Posts filed under ‘Mortgage Lending’

Three Things You Should Know To Start Your Credit Union Day

Municipal Deposit legislation, A8289, gained a key sponsor yesterday when the new Chairwoman of the Assembly Banks Committee became the prime sponsor of the legislation in that chamber.

Assemblymember Pat Fahy is the new chairperson of the Banks Committee. She replaces former Bronx Assemblymember Victor Pichardo who resigned from the Legislature this past summer. Pichardo’s departure means that the legislation will have to be reconsidered by the Banks Committee. Last year the legislation advanced to the Assembly Ways and Means Committee.

Assemblymember Fahy is a familiar face in the Capital Region who represents parts of Albany and Bethlehem. In September, the Association met with her office to discuss credit union priorities.

Court Clarifies Foreclosure Notice Requirements

When it comes to foreclosing in New York, minute mistakes can make a huge difference. Most readers of this blog know that state law requires mortgage holders to mail a 90 day pre-foreclosure notice to delinquent homeowners before commencing foreclosure (RPAPL 1304). When there are multiple borrowers, how is this requirement satisfied? In this recent decision a New York Appellate Court addressed this issue for the first time. It ruled that lenders must mail a separate 90 day notice to each borrower in separate envelopes.

Is this arcane? You bet it is. But if this procedure isn’t followed, a foreclosure will be dismissed, at least in Long Island, Westchester, Brooklyn, Queens and Staten Island over which this court exercises its jurisdiction. Wells Fargo Bank, N.A. v Yapkowitz, 2021 N.Y. Slip Op. 05139, 2021 WL 4448061

Yellen Continues To Push For Transaction Monitoring

Treasury Secretary Janet Yellen continues to insist that requiring banks and credit unions to report almost every account transaction by their members is no big deal. Ironically, she is making this argument even as America wakes up to the danger of Facebook controlling so much of our personal information. People don’t trust the IRS any more than they trust Mark Zuckerberg, although it might be close at this point. 

Yellen’s continued advocacy underscores that we have to continue to tell anyone that will listen that intrusive transaction reporting is a bad idea.

I will be back on Tuesday.  Enjoy your long weekend. This year’s World Series prediction, which has been certified as acceptable Secondary Capital by the NCUA, is the Milwaukee Brewers against the Houston Astros, with the Brewers winning in a seven game classic.

October 7, 2021 at 9:55 am Leave a comment

Four Things You Need To Know To Start Your Credit Union Day

For the first time in a while, I am overflowing with news you need to know to start your credit union day. As long time readers know, what follows is a series of quick hits, any one of which would be worthy of its own blog on a quieter day.

Treasury Pushes For Expanded Reporting Responsibilities

Anyone who thought we were out of the woods after the House Ways and Means Committee approved a plan to pay for a $3.5 trillion spending package that did not include increased reporting requirements for banks and credit unions is mistaken. Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig have written letters urging Congress to include the proposal in the final budget package.

With the caveat that there has been no language officially proposed, the idea under consideration would mandate that financial institutions report gross report flows of income in and out of accounts that exceed $600.

Clearly this would impose an onerous new mandate on credit unions and alienate more than a few members. Stay tuned for more information from the Association.

How Was Your Examination Service?

The NCUA announced yesterday that federal credit unions will be asked to submit a post examination survey that will be administered by the NCUAs Ombudsman’s office as part of a pilot program.

If you have fantasies about using the survey to vent after a rough examination, you will be disappointed. The letter explains that “examination disagreements or reports of waste, fraud, or abuse should not be reported through the survey response.” At the risk of being branded a heretic, the industry spends way too much time obsessing over the examination process.  After all, disagreements are inevitable and it’s actually a sign the system is working.

FHFA Makes It Easier To Finance Investment Property

The Federal Housing Finance Administration and Treasury announced that they were suspending certain agreements entered into this past January which placed caps on the number of investment property mortgages that Fannie Mae and Freddie Mac could purchase. This is the latest in a series of moves by the new leadership at the FHFA to use the GSEs to more aggressively provide aid for homebuyers.

Acting Director Thomson discussed the changes at NAFCUs Congressional Caucus. In a closely related development, the FHFA is also proposing changes to the capital requirements for the GSEs.

Let The Redistricting Games Begin

Yesterday marked the first formal step in the once-a-decade political blood sport that is redistricting. By the time the process is complete, the Legislature will have approved new Congressional and Legislative Districts that will shape the direction of politics and policy for decades to come. This morning’s Times Union is reporting that the bipartisan commission designed to propose the initial redistricting plan has instead proposed two separate plans. One supported by Republicans, the other by Democrats. It boldly predicted that a partisan stalemate looms in New York redistricting, which is tantamount to Claude Rains’ character Captain Renault claiming to be shocked that gambling is taking place in a casino. 

