered that the case go to private mediation or a settlement conference before a magistrate judge, with the parties to decide which route they preferred. The parties thereafter agreed to a settlement conference before a magistrate judge. While the settlement discussions were pending, the Fifth Circuit panel adopted the reasoning of the concurring opinion in ruling in the CFSA Case that the CFPB’s funding structure violated the Appropriations Clause.
Assuming the CFPB plans to seek a rehearing in the Fifth Circuit or Supreme Court review in the CFSA Case, we find it surprising that the CFPB agreed to a settlement in All American Check Cashing before the panel decision in the CFSA Case becomes final rather than seek a stay of further proceedings pending the ultimate disposition of the CFSA Case. The amount of the settlement suggests that the CFPB may be willing to settle cases pending in the Fifth Circuit for modest payments. In addition to the settlement amount, it is also noteworthy that the CFPB did not obtain any other relief in the settlement. While the dissolution of the corporate defendants in 2018 mooted the question of injunctive relief against them, the settlement does not include any injunctive relief as to Mr. Gray.
- Michael Gordon & Alan S. Kaplinsky
CFPB Issues Circular on Investigation of Consumer Reporting Disputes
The CFPB has issued a circular (2022-07) to address “shoddy investigation practices” and “affirm that neither consumer reporting companies nor information furnishers can skirt dispute investigation requirements.”
The Fair Credit Reporting Act (FCRA) requires both consumer reporting agencies (CRAs) and furnishers of information to CRAs to conduct a reasonable investigation when properly notified of a dispute about information furnished in a consumer report. The first question discussed in the circular is whether the FCRA permits CRAs and furnishers “to impose obstacles that deter submission of disputes.”
The CFPB indicates that CRAs and furnishers can violate the FCRA by requiring any specific format or specific attachment to a dispute, other than as described in the FCRA and regulations, as a precondition to conducting an investigation. It gives the following examples of requirements that would not be permissible:
A requirement by a CRA that a consumer must provide a recent copy of the consumer’s report or file disclosure before the CRA will investigate a dispute despite the consumer providing sufficient information to investigate the disputed information;
A requirement by a furnisher that a consumer must provide additional specific documents even though the consumer has already provided the supporting documentation or other information reasonably required to substantiate the basis of a direct dispute; and
A requirement by a CRA or furnisher that a consumer must attach a completed proprietary form before investigating the consumer’s dispute.
The CFPB notes that while a CRA or furnisher must reasonably investigate a dispute received directly from a consumer unless it has reasonably determined that the dispute is frivolous or irrelevant, a furnisher is not permitted to deem disputes as frivolous or irrelevant if the dispute has been provided to the furnisher from a CRA pursuant to FCRA Section 623(b). Thus, a CRA or furnisher must reasonably investigate direct disputes that are not frivolous or irrelevant and furnishers must reasonably investigate all indirect disputes “even if such disputes do not include the entity’s preferred format, preferred intake forms, or preferred documentation or forms.”
The second question discussed in the circular is whether CRAs need to forward to furnishers consumer-provided documents attached to a dispute. A CRA can violate the FCRA by failing to promptly provide to a the furnisher “all relevant information” regarding the dispute that the CRA receives from the consumer. The CFPB states that while there is no affirmative requirement for a CRA to provide original copies of documentation received from consumers, it would be difficult for a CRA to prove that it provided all relevant information if it failed to forward “even an electronic image of documents that constitute a primary source of evidence.”
The CFPB notes that, through its supervisory activity, it has found that CRAs “tend to ingest dispute information from consumers using automated protocols, and they also share dispute information with furnishers electronically” and that “[t]he use of these technologies has reduced the cost and time to transmit relevant information.” Although a CRA might be able to show that it transmitted “all relevant information” about a dispute even if it did not provide original documents received in paper form, it will be difficult for the CRA to do so. The CFPB states that “given that primary sources of evidence provided by consumers can be dispositive in determining whether there has been a furnishing error, and given that the character of a primary source of evidence is probative and thus relevant to the investigation,” it will be difficult for a consumer reporting agency to prove that it complied with the FCRA if it does not provide electronic images of primary evidence for evaluation by the furnisher.”
