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Fair Credit Reporting: 13.7.2 State Authority Over National Banks and Thrifts

Prior to 2009, the OCC took the position the National Bank Act—which provides that national banks are not subject to “visitorial powers” by state officials236—also prohibited states from suing national banks to enforce consumer protection statutes.237 The OCC promulgated regulations interpreting the NBA which provided that, with respect to national banks, state officials could not “prosecut[e] enforcement actions” or “enforce[e] compliance with any applicable Federal or state laws concerning” “a

Mortgage Servicing and Loan Modifications: 5.2.4 Escrow Requirements

The management of escrow accounts is another area that is typically covered by state servicing statutes. While these statutes often impose requirements for escrow accounts that are similar to those imposed by RESPA,25 it is worth checking whether a state statute may cover matters not addressed by RESPA, or may provide greater rights to the borrower.

Mortgage Servicing and Loan Modifications: 5.9.2 Preemption Under TILA

Similar to RESPA, the federal Truth in Lending Act (TILA) establishes a preemption standard. Generally, TILA does not affect any state law relating to the disclosure of information unless the state law is inconsistent with the federal law, and then only to the extent of the inconsistency.274 This is referred to as “conflict preemption,” as opposed to “field preemption.”275

Mortgage Lending: 5.4.2.2 Definition of Lender

The scope of the term “lender” is important for determining which loans will be covered by a high-cost loan statute.67 Some state statutes define lender broadly enough to include small-scale lenders such as individuals who make just one or two loans.68 Other statutes define the term more narrowly, so that it includes only lending institutions and licensed lenders.69 But even those statutes may place restrictions on loan terms that are applica

Mortgage Servicing and Loan Modifications: 5.2.6 Special Servicing Requirements for High-Cost Loans

Some states have enacted statutes that give protections to homeowners at risk of foreclosure of high-cost home mortgages. These anti-predatory lending laws can be powerful tools for challenging unfair lending practices and defending against foreclosure. The scope and content of these state laws vary widely. While many of the provisions of these statutes deal with loan origination issues, some also impose requirements on the servicing of high-cost loans.

Mortgage Lending: 5.2.1 Overview

Abusive mortgage origination practices can often be challenged under state unfair and deceptive acts and practices (UDAP) statutes.6 Most UDAP statutes make deception and unfairness actionable without the strict elements and proof requirements of common law fraud7 and other tort claims while also offering significantly broader remedies than contract claims.

Mortgage Lending: 5.13 The Role of Industry Standards

An industry standard can take the form of an unwritten rule, a customary practice or norm,600 or a more formalized collection of written requirements published by an industry or trade group. Industry standards are not laws. Instead, they are simply guidelines or structures within which most market players conduct business.

Mortgage Lending: 4.2.1 Introduction

The Real Estate Settlement Procedures Act (RESPA)14 is the primary federal law directly addressing residential mortgage settlements.15 RESPA, originally enacted in 1974, is intended to ensure that consumers in real estate transactions receive timely information about the nature and cost of the settlement process and to protect consumers “from unnecessarily high settlement charges caused by certain abusive practices.”16 To accomplish these goa

Mortgage Lending: 4.2.4.2.1 Subordinate liens

A narrow category of subordinate loans are exempt from the parts of Regulation X requiring the HUD-1 settlement statement, the good faith estimate, the mortgage servicing transfer statement, and the settlement costs booklet.127 To qualify for the exemption, the loan must be:

Mortgage Lending: 4.2.4.4.1 The role of the HUD-1 or HUD-1A settlement statement

Until October 2015, the HUD-1 or HUD-1A “settlement statement” was used when closing every mortgage transaction subject to RESPA.160 Since then, it has only been required for reverse mortgages and open-end loans—primarily home equity lines of credit.161 Regulation X and RESPA direct the “settlement agent” and “the person conducting the settlement,” respectively, to complete the settlement statement and provide it to the borrower at or before closing.16

Mortgage Lending: 4.2.4.4.5 Documentation requirements

Lenders must retain copies of the settlement statement for five years from the date of settlement, unless the lender disposes of its interest in the mortgage and does not service the mortgage. In that case, the lender must provide its copy of the settlement statement to the new owner or servicer of the mortgage as a part of the transfer of the loan file.183

Mortgage Lending: 4.2.5 Transfer of Servicing Notice

Until October 3, 2015, RESPA required anyone making a federally related mortgage loan to disclose to each applicant whether the servicing of the loan may be assigned, sold, or transferred at any time during the term of the mortgage.212 Effective October 2015, loans subject to TILA’s disclosure requirements, or exempt from disclosure, became exempt from the servicing notice requirement.213

Mortgage Lending: 11.1 Introduction

This chapter discusses land installment contracts, which are also known as contracts for deed, bond for deed, bond for title, installment sale contracts, long-term land contracts, and land sale contracts. Here they are referred to collectively as land installment contracts or land contracts. Land contracts are essentially a form of seller financing in which legal title remains in the seller’s name until all payments have been made. This type of contract is often described to low-income people as a way to acquire homeownership without needing to deal with a bank or get credit approval.

Mortgage Lending: 4.4.2 Truth in Lending Damages Claims

Failure to comply with TILA’s disclosure requirements or substantive restrictions may give rise to claims for actual damages,313 statutory damages,314 and attorney fees.315 Rescission is also available for a limited set of violations and is discussed in the following subsection.316

Mortgage Lending: 4.4.4 Assignee Liability

The TILA provision imposing liability for damages applies to any creditor that violates the Act.338 “Creditor” is defined as the party to whom an obligation is initially payable. This definition is particularly significant because it is common for the original creditor to assign the obligation to another entity after consummation.

Mortgage Lending: 4.4.6 Originator and Servicer Liability

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act created certain requirements for loan originators, distinct from creditors.359 Loan originators are specifically liable for those violations, a change from the usual rule that originators are not liable for TILA violations.360 Who qualifies as a loan originator is discussed in

Mortgage Lending: 4.6.1 Overview and Remedies

The Home Ownership and Equity Protection Act (HOEPA)377 carves out a class of high-rate loans and subjects them to special regulation. For these loans (known as HOEPA loans or high-cost loans), HOEPA requires additional disclosures, prohibits certain abusive loan terms and practices, imposes additional penalties, and extends the potential liability of assignees.

Mortgage Lending: 4.6.2 Advance Look Disclosures

Covered loans are subject to additional disclosure requirements. The consumer must be given special “advance look” HOEPA disclosures at least three business days prior to consummation,391 to assure that the consumer has time to reflect.