September 16, 2021 at 10:14 am Leave a comment

Key Week for CUs and Congress

This may be the week when we find out if the Democrats’ spending plan will come to fruition or is destined to be the legislative equivalent of Novak Djokovic’s attempt to achieve the Grand Slam: a historic undertaking which crashed and burned.  Either way, the outcome could have important practical implications for your credit union.

For weeks now the Democrats have been touting the benefits of a $3.5 trillion spending plan and a closely related $1.5 trillion package of infrastructure upgrades. Telling people how you plan to spend money is the fun part of legislating; explaining to constituents whom among them is going to pay for the spending spree is quite another matter. Massachusetts Congressman Richard Neal, who chairs the Ways and Means committee was refreshingly honest in explaining over the weekend that he was reluctant to get too specific about paying for the proposals before getting a sense of what legislation could pass. House Democrats only have a three seat majority and he certainly does not want to be the person who makes vulnerable Democrats support controversial legislation which does not become law. This task became even more complicated when Senator Joe Manchin of West Virginia doubled down on his opposition to the size of the Democrat spending plan.

Nevertheless, several papers are reporting this morning that the Congressman has released a four page outline of legislation to pay for the plan so we are likely to see more specifics in the coming days.

According to CUNA, one proposal under consideration would help the IRS collect more taxes by imposing increased reporting requirements on financial institutions. Specifically, the IRS form 1099-INT would be expanded to include a report on the gross inflows and outflows of accounts and increase scrutiny of cash transactions. At this point, nothing has been formally put in writing but the proposal certainly sounds like one that would impose extensive new mandates on credit unions of all shapes and sizes. Imagine how much fun it would be parsing through proposed regulations in this area. Stay tuned.

Another budget issue under review this week involves increased funding for community development financial institutions.

David Baumann is reporting that today the House Financial Services Committee will be marking up legislation that would provide $10 billion to CDFIs to build or preserve more than one hundred and seventy thousand affordable homes.

September 13, 2021 at 9:34 am Leave a comment

Can Big Data Increase Home Ownership?

Good Morning, folks. The summer slumber is over and in case you missed it, the regulatory development that most intrigues me is Fannie Mae’s announcement that in a little more than a week from now it will start using a mortgage applicants’ history of consistently making rent payments to qualify first time home buyers for a mortgage.

Under the guidelines announced by the GSE on August 30th, borrowers must be able to document their rent payment history for the last 12 months. Acceptable documentation includes cancelled checks, bank statements, copies of money orders or other reasonable methods to document the timely payment of rent.

So why does this announcement intrigue me so much? One of the key emerging issues percolating in the Fintech/ banking industry is the extent to which the increasing availability of non-traditional data can and should be used to qualify lenders. A second key issue is what role the conserved GSE’s should play in the housing market?  This announcement has implications for both of these issues.

In announcing the use of the new criteria, Hugh Frater, Fannie Mae’s CEO, opined that this step would help address housing inequalities by making more African Americans eligible for home ownership. According to Frater approximately 20% of the US population has little or no credit history and the use of rent payment history is a safe and sound way of helping to address this issue. After all, as I have been told by many credit union underwriters, there are often members who are good lending risks even though their credit scores would indicate otherwise.

It remains to be seen just how positive an impact this expanded use of data will have. For example, should a member’s non-payment of rent be counted against her?

Furthermore, anytime new data is used to qualify borrowers there are of course new challenges to the application of fair lending laws. I hope that Fannie Mae keeps us updated on the impact that this change is having on the housing market.

September 7, 2021 at 9:23 am Leave a comment

New Governor Moves Quickly To Extend Foreclosure Protections

Good morning, Folks. New York Governor Hochul convened an Extraordinary Session yesterday in which the legislature extended foreclosure and eviction protections for individuals claiming COVID related hardships until January 15th of next year. The measures impact both state and federally chartered credit unions that start foreclosure actions against delinquent homeowners and businesses.

Notice that I did not say that the legislation simply extends New York’s eviction and foreclosure ban. In response to recent rulings by the Supreme Court, landlords and lenders now have the ability to challenge an individual’s assertion that they are delinquent because of a COVID related hardship. The hardship exception applies to mortgages that are held by state or federally chartered credit unions. It does not apply to mortgages held by GSE’s.

We will have to see how this new framework is implemented. But if your credit union is interested in pursuing this option it should start identifying cases where this new exception might be applicable.

Guidance Issued On Lending To Same-sex Couples

In another important move, the Department of Financial Services issued guidance detailing steps lenders should take to prevent lending bias when making loans to same-sex couples. DFS has been working on the guidance for weeks. I will be providing more information about its specifics in a future blog. This guidance just applies to state chartered entities and licensed institutions such as state chartered credit unions and mortgage CUSO’s.