In Wakefield v. ViSalus, Inc., the Ninth Circuit considered whether a jury verdict of $925,200,000 for cumulative statutory damages under the Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA) was constitutional in light of its harsh severity. After a three-day trial, the jury delivered a verdict against ViSalus, finding that it sent over 1.8 million prerecorded calls to class members without prior express consent, in violation of the TCPA. As the TCPA sets the minimum statutory damages at $500 per call, the total damage award against ViSalus was a staggering $925,220,000.
On appeal, the Ninth Circuit vacated and remanded the district court’s denial of ViSalus’s post-trial motion challenging the constitutionality of the statutory damages award under the Due Process Clause of the Fifth Amendment to permit reassessment of that question. Turning to Supreme Court precedent from over a century ago, the Ninth Circuit reasoned that in certain extreme circumstances, a statutory damages award violates due process if it is so severe and oppressive as to be wholly disproportionate to the offense and obviously unreasonable. The Court of Appeals held that this constitutional due process test should apply to aggregated statutory damages awards even where the statutory per-violation award is constitutional, which has been the case in individual TCPA actions.
Providing a roadmap for district courts, the Ninth Circuit cited the factors it considered over three decades ago in Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301 (9th Cir. 1990), to determine whether an aggregated statutory damages award is disproportionately punitive:
- The amount of award to each plaintiff,
- The total award,
- The nature and persistence of the violations,
- The extent of the defendant’s culpability,
- Damage awards in similar cases,
- The substantive or technical nature of the violations, and
- The circumstances of each case.
Wakefield demonstrates that due process considerations are increasingly receiving traction from the Courts of Appeals. In Parker v. Time Warner Entm’t Co., 331 F.3d 13, 22 (2nd Cir. 2003), the Second Circuit addressed this issue but only as a hypothetical in the context of a prospective aggregate statutory damages award under the Cable Communications Policy Act. More recently, the Eighth Circuit, in Golan v. FreeEats.com, Inc., 930 F.3d 950 (8th Cir. 2009), affirmed a district court’s reduction of a $1.6 billion aggregate statutory damages award under the Due Process Clause.
In light of this increasing trend, Wakefield may have powerful implications for putative class actions based on statutes, which permit large aggregate awards, in particular the TCPA. A few of those implications are set forth below.
New Challenge to Class Certification
If aggregate statutory damages have a potential to become unconstitutional, a class action cannot be viewed as a superior vehicle to litigating individual claims if the class members cannot get the full amount of statutory damages.
Restructuring Settlement Leverage
Hypothetical aggregated jury statutory damage awards often drive outrageous settlement demands and results in less room for negotiation post class certification. The risk of a challenge to an unfairly punitive damages award provides new settlement leverage.
Traction for Constitutionality Defenses
Companies have been raising affirmative defenses that damages on a class wide basis are unconstitutional for years. However, those companies have found little success until the Wakefield ruling. This case may signal that affirmative defenses contesting constitutionality have some teeth.
Reconsideration of Statutory Damages by Congress
The TCPA, which provides statutory damages of $500 to $1,500 per call was enacted in 1991—a much less automated time. In Wakefield, the Ninth Circuit recognized that “modern technology permits hundreds of thousands of automated calls and triggers minimum statutory damages with the push of a button.” (Wakefield at 34.) The Ninth Circuit implicitly suggests that Congress may want to revisit the damages it assigned to more antique statutes.
- Jenny N. Perkins, Joel E. Tasca & Elliot Johnson
CFPB Highlights Accuracy Problems in Two Reports on Tenant Background Screening Reports
The CFPB recently released two reports concerning tenant background checks. One report, “Consumer Snapshot: Tenant Background Checks,” discusses consumer complaints received by the CFPB that relate to tenant screening by landlords. The other report, “Tenant Background Checks Market,” looks at the practices of the tenant screening industry.
