New Class Action Claims Non-Compliance with Mortgage Forbearance Mandates
Mortgage Crisis & Financial Services Watch
by Enza G. Boderone and Philip R. Stein
2y ago
Millions of homeowners have signed up for a forbearance under the CARES Act, which gives homeowners with a federally-backed mortgage loan the right to obtain a temporary reduction or suspension of mortgage payments by way of a forbearance.  During the forbearance period, the financial institution cannot charge fees, penalties, or interest beyond the amounts included as part of the homeowners’ regular monthly mortgage payments. A new putative class action asserts that one bank, however, is doing just that. PNC Bank customers recently filed a class action against the bank in federal court i ..read more
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An Opportune Time For Financial Institutions to Review Their Fair Lending Procedures
Mortgage Crisis & Financial Services Watch
by Enza G. Boderone and Philip R. Stein
2y ago
At the beginning of his term, President Biden declared that his administration would make it a policy to eliminate “racial bias and other forms of discrimination in all states of home-buying and renting.” Recently, this policy statement has manifested itself in regulatory proposals and enforcement actions against a national banking association in what is the largest fair lending enforcement action in the past few years. In late August, the Office of the Comptroller (“OCC”) entered into a consent order [1] with a national banking association, Cadence Bank, over what it alleged were violations ..read more
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Mortgage Brokers File Class Action Against Leading Wholesale Mortgage Lender
Mortgage Crisis & Financial Services Watch
by Philip R. Stein
3y ago
United Wholesale Mortgage (UWM), the nation’s largest wholesale mortgage lender, announced on March 4, 2021, that it would no longer do business with mortgage brokers who also worked with Rocket Mortgage (the online loan shopping and application tool offered by Quicken Loans) or with Fairway Independent Mortgage Company, claiming that those two rival companies “are hurting the wholesale channel.” UWM’s “us or them” ultimatum sparked a furor and no shortage of angst among the voluminous group of brokers who had been dealing profitably with both UWM and at least one of those rivals to that ..read more
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To Register or Not to Register: A Common Soliloquy in the Digital Gold Rush
Mortgage Crisis & Financial Services Watch
by Jennifer Llano
3y ago
Developers of digital tokens can find themselves in an existential crisis.  Security or not a security? Commodity or not a commodity?  To register or not to register?  Bitcoin, Ethereum, Aave, and the like are cryptocurrencies available on a decentralized network and are generally viewed as commodities not necessarily subject to the heavily regulated environment of securities.  However, navigating the regulatory environment to determine whether your digital token should be classified as a security or a commodity is not always a straight road.  Take XRP, for example, wh ..read more
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NFTs: Unique Assets Spur Legal Questions of First Impression
Mortgage Crisis & Financial Services Watch
by Philip R. Stein
3y ago
Non-fungible tokens (NFTs) have gotten a lot of media attention of late, with breathless reports of multi-million dollar purchases of items one might never have expected to command such staggering sums. The objects sold have included digital artworks (such as drawings, music, and short videos) and even an autographed tweet by Twitter’s founder. Talk of an NFT “gold rush” abounds and does not seem overstated at the moment. But perhaps just as intriguing and unsettled as this new marketplace are the many legal issues that it raises. Most NFTs are part of the Ethereum blockchain. Ethereum is a cr ..read more
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The SPAC Era Is Upon Us, and Related Litigation Is on The Rise
Mortgage Crisis & Financial Services Watch
by Philip R. Stein
3y ago
Special Purpose Acquisition Companies (SPACs) have been in such widespread use over the last year or two that an uptick in SPAC-related litigation appears inevitable.  Indeed, the increase is already beginning.  After a brief overview of SPACs, this article will identify some of the key litigation risk areas for these entities and the individuals who govern them. SPACs have no commercial operations when they are formed. They are shell companies that exist to raise capital through an IPO to merge with a private operating company and take it public. Taking the private company public is ..read more
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Lehman Brothers Holdings Inc. Files New Adversary Proceedings Against Mortgage Brokers
Mortgage Crisis & Financial Services Watch
by Philip R. Stein and Enza G. Boderone
3y ago
If you thought Lehman Brothers Holdings Inc. (“LBHI”) was done suing lenders as a result of its settlements with RMBS trustees years ago, think again. LBHI recently filed a new wave of lawsuits against approximately 60 defendants, mostly mortgage brokers, in the bankruptcy proceedings currently pending in the U.S. Bankruptcy Court for the Southern District of New York, and more may still be to come. As it did with the nearly 190 mortgage originators that it sued in 2018 in the same bankruptcy proceedings (the “2018 Adversary Proceedings”), LBHI seeks the remedy of contractual indemnification ..read more
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The Fed Raises Concerns about Corporate Debt
Mortgage Crisis & Financial Services Watch
by Philip R. Stein and Kenneth Duvall
3y ago
We have previously written about the possible economic and litigation implications of mushrooming corporate debt. Now, the Federal Reserve has flagged some of those same concerns. In its semi-annual monetary policy report to Congress last Friday, the Fed expressed anxiety regarding the amount of debt taken on by American companies. Even “before the outbreak of the pandemic,” business debt was “already elevated.” Now, amidst the pandemic, “business leverage now stands near historical highs.” The Fed took a sanguine view of “near-term risks,” stating that low interest rates and other factors pro ..read more
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ViacomCBS Seeks to Recover COVID-19-Related Losses from Insurer
Mortgage Crisis & Financial Services Watch
by Philip R. Stein and Enza G. Boderone
3y ago
Business interruption insurance claims keep coming, cutting across a broad array of industries. The entertainment and media sectors are certainly not immune from pandemic-related losses. Last month, ViacomCBS became the latest entertainment entity to file such a claim, suing its insurer, Great Divide Insurance Co., for breach of contract and breach of the implied covenant of good faith and fair dealing. In the suit, filed in the U.S. District Court for the Central District of California, ViacomCBS seeks damages and declaratory relief for what it alleges is the insurance company’s failure to co ..read more
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Corporate Debt: Still Growing, and Still a Concern
Mortgage Crisis & Financial Services Watch
by Kenneth Duvall
3y ago
As the pandemic began unfolding about a year ago, we wrote about the risk that the high volume of corporate debt might make it the next market bubble to burst. The issuance of corporate debt only accelerated in 2020 compared to 2019, growing by 17% and setting a new record in volume. S&P Global Ratings has predicted that corporate debt issuance in 2021 will remain robust, decreasing by only 3% compared to a frenetic 2020 (which would still be up 14% over 2019 levels). The ratio of corporate debt to GDP might be at an all-time high, registering at over 46% in the second half of 2020. Factor ..read more
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