Hochul Nominates New DFS Superintendent

The above guidance was issued the same day that the Governor announced that she had chosen Adrienne Harris to lead New York’s Department of Financial Services. Harris replaces Linda Lacewell who resigned when Governor Cuomo left office.

Judging by her resume, Harris, a Columbia law school graduate, has a broad range of experience. She has served as an economic advisor during the Obama administration and as an adviser to Fintechs.

New York State’s Superintendent has historically been among the highest profile state regulators in the country. She not only oversees the banking industry but the insurance industry as well.

September 2, 2021 at 9:33 am Leave a comment

Life After The CDC Eviction Ban

The Supreme Court yesterday ruled that the CDC exceeded its authority when it enacted a nationwide ban of evictions against tenants who claim to be suffering a COVID-19 related hardship.

The court’s ruling surprised absolutely no one who has been following the issue. Just weeks ago, the court signaled that a similar moratorium was most likely unconstitutional but allowed it to expire so that there was more time to distribute federal aid intended to help states like New York avoid the need for evictions.

The precise legal issue was whether the CDC had the regulatory authority to ban evictions absent Congressional action. The court explained that “it is indisputable that the public has a strong interest in combating the spread of the COVID–19 Delta variant. But our system does not permit agencies to act unlawfully even in pursuit of desirable ends…It is up to Congress, not the CDC, to decide whether the public interest merits further action here.”

The Court’s ruling put the focus squarely back onto the states. Although the Court recently invalidated a New York statute which prohibited evictions of individuals suffering a COVID-19 hardship, the Court’s emergency ruling was not a decision on the merits and the statute under review did not give landlords the ability to contest a hardship determination. 

Without further action by Congress the primary federal regulation of which credit unions have to be mindful is the CFPB’s regulation which takes effect on September 1st, mandating that servicers take additional steps to inform delinquent homeowners of loss mitigation options that may be available to individuals delinquent because of a COVID hardship. Crucially, unlike the eviction moratorium struck down by the Court, the CFPB’s new regulation does not mandate that specific relief be made available.

August 27, 2021 at 9:12 am Leave a comment

Another Important Foreclosure Case gives Lenders More Flexibility

A recent decision provides more clarity to New York’s Byzantine foreclosure process. For those of us who believe that the goal of foreclosure should be to ensure that the rights of homeowners are protected while at the same time ensuring that lenders can get access to homes that borrowers can no longer afford to be in, this is a good thing.

When you enter into a mortgage loan with a member, the member is agreeing to pay back the note in monthly installments.  If a member misses a payment, you can actually sue and demand payment for the past due installment, which would be a ludicrous waste of time.  Instead, a payment default is a violation of the repayment contract and the lender has the option of demanding that the member pay the full amount due on the mortgage note. New York has a six year statute of limitations for mortgage foreclosure actions. The six year time period starts when a bank or credit union makes an unequivocal demand on a delinquent homeowner to pay the entire amount due on a mortgage note. Since New York has one of the most intricate and time consuming foreclosure processes in the country, it is not uncommon for foreclosures to take several years to complete and there has been an explosion in litigation in which delinquent homeowners argue that the six years statute of limitations has expired.

As a result, a key issue is how and when a lender can stop the foreclosure clock from running out by withdrawing a demand for full payment of a delinquent mortgage loan. Earlier this year the Court of Appeals decided Freedom Mortgage Corporation v. Engel in which it clarified the circumstances under which lenders could deaccelerate a mortgage note on which a bank had made a demand for full payment. In making its ruling, the court made clear that lenders simply had to put borrowers on notice that they no longer were obligated to immediately pay the entire amount due on their mortgage.

Seems clear enough, but what happens when a homeowner can show that a bank or credit union’s decision to stop demanding full payment of the note was primarily motivated by a desire to simply keep the six years statute of limitations from running out? For example, in Milone v. US Bank a homeowner defaulted on a mortgage note on October 1, 2008 and a demand of full payment for the entire amount due was made in December of 2008. Fast forward to October 21, 2014 when the homeowner received a letter that the mortgage note was being deaccelerated and that its demand for immediate payment of the entire debt was withdrawn.  Instead, our homeowner simply had to start making the monthly installment of payments. 

But in March of 2015 the homeowner sued the bank claiming that it was entitled to have the mortgage note discharged because the six year statute of limitations had expired. The court agreed. It effectively ruled that a decision to halt a foreclosure action did not stop the six year statute of limitations when a financial institution’s primary motivation is not to cease demanding full payment of the debt but to simply stop the foreclosure clock.

Here is the good news.  In a recent decision, 53rd Street LLC v. U.S. Bank, the Court of Appeals for the Second Circuit flatly rejected this logic. So long as a lender unequivocally deaccelerates the amount due on a mortgage note, it has the option of commencing a subsequent foreclosure action, even if the subsequent foreclosure action is filed six years after the initial demand for full payment of the note.

August 18, 2021 at 9:47 am Leave a comment

SC Rules that New York’s Eviction Moratorium Goes Too Far

The Supreme Court on Thursday granted emergency relief to landlords challenging a New York State statute barring them from commencing eviction proceedings against tenants who certify that they are suffering a financial hardship as a result of COVID-19. Although the law in question was set to expire on August 31st, the Court’s decision could have important implications if and when the state chooses to take similar steps in the coming weeks or in response to a future economic downturn.

Part A of Chapter 381 of the laws of 2020 provided that individuals could avoid foreclosures by indicating that they were being harmed by the pandemic. A separate section of the bill which the Supreme Court’s decision did not address extended similar protections to homeowners facing foreclosure. In blocking New York State from enforcing this bill against landlords the court technically did not issue a decision on the merits of the case, but by granting the emergency order a majority of the court signaled that New York’s law was illegal. There was even a dissenting opinion.

In a terse explanation of its decision, the majority explained that New York’s statute violated the “longstanding teaching that no man can be a judge in his own case.” In other words, any future law seeking to block evictions has to give landlords the ability to show that a tenant is not suffering from a financial hardship.

Like I said, although this case dealt specifically with evictions, the same argument could easily be made as applied to New York’s foreclosure ban, also set to expire on August 31st, which provides no mechanism for mortgage holders to contest a homeowner’s financial hardship.

                                                Hochul Transition Picks Up Pace

New York’s Superintendent of the Department of Financial Services announced that she would be resigning on August 24th, the same day the Governor has indicated he will hand over power to Lt. Governor Kathy Hochul. Before becoming the Superintendent, Lacewell served as a top aide to the Governor and remained an active advisor.

As for the Governor-in-waiting, she spent Sunday morning appearing on two Sunday news shows demonstrating, yet again, that in politics a week really is a long time. Virtually overnight, she has catapulted from the lowest profile statewide position in New York State government to a nationally significant politician. 

August 16, 2021 at 9:19 am Leave a comment

Juneteenth Clarified For Compliance Purposes

Yours truly has a busy day today. But I wanted to give you a heads up on an announcement that I almost missed when it first came out. As I’m sure many readers of this blog recall, when President Biden signed a bill proclaiming Juneteenth a national holiday. The bill took effect immediately. As a result, as drafted, June 17th could not count as a business day for certain RESPA and TRID disclosures required in the federal law. Many a lender spent a long couple days reconfiguring disclosures.

To its credit the CFPB has issued this interpretive guidance clarifying compliance issues for this period. Specifically, in its guidance the CFPB stipulates that “in the context of the 2021 Juneteenth Federal holiday and the affected closed-end rescission and TRID provisions, if the relevant time period began on or before June 17, 2021, then June 19, 2021 is a business day for purposes of the specific business day definition. If the relevant time period began after June 17, 2021, then June 19, 2021 is a Federal holiday for purposes of the specific business day definition.”

I would keep this guidance in the file, you know someone down the road is going to make an issue out of this. On that note, enjoy your weekend and I’ll be back on Monday.

August 13, 2021 at 9:08 am Leave a comment

More Foreclosure Mandates Coming Your Way

This week the Governor signed legislation imposing additional requirements on lenders foreclosing on residential property in New York State but did so only after citing technical flaws with the bill that the Legislature has agreed to address. The measure takes effect on January 1st.

Let’s review New York’s alphabet soup of mortgage requirements. Section 6-l and 6-m impose additional disclosure requirements for high-cost and subprime loans. Section 595-a imposes general requirements on mortgage lenders in New York, such as a prohibition against misrepresenting material fact.  But this statute has never been part of New York’s foreclosure process.

What is clear is that the intent of this Legislation is to mandate that all foreclosing parties must affirmatively state that they have possession of both the note and the mortgage on which they are seeking to foreclose. As originally drafted the legislation would have imposed all of 6-l and 6-m’s requirements on residential mortgages in New York State. This would have meant, for example, that you would have been required to provide mortgage escrows for all of your homeowners.

Frankly, even with the amendments, it is still challenging to figure out precisely who has what obligations under this new measure. Hopefully the amendments that are made by the legislature will clarify precisely what provisions of New York Law now apply to all mortgages in New York that become subject to a foreclosure. For example, as drafted a lender not only has to comply with the certain provisions of 6-l and 6-m but also section 595-a.  We will keep you updated on the proposed legislative fix.

August 5, 2021 at 9:19 am Leave a comment

Older Posts


Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 741 other followers

Archives