Consumer Banking and Payments Law: 11.7.6.3 MOVED—Implicit Preemption
[Editor’s Note: This subsection has been moved to § 11.2.8.3, supra.]
[Editor’s Note: This subsection has been moved to § 11.2.8.3, supra.]
[Editor’s Note: This subsection has been moved to § 11.2.8.3, supra.]
[Editor’s Note: This subsection has been deleted.]
[Editor’s Note: This section has been moved to § 11.4.8a, supra.]
In early 2014, HUD specifically approved electronic signatures for FHA mortgages.612 HUD’s instructions for the use of electronic signatures include numerous protections to ensure that the mortgagor—the homeowner—intended to sign the actual document to which the electronic signature is attached, and that the document cannot be changed after this signature is attached. The instructions contain the following:
In April 2014, the Consumer Financial Protection Bureau (CFPB) released a report about mortgage loan closings that included concerns raised by industry members and consumers about the problems they experience with the current paper application and closing process.616 “Consumers face a daunting package of closing documents that is too large to absorb and too difficult to understand.”617
E-Sign provides that, notwithstanding any statute, regulation, or other rule of law, a signature, contract, or other record may not be denied legal effect, validity, or enforceability solely because it is in electronic form, and a contract may not be denied legal effect, validity, or enforceability because an electronic signature or record was used in its formation.24 For example, a contract may meet a statute-of-frauds requirement and be legally binding even if it is based on email communications.
Section 7003 of E-Sign139 excludes certain important consumer notices from its coverage. However, when a state’s adoption of UETA does not also expressly do so, the question is raised as to whether these notices can be supplied electronically by virtue of the state UETA.
In Henson v. Santander Consumer USA Inc.,361 the Supreme Court held that a debt buyer is not one that collects debts “owed or due another,” because it owns the debts after purchasing them.
The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails . . . who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.391
The Supreme Court in Obduskey acknowledged that even a nonjudicial foreclosure of a mortgage is the collection of a debt.457 The Court explained that, at a minimum, someone who conducts a foreclosure is indirectly attempting to collect a debt.
While the Obduskey Court left for another day the question of whether those who enforce mortgages through judicial procedures are subject to all FDCPA provisions,521 courts after Obduskey consistently find that they are subject to all FDCPA provisions.522 This means that a multi-state foreclosure law firm may not have a principal purpose of enforcing security interests where it conducts nonjudicial foreclosures in some states, and judicial foreclosures in others.
As described throughout this chapter, the GSEs have developed loss mitigation options that provide borrowers in distress with viable alternatives to foreclosure. For example, in response to the COVID-19 pandemic, the GSEs implemented flexible loss mitigation options with minimal barriers to access.313 Unfortunately, as the GSEs implemented their new loss mitigation options, they simultaneously undercut these efforts through a program that sells off many of the loans they own or guarantee.
Most mortgage servicers do not have foreclosures as a principal purpose. Servicers spend most of their time managing loans that are not in default, collecting timely payments, managing escrow accounts, and providing accounting services to borrowers and investors.535 Servicers regularly file and collect on proofs of claims in bankruptcy cases where many borrowers are not in default on the mortgage loan.
The term [“debt collector”] does not include . . .
(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity . . . (iii) concerns a debt which was not in default at the time it was obtained by such person;660
The Code allows objections to claims of exemption by “a party in interest,” again specifying no procedure.337 The procedure is provided by Bankruptcy Rule 4003(b), though the rule does not prescribe any particular form for the objection,338 but it seems clear that an objection initiates a contested matter under Bankruptcy Rule 9014. In most cases the party who would be likely to object is the trustee.
Assuming that a secured claim is filed, it will be allowed in the amount requested unless an objection is raised or the amount is determined in the plan based on a request made under Rule 3012.360 If an objection is raised, the claim must then be determined and allowed or disallowed.
There are certain claims that the debtor cannot pay within the time period of the proposed plan, which can never exceed five years,438 simply because they are large long-term obligations that have many years of payments remaining before they are due to be fully satisfied. Section 1322(b)(5) allows the debtor to cure a default on such an obligation within a reasonable period of time without having to pay the entire debt balance within the time period of the plan.
One of California’s UDAP statutes, the Unfair Competition Law,58 does not authorize damages,59 but allows restitution.60 Decisions interpreting the scope of restitution under this statute are discussed in § 12.3.2.4.3, infra.
UDAP statutes should be liberally construed to authorize the broadest damage remedy possible.100 Because of UDAP statutes’ remedial purpose, common law principles limiting damages between merchants are often inappropriate.101 Just as courts fashioned different rules of damages for different types of contract, equity and tort actions, they should fashion new remedial rules of damages under UDAP statutes allowing recovery of “actual” damages or “restitution.” UDAP awards should not be limited to c
The scope of restitution is particularly well-developed under the California Unfair Competition Law, one of California’s two UDAP statutes, which allows restitution but not damages. (California’s other UDAP statute—the Consumers Legal Remedies Act—allows both restitution and damages.179) The California Supreme Court defines restitution as “compelling a . . .
Often one of the greatest consequential costs to a consumer of a UDAP violation is the expense of hiring an attorney to untangle the problems caused by the deceptive practice. Most UDAP statutes authorize a prevailing consumer to recover attorney fees required to obtain the UDAP judgment, so that it will be unnecessary to recover these same costs as consequential damages. But some UDAP statutes do not do so, or make such an award discretionary with the court.