New Developments
New Developments
New Medical Debt Protections
New IRS regulations, AG settlements, and CFPB actions offer key new protections relating to delinquent medical debt. For more details, click here.
Bad News for Debt Collectors
An FCC ruling this summer tightens the screws on collectors calling or texting cell phones, with TCPA minimum damages of $500 per call or text. Limits on wrong number calls or texts, no autodialed calls without consent, and it is now easy to withdraw that consent, as explained in this article.
Effective Dates for 3 Important Rule Changes
July 18, 2015 for new requirements for manufactured home appraisals described in Truth in Lending § 9.5.4.6.2
July 20, 2015 for warranty and arbitration rule changes described here
Oct. 3, 2016 for major rule changes on credit offered service members, extending 36% interest rate cap and arbitration ban to far more forms of credit, as described here
Installment Loans: A Growing Form of Predatory Lending
With increased regulation of payday loans, high-cost installment loans are growing fast, as the latest way to target struggling consumers. Read Consumer Credit Regulation online for NCLC's new analysis of each state's regulation of closed-end (Appx. D-1) and also of open-end (Appx E-1) installment loans.
Using Disparate Impact After Supreme Court's Green Light
The U.S. Supreme Court on June 25 affirmed that disparate impact claims are cognizable under the Fair Housing Act. For ways to use that theory under the FHA and ECOA, see NCLC's Credit Discrimination §§ 4.3 (proof issues), 6.4.3 (credit scoring), 7.2.1 (redlining), 8.5 (reverse redlining), and 8.6 (credit mark-ups).
New FTC Rules Limit Binding Arbitration, Aid Consumer Warranty Litigation
The FTC has just released important changes to its Magnuson-Moss Warranty Act interpretations and rules. The changes will aid consumer warranty litigation, including support for limiting the enforceability of binding arbitration requirements. All the changes are summarized in this article, with links to more detailed analysis in NCLC’s warranty treatise.
Combined TILA/RESPA Mortgage Rules Delayed Until October 3
As explained here the CFPB has delayed its combined TILA/RESPA rules until October 3. The rules that change disclosure requirements for closed-end mortgage loans are explained in NCLC’s Truth in Lending § 5.11 (9th ed. 2015). See also §§ 4.4.7.4, 11.6.8.3. The rules and CFPB Supplementary Information are found at Appx. B-Addendum (online only).
New Supreme Court Bankruptcy Ruling on Lien Strip Offs
A June Supreme Court decision siding with the majority of courts that limit lien strip offs in chapter 7 cases does not affect a consumer’s ability in chapter 13 cases to strip off mortgage liens, as explained in this article.
Student Loan Servicing
What you need to know about private companies' federal student loan servicing and ways to sue these companies or otherwise get relief if they do not comply with their contracts or regulations. Now available as an all new Chapter 5 in NCLC's Student Loan Law (5th ed. March 2015).
Arbitration Developments on Three Fronts
1. CFPB released its 700 page study and now has statutory authority to prohibit forced arbitration clauses in consumer credit.
2. NCLC has just released a model state statute limiting arbitration while not preempted by FAA
3. Consumer Arbitration Agreements (7th ed. March 2015) updates the scores of important recent court decisions.
New IRS Regulations Limit Medical Debt Collection
IRS now requires non-profit hospitals to offer financial assistance and limits debt collection actions that they can take during a hospital bill's first 120 days. A full explanation is provided at a free powerpoint and recording.of a March 4 webinar.
Supreme Ct. TILA Ruling
Supreme Court on January 13 rules 9-0 that consumer need only send TIL rescission notice, not file suit, within three-year period, and Court's language has major implications for other TIL rescission issues. See online version of NCLC's Truth in Lending 10.6.3.1.3 and 12.2.2.4 (9th ed. March, 2015) (case only briefly mentioned in print edition that went to press in January).
Straight Answers for Corinthian Students
How to Help Over 100,000 Corinthian Students: learn about the CFPB settlement and student rights set out in NCLC's Student Loan Law (5th ed. March 2015): ch. 10 (discharging loans), ch. 12 (private student loans), § 13.5.2 (tuition recovery funds), and § 13.8 (school-related claims as defense to a loan).
HUD Provides New (Limited) Protections for Surviving Spouses with Reverse Mortgages
HUD Mortgage Letter 2015-03 (Jan. 29, 2015) provides limited protections for surviving spouses with reverse mortgages. Often couples were encouraged by loan brokers to put a home in the name of only the older spouse to increase the cash benefits from a reverse mortgage. But this is dangerous because if the older spouse passes away first, the younger spouse may not be able to assume the loan or remain in the home. See NCLC’s Foreclosures and Mortgage Servicing § 16.3.3.3 (5th ed. 2014).
Under the new policy, lenders have the option of allowing claim payment following the sale of the property by heirs or estate; foreclosing in accordance with the terms of the mortgage, and filing an insurance claim under the FHA insurance contract as endorsed. They may also elect to assign the HECM to HUD upon the death of the last surviving borrower, where the loan would not otherwise be assignable to FHA, also known as the Mortgage Optional Election Assignment (MOE).
Circuit Courts Examine Prior Express Consent under the TCPA
Two recent circuit decisions, Mais v. Gulf Coast Collection Bureau, Inc. and Nigro v. Mercantile Adjustment Bureau, LLC, addressed the scope of prior express consent to receive autodialed and prerecorded calls to cell phones under the Telephone Consumer Protection Act (“TCPA”). The relevant portion of the TCPA prohibits:
any person . . . to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice . . . to any telephone number assigned to a . . . cellular telephone service.
Although they reach different conclusions about express consent in light of the unique facts in each case, both decisions rely on the Federal Communication Commission (“FCC”) ruling, In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 (“2008 FCC Ruling”), 23 FCC Rcd. 559 (2008).
Website Identifies Vehicles Whose Recall Repairs Never Made
A new NHTSA website, https://vinrcl.safercar.gov/vin/, allows the public to look-up safety recalls by VIN (vehicle identification number). Put the VIN number in the site and it lists all safety recalls conducted over the past 15 years, identifying if a safety recall repair has not been performed on that specific vehicle.
The website information is provided by the vehicle manufacturers, and over 50 manufacturers are participating. The site includes information not only on light vehicles but also motocycles. International vehicles are not included and very recent recalls may not be posted yet either.
The site does not indicate completed recall information, and does not apply to manufacturers’ own voluntary recalls to non-safety recall campaigns.
Thanks to Ron Burdge, a consumer attorney in Dayton, Ohio, for alerting us to the website.
Powerful Consumer Right Hiding in Plain Sight
A powerful consumer right is hidden in plain sight in the TILA provision prohibiting arbitration in mortgage loans—the same provision prohibits application of any provision in a mortgage loan agreement that would limit the consumer’s right to seek court relief based on a federal claim. This provision should have wide application.
Sixth Circuit: Debt Buyer Cannot State Prejudgment Interest Owed for Period After Debt Charged Off
Credit card issuers often waive the right to contractual interest after they charge off a debt, which means debt buyers cannot seek interest for that period either. At least one debt buyer has responded by representing that statutory prejudgment instead of contractual interest was owed. The Sixth Circuit has just found it to be a FDCPA violation to state that such prejudgment interest was owed for the period after charge-off.