How COVID-19 is Impacting Mortgage Lenders

As the sheer impact of COVID-19 continues to unfold, federal agencies are implementing policies across the country in an effort to lessen the financial burden on Americans.  On March 18, 2020, the U.S. Department of Housing and Urban Development (“HUD”) authorized the Federal Housing Administration to place an immediate 60-day suspension on all evictions and foreclosures.  HUD Secretary, Ben Carson, is hopeful this moratorium “will provide homeowners with some peace of mind during these trying times[.]”

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The Often Overlooked Federal Protections to Tenants in Foreclosure Actions

For institutional lenders, the filing of any foreclosure action requires careful navigation and compliance with various state and federal laws.  Notice to the mortgagor, for instance, is a prerequisite to any foreclosure; however, what if the property is subject to a residential lease? What obligation does a mortgagee then have to a third-party tenant?  For issues like these, states generally have their own specific tenant foreclosure notice requirements.  In many states, notice laws are drafted to mirror the federal provisions provided under the Protecting Tenants at Foreclosure Act (“PTFA”).

Introduced in 2009, the PTFA was originally enacted under Title VII of the Helping Families Save Their Homes Act.  The PTFA included a sunset clause, but on May 24 2018, the Trump Administration signed its permanent extension into law.  In addition to serving a notice on the mortgagor, the PTFA mandates that notices to foreclose must also be served on all tenants.  Generally, once the mortgagee issues a notice to foreclose, the PTFA permits tenants to stay in the foreclosed property for either: (1) 90-days from the date of the notice or (2) the remainder of their lease term, whichever is greater.  Significantly, however, the PTFA’s protections only apply to tenants with bona fide tenancies.

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Supreme Court Justices say no to applying the “discovery” rule on FDCPA claims

On December 10, 2019, the Supreme Court of the United States resolved a split among the Circuit Courts of Appeals over whether the one-year statute of limitations of the Fair Debt Collection Practices Act (“FDCPA”) begins to accrue from the time the alleged violation occurs, as opposed to when it is discovered.  The Supreme Court’s decision, delivered by Justice Thomas, in Rotkiske v. Klemm, et al., No. 18-328, held that claims brought under the FDCPA are strictly subject to the statutory language of the FDCPA and must be filed “within one year from the date on which the violation occurs.”

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New Jersey Issues Rule Proposal on Uniform Fiduciary standard

Yesterday the New Jersey Bureau of Securities (“NJBOS”) issued its Rule Proposal titled “Fiduciary Duty of Broker-Dealers, Agents, Investment Advisers, and Investment Adviser Representatives”.  Below is a link to the Press Release, which in turn includes a link to the Rule Proposal itself.  The Rule Proposal would amend existing section N.J.A.C. 13:47A-6.3 and then add new section N.J.A.C. 13:47A-6.4.

https://www.njconsumeraffairs.gov/News/Pages/04152019.aspx

We have reviewed the Rule Proposal and identify the below highlights.  The public comment period on the Rule Proposal ends June 14, 2019.  The Rule would take effect 90 days after a Notice of Adoption is published.  Let us know if we can be of any help, even if it is just to talk through the new proposed requirements.

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Appellate Division Rejects MacPherson Mortgage Acceleration Argument in Case of First Impression

In a case of appellate first impression in New York, the Appellate Division, Second Department held that a mortgage is accelerated upon a lender’s election to do so, notwithstanding an optional reinstatement clause in a mortgage.  In the Dieudonne matter,[1] the Second Department rejected the “MacPherson Argument,” first pronounced by the Supreme Court, Suffolk County[2] and affirmed the dismissal of the lender’s foreclosure complaint as time-barred. The MacPherson Argument reasons that a mortgage with an optional reinstatement clause is not accelerated until judgment enters, as the borrower has an continuous right to reinstate until that point.

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New Jersey Bureau of Securities (“NJBOS”) holds second public hearing on its Pre-Proposal for a Rule implementing a uniform fiduciary standard

As noted in our prior update, we continue to cover the NJBOS’ rulemaking activity relating to a uniform fiduciary standard applicable to all investment professionals.  On Monday, November 19, 2018 we attended the second public hearing held by the NJBOS.  There were approximately 40 attendees at the second hearing, with 16 speakers, representing diverse interests, putting formal comments on the record (there were seven speakers at the first hearing).

Three takeaways from the second hearing: Continue Reading

Today the New Jersey Bureau of Securities (“NJBOS”) began public hearings on its Pre-Proposal for a Rule implementing a Uniform Fiduciary Standard for Investment Professionals

This morning we attended the first public hearing held by the NJBOS concerning its pre-proposal to adopt a rule implementing a uniform fiduciary standard for investment professionals, including broker-dealers and investment advisers.  The hearing was administered by New Jersey officials, including Christopher Gerold, Chief of the NJBOS.  There were approximately 40 attendees from diverse backgrounds – investment firms, industry groups, in-house and outside counsel, and consultants.  Here are three takeaways from the hearing:

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New Jersey Bureau of Securities provides formal Notice of Pre-Proposal regarding Fiduciary Standard

Today the New Jersey Bureau of Securities began rulemaking on a proposed uniform fiduciary standard for investment professionals.  Attached below is the Bureau’s Notice of Pre-Proposal.  Comments on the Pre-Proposal are due to the Bureau by December 14, 2018, and the Bureau will hold two (2) informal conferences (on November 2 and November 19, 2018) in order to take testimony, gather facts, and provide for the opportunity of public comment.  Reed Smith will continue to monitor this process and intends on attending the public conferences.  We are available to assist clients through this process.

Read our blog post on the initial announcement here.

New Jersey Bureau of Securities notice

No Uniform Fiduciary Standard – Not so fast says New Jersey

Earlier this week, New Jersey Governor Phil Murphy announced that the New Jersey Bureau of Securities would start rulemaking to “impose a fiduciary duty on all New Jersey investment professionals, requiring them to place their clients’ interests above their own when recommending investments.”  The rule is aimed at reconciling the different standards of care that apply to investment professionals, such as broker-dealers and investment advisers.   Addressing the need for this rule, Bureau Chief Christopher Gerold added, “The roles, duties and obligations of investment advisers and broker-dealers are confusing to investors under current federal regulations.”  New Jersey Attorney General Gurbir S. Grewel also confirmed his office’s support for the action stating “With the Trump Administration gutting those [investor and consumer] protections left and right, it falls to states like New Jersey to fill the void”.

A formal Notice of Pre-Proposal to solicit public comment will be issued by the Bureau.

Reed Smith will monitor this rulemaking, which addresses an important issue for our broker-dealer and investment adviser clients, especially given judicial action striking down the Department of Labor’s Fiduciary Rule in March 2018, as well as the proposal in April 2018 of Regulation Best Interest by the Securities and Exchange Commission.  We are available to assist our clients in addressing the New Jersey rulemaking process including submission of responses to the proposed rule.

A link to the State’s Press Release from earlier this week is below.

https://www.nj.gov/governor/news/news/562018/approved/20180917c.shtml

Client Alert – TCPA compliance and litigation impacted by ACA

On Friday, March 16, 2018, the United States Court of Appeals for the District of Columbia issued its long-awaited ruling in ACA International et al. v. FCC (see attached). The petition before the court challenged aspects of the Telephone Consumer Protection Act (TCPA) Omnibus Declaratory Ruling and Order issued by the Federal Communications Commission (FCC) in July of 2015.

Please read the full client alert at reedsmith.com.

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