Consumer Snapshot
The report describes the tenant screening process faced by rental applicants. It highlights the following common issues reported in complaints:
- Negative information that does not belong to the consumer, which the report attributes to the use of “name-only” matching and “wildcard” (i.e. partial name) searches by tenant screening companies;
- Inaccurate or misleading information about evictions and rental debt, with the CFPB noting that based on applicants’ experiences, the presence of eviction records, regardless of accuracy and outcome, has a high likelihood of leading to denials of rental housing; and
- Errors in criminal record information, with the CFPB noting that inaccuracies in criminal records may have an outsized impact on Native American, Black, and Hispanic communities because of their disproportionate representation in the criminal justice system and despite known issues with inconsistent public records systems across jurisdictions, many tenant screening companies conduct minimal manual verification of information and continue to report inaccurate and incomplete civil and criminal public records.
The CFPB states that “[t]he issues described in CFPB complaints and qualitative research suggest that some tenant screening companies are not meeting the legal requirement under the FCRA ‘to follow reasonable procedures to assure maximum possible accuracy’ of the information in the reports they compile.” In discussing the challenges faced by applicants in addressing errors, the CFPB highlights the use of proprietary scoring models or algorithms by tenant screening companies to classify a renter as more or less risky. The CFPB reports that complaints and interviews showed a lack of consistent compliance with FCRA adverse action notice requirements by landlords who took adverse action based on tenant screening reports and with FCRA dispute requirements by tenant screening companies. It concludes the report with the statement that “[t]he experiences documented in this report illustrate that tenant screening reports are an increasing area of concern for many across the country.”
Market Report
The CFPB’s industry research used for the report focused on publicly available information from a sample of 17 tenant screening companies that offer services to landlords across the country. These companies were selected based on their perceived prevalence in sources such as: public-facing websites, analyses by industry observers, academic research, consumer complaints submitted to the CFPB, and recent lawsuits. The CFPB estimates that a majority of landlords use tenant screening reports when considering rental applicants.
The report contains a description of the rental housing landscape, an overview of the tenant screening industry, a description of the features of tenant screening reports, and a discussion of the federal, state, and local laws that apply to the creation and use of tenant screening reports. It also contains a section entitled “Market Challenges” in which the CFPB discusses the following issues that “have the potential to create or reinforce market distortions and harms for landlords and renters”:
- Many tenant screening companies appear to over-include criminal and eviction court records as a result of automated matching procedures, including “wildcard” matching, that lead to erroneous matches. With respect to eviction records, some tenant screening companies and their data vendors appear to lack adequate procedures to account for the complexities of and errors inherent in such records. With respect to criminal records, the CFPB found many instances where tenant screening reports appeared to include obsolete non-conviction criminal records or incomplete arrest record information and also found that tenant screening companies and their data brokers may also fail to have procedures to remove criminal records that were expunged or sealed. As to both eviction and criminal records, the CFPB raises questions about the value of such records in predicting tenant behavior and discusses emerging trends by state and local jurisdictions to limit access to eviction records and restrict the use of criminal history information inn rental decisions.
- The CFPB also questions the relevance of credit report information and credit scores, which are often included in tenant screenings reports, as a predictor of an applicant’s likelihood to pay rent and be a responsible tenant. The CFPB cites research suggesting that renters may be more likely to prioritize rental payments over the payment of other debts. According to the CFPB, this calls into question the strength of the relationship between an applicant’s credit profile and the likelihood the applicant will pay rent. The CFPB reports that some local governments limit the use of certain credit reporting information, including credit scores, in rental decisions.
- The CFPB reports that in addition to credit scores, many tenant screening companies offer a customized rental risk score or a decision recommendation such as “accept,” “reject,” or “accept with conditions.” Some tenant screening companies allow landlords to specify the criteria most important to them (e.g. income, employment, criminal history) and the report generates a recommendation on that basis. Other companies create overall risk scores based on their own proprietary models. The CFPB, contrasting such models with “documented model risk management in the financial services space,” indicates that it is unaware of objective validation of such models or detailed descriptions of the specific variables or weights used in a given model. The CFPB also observes that algorithmic screening and automated scoring can obfuscate the underlying reasons for adverse decisions on rental applications and create risks for landlords, such as not being able to provide enough information to allow applicants to challenge the results or correct inaccurate information and allegations of Fair Housing Act violations and other threats of civil litigation.
