Yesterday, April 7, 2021, the Consumer Financial Protection Bureau (CFPB) issued a proposal to delay the effective date of the Debt Collection Rules for sixty (60) days. The reason for the delay is to give those impacted by the Rules more time to prepare given the pandemic. The new proposed effective date is January 29, 2022. The proposal seeks only to modify the effective date and does not include any other changes. This proposal is open for public comment for thirty days, after which the CFPB will make a final determination on whether the effective date will be delayed. If you have questions about this proposal or the Debt Collection Rules, please do not hesitate to contact a lawyer at SVL.

On April 5, 2021, the Consumer Financial Protection Bureau (CFPB) issued a proposed rule that seeks to amend Regulation X to assist borrowers affected by the COVID-19 emergency. Last week, the CFPB warned mortgage services of the coming wave of foreclosures when existing forbearance agreements come to an end. That warning included a directive that mortgage servicers need to be ready to handle the expected increase of loss mitigation requests by mortgage borrowers. The information released by the CFPB last week suggest that as many as 3 million consumers are behind on their mortgages.

The CFPB’s proposed rule to amend Regulation X (mortgage servicing rule) would:

• Give borrowers more time by providing “a special pre-foreclosure review period” that would generally prohibit servicers of mortgage loans from starting foreclosure until after December 31, 2021. In essence, it would modify the 120-day rule to be a temporary blanket prohibition on starting a foreclosure because of a mortgage delinquency until after December 31, 2021.
• Allow for streamlined loan modification options to borrowers with COVID-19 related hardships based on the evaluation of an incomplete application. 
• Keep the consumers informed of their options by changing the required servicer communications to consumers. 

Please note that this proposed rule to the mortgage servicing rules would apply only to mortgage loans secured by a borrower’s principal residence. Further, the proposed changes would apply only to large servicers but the CFPB is seeking comments on whether it should extend to small servicers. The proposed effective date of these changes is August 31, 2021. The CFPB is accepting public comments on the proposed rule through May 10, 2021.

SVL is working to put together a virtual event to go through this proposed rule in detail. We anticipate having further information on the virtual event later this week. In the meantime, if you have questions, please contact a lawyer at SVL.

Yesterday, the United States Supreme Court issued a long-awaited ruling in the case of Facebook, Inc. v. Duguid. This was an appeal out of the Ninth Circuit and involved the Telephone Consumer Protection Act of 1991 (TCPA). In particular, this case involved the definition of an “automatic telephone dialing system” (ATDS). Many in the consumer credit industry hoped that this case would restore some limits to the definition given by the Federal Communication Commission’s (FCC) previous ruling that defined an ATDS to include any modern telephone system.

The Court held that an ATDS under the TCPA is a device that “must have the capacity either to store a telephone number using a random or sequential number generator, or to produce a telephone number using a random or sequential number generator.” The case centered on the reading of the TCPA statute and its definition of an ATDS. Furthermore, the case turned on whether the clause “using a random or sequential number generator” modifies the two verbs that precede it (“store” and “produce”). The Court adopted the position that the clause modifies the two verbs. As such, for a creditor to be subject to the TCPA, it must use a random or sequential number generator that either stores or produces telephone numbers. Unfortunately, the Court did not address the term “capacity,” which is another part of the statutory definition that has caused litigation.

This limiting definition of an ATDS should help to reduce future litigation under the TCPA. How much this will limit future litigation remains uncertain. Credit Unions must remain careful and comply with the other provisions of the TCPA, which remain in effect, including respecting consumer’s revocation of consent.

Should you have question on how this ruling impacts your practices or procedures, please contact a lawyer at SVL.