Posts filed under ‘New York State’

Early Lessons You Need to Learn When Dealing With Vacant Property

In 2016, the legislature decided that it would be smart to make larger banks and credit unions responsible for maintaining abandoned property before the property was even foreclosed on. In return, for this absurd requirement, the legislature agreed to expedite the foreclosure process for institutions holding mortgages on abandoned property.

Yours truly has always been somewhat skeptical that the fast track reforms would work but, as the first cases under this new statute begin to hit the dockets the early returns are encouraging. In fact, I’m going to highlight a recent case that I would suggest those of you responsible for managing foreclosure activity use as a template as you manage the ridiculous number of obstacles that New York continues to put in the way when it comes to foreclosing on property that borrowers can’t afford. And remember, even if you’re a credit union that doesn’t have to comply with the property maintenance requirements, these cases demonstrate how important it is for your credit union to still follow the appropriate procedures for demonstrating that a mortgage property has been abandoned in order for your credit union to be able to take advantage of this new expedited procedure.

The most recent example I’ve seen is TEACHERS FED. CREDIT UNION v. GERGEL, 2017 NY Slip Op 51642. It’s impossible to summarize the case in less than five blogs not because the issues are so complicated, after all we are dealing with someone who decided not to pay a mortgage they owed and vacate their house, but because of the myriad of regulatory requirements with which the credit union and similarly situated lenders must comply. For example, the credit union had to document that a foreclosure settlement conference was held in which the defendant did not appear; the plaintiff could then move for an expedited foreclosure, but only after the defendant’s time to respond to the foreclosure lawsuit had expired; the credit union and court both properly served the appropriate notices and the credit union had to prove that it complied with the detailed procedures for determining that the property was in fact abandoned.

It’s hard to believe that this is an improvement over New York’s existing system but in a state where it is not uncommon for foreclosures to take an excess of four years, the fact that the credit union was able to file this lawsuit on October 3, 2016 and receive the go ahead to sell the property is a marked improvement.

Does this mean that New York doesn’t have to reform its foreclosure process? Absolutely not. For one thing, the improvements made by the legislature just apply to vacant and abandoned property. For another, even this properly applied application of the statute demonstrates how many moving pieces have to align before even a simple foreclosure can go forward. Judges have to be available to hear the cases, similar if not downright duplicative notices have to be sent and when we see the next upsurge in foreclosures, the system will once again be overwhelmed.

The simple truth is that the existing foreclosure system has provided delinquent homeowners with so many procedural protections that there is no longer an appropriate balance between the understandable desire to make sure that someone truly should lose their house and the need to keep property values stable by making foreclosures a feasible option.

Here are some additional recent cases you may want to take a look at:U.S. Bank Tr., N.A. v. Rodriguez, No. 605405/2017, 2017 BL 432109 (N.Y. County Ct. Dec. 01, 2017); JPMorgan Chase Bank, N.A. v. Martin, No. 14017/2011, 2017 BL 406184 (Sup. Ct. Oct. 26, 2017)

December 12, 2017 at 9:23 am Leave a comment

New York Forges Ahead With More State Charter Improvements

Image result for student bankingI have more good news to report on the state-charter front. Yesterday, New York State Superintendent Maria Vullo gave final approval to a request by state-chartered credit unions that they be able to operate student branches to the same extent as their Federal brethren. This is a huge improvement for those credit unions interested in helping kids learn the basics of banking. Most importantly, under the wild card approval, students who are members of credit unions as a result of a student branch won’t lose their membership just because they graduated. Here is a great joint agency guidance on this issue a couple of years ago.

There Are No Longer Banks Too Big To Fail

That’s the somewhat shocking assessment of Jerome Powell, President Trump’s nominee to head the Federal Reserve Board in testimony before the Senate Banking Committee yesterday.

Perhaps it’s because we’re in a magical season when hope seems to spring eternal, but it’s amazing to me that any responsible banking regulator can say this with a straight face. Look at the statistics. The big banks today are bigger than they were a decade ago and if anything, the economy is more, not less dependent on them. In fact, the greatest political failure of the last decade has been the unwillingness of a political system to take on a banking system run amuck.

Statements like these have real consequences. There will be another banking crisis and the American public needs to know that as things currently stand, they are just as likely to have to bail out the big guys as they were in 2008.

On that happy note, enjoy your day.

November 30, 2017 at 8:31 am Leave a comment

New York On Verge of Historic Power Shift…Again

Image result for senator jeff kleinThis headline might be a tad premature but it appears that the State Senate Democratic Caucus headed by Andrea Stewart-Cousins and the 8 member Independent Democratic Caucus by Senator Jeff Klein have reached a preliminary agreement to unify, potentially paving the way for cutting Republicans out of holding any power in the state legislature.

How big of a deal is this? Since the end of WWII, Democrats have held power without Republican help only briefly in 1964, 2008, and 2010. In the latter two cases, Republicans maintained control by entering into power sharing agreements with a group of breakaway Democrats.

Yesterday, Senator Jeff Klein issued a statement in which he indicated that the Democratic factions had come to an agreement about how to work together. In a statement released yesterday evening, “The State Party’s assurance that our progressive legislative agenda will be advanced is a victory for the people of New York,” Klein said. “I look forward to implementing the terms that have been outlined in yesterday’s letter.”

Still this appears to be an agreement to agree. The new power sharing arrangement is reportedly scheduled to take effect only after the state budget is negotiated. Currently there are 23 Democrats in the traditional Senate Democratic Caucus and 8 Democrats in the breakaway IDC. Simcha Felder is a Democrat who currently caucuses with the Republicans but has indicated in the past that he is willing to work with whatever party can most help his constituents. With special elections taking place next year, a unified Democratic conference should be able to take control without needing Republican help, but then again we have been here before.

NY Credit Union Fined By DFS

New York’s Department of Financial Services announced that The United Nations Federal Credit Union and Lloyds of London were fined $1.47 million for marketing and offering life insurance tied to the credit union’s credit and debit card program without being appropriately licensed. Here is some additional information.

Round One Goes To Mulvaney