The CFPB concludes the report with a list of future actions it plans to take regarding the tenant screening market. In addition to additional monitoring and research, the CFPB plans to:
- Identify guidance or rules it can issue to ensure legal compliance by the “background screening” industry;
- Determine how to require the “background screening” industry to develop and maintain appropriate and accurate consumer reporting practices in accordance with applicable law;
- Coordinate enforcement with the FTC to hold tenant screening companies accountable for having reasonable procedures to assure accurate information in their reports; and
- Coordinate with federal and local government agencies to ensure tenants receive timely information about potential inaccuracies and adequate adverse action notices.
- Michael Gordon & John L. Culhane, Jr.
CFPB Expands Consumer Complaint Access to Local Governments
In a recent blog post, the CFPB announced that it has started sharing consumer complaint data with local governments through its Government Portal. The Government Portal gives local, state, and federal government agencies access to more granular information about consumers’ complaints and companies’ responses than the public is able to view through the CFPB’s public-facing Consumer Complaint Database. The CFPB indicated that this initiative is intended to “increase the impact of our complaint data” by giving cities and counties information that will allow them to “increase their efforts to protect consumers at the local level.” The initiative is consistent with statements made by Director Chopra regarding increased CFPB collaboration with other enforcement authorities.
The cities and counties initially chosen by the CFPB to receive access were those the CFPB deemed “best positioned to benefit from the CFPB’s complaint data” consisting of:
- Local governments with civil or criminal prosecutorial authority to monitor and enforce their own consumer protection laws as well as force-multiply enforcement of federal consumer financial protection laws such as those available under the Consumer Financial Protection Act; and
- Local governments that have, or that are working to create, financial empowerment offices and financial empowerment strategies to improve financial stability for low- and moderate-income households.
To be onboarded onto the Government Portal, cities and counties must sign a confidentiality and data access agreement with personal data protection requirements. A city or county that is onboarded is able to:
- See in real-time what consumers are experiencing in the financial marketplace and how companies are responding
- Download complaints, including consumer- and company-provided documents
- Filter and export information to allow targeted analysis by time period, company, geography, and more
- Compare problems their constituents are facing to other localities and nationwide
- Securely refer individual complaints to the CFPB
- Receive the list of companies responding to complaints through CFPB’s process
The CFPB states that in a period of less than three months, more than a dozen cities and counties have expressed interest in accessing the Government Portal. The participating jurisdictions include:
- Department of Consumer and Business Affairs, Los Angeles County, CA
- Office of the Harris County Attorney, Harris County, TX
- Montgomery County Office of Consumer Protection, Montgomery County, MD
- Sacramento County District Attorney’s Office, Sacramento, CA
- Los Angeles Office of the City Attorney, Consumer and Workplace Protection, Los Angeles, CA
- New York City Department of Consumer and Worker Protection, New York City, NY
- City of Albuquerque Consumer Protection, Office of Policy, Albuquerque, NM
- City of Austin, Regulatory Monitor, Office of Telecommunications & Regulatory Affairs, Austin, TX
- Office of the Columbus City Attorney, Columbus, OH
- Office of Oakland City Attorney, Oakland, CA
The CFPB’s initiative expands enforcement risk by making local governments aware of potential violations of law as to which they have enforcement authority.
On November 3, 2022, Pennsylvania Attorney General (and Governor-Elect) Josh Shapiro announced that his office had filed a lawsuit in the U.S. District Court for the Western District of Pennsylvania against New York-based Fluent, Inc.—a lead generator that connects companies to potential new customers through the consumers’ harvested personal data—and its subsidiaries for their role in allegedly assisting and facilitating the making of hundreds of thousands of unwanted telemarketing calls to Pennsylvania consumers.
The lawsuit alleges that Fluent collected the personal data of Pennsylvania consumers through a series of promotional offerings on websites and thereafter sold that information to sellers and telemarketing companies (Marketing Partners). According to the complaint, from 2018 to 2021, more than 4.2 million Pennsylvania consumers provided their information on one of Fluent’s websites. Fluent drew the attention of the Pennsylvania Attorney General when it agreed to pay a $3.7 million civil penalty to the New York Attorney General in May 2021 relating to allegations that it supplied millions of fake public comments in opposition to proposed net neutrality rules.
The lawsuit alleges that by obtaining and selling telemarketing leads to the Marketing Partners, Fluent “provided substantial assistance or support to sellers and telemarketers” and that as result of Fluent’s substantial assistance, the Marketing Partners made telemarketing calls, including robocalls, to Pennsylvania telephone numbers or consumers without the consumer consent required by the federal Telemarketing Sales Rule (TSR). The lawsuit further alleges that (1) the illegal calls would not have been made by the Marketing Partners but for Fluent’s substantial assistance or support; (2) Fluent knew or consciously avoided knowing that the Marketing Partners were engaged in practices that violated the TSR; (3) Fluent’s acts and practices constitute deceptive telemarketing acts or practices in violation of the TSR; (4) a TSR violation constitutes a violation of the Pennsylvania Telemarketer Registration Act and, by extension, a violation of the Pennsylvania Consumer Protection Law (CPL); and (5) such acts and practices constitute unfair methods of competition and/or unfair or deceptive acts or practices in violation of the CPL.
The lawsuit also includes a separate count alleging that Fluent violated the CPL by engaging in deceptive and misleading business practices in connection with its lead-generating practices, such as promises of free gifts to lure consumers to provide their contact information.
The lawsuit seeks a permanent injunction, civil penalties, and other equitable relief under the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. §§ 6101-6108, Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1, et seq., Pennsylvania’s Telemarketer Registration Act, 73 P.S. § 2241, et seq., and the Federal Trade Commission’s Telemarketing Sales Rule, 16 C.F.R. Part 310.
A critical allegation in the complaint that is the basis for the alleged TSR violations is the absence of valid consumer consent for the telemarketing calls made by the Marketing Partners. According to the complaint, Fluent’s websites contained a fine print, obscured disclosure that consumers were providing consent to be contacted by the Marketing Partners and such disclosure did not satisfy TSR consent requirements. As a result, the enforcement action should serve as a warning to both lead generators and lead buyers of the need to consult with counsel to ensure that consent for telemarketing calls is obtained in compliance with TSR requirements.
The Declared Rate for determining high-interest/high-point home loans in Vermont will be four percent in 2023. Vermont law requires lenders to provide high rate disclosures on any loan with an interest rate that exceeds the Declared Rate by more than three percent and/or for which the lender charges more than four points. In other words, any residential loan with an interest rate greater than seven percent is considered a high rate loan in Vermont. The new rate goes into effect January 1, 2023.
The Declared Rate varies annually in line with the interest rate that the Vermont Department of Taxes sets for overpayment and underpayment of taxes. Under 32 V.S.A. § 3108, the Commissioner of the Department of Taxes sets the interest rate by rounding up to the nearest quarter percentage from the average prime loan rate charged by banks during the 12-month period ending October 31 each year. That rate, as determined by the Board of Governors of the Federal Reserve System, was 3.96 percent, so the Commissioner has set Vermont’s rate for interest that accrues during calendar year 2023 at 4.0. This represents a 0.75 percent increase from the rate for 2022, and a return to 2021’s rate.
- Tanner Horton-Jones & Rinaldo Martinez
Renewals - NMLS Agency Specific Alerts
A reminder that within the Annual Renewal Information tab on the NMLS website there is a listing of updates that various states have made to their checklists–a helpful tool to confirm that you have the most up to date renewal requirements.
- John Georgievski
Looking Ahead
CMBA Legal Issues & Regulatory Conference
Newport Beach, CA | December 12- 13, 2022
Fair Lending and Legal Implications
Speaker: Michael Gordon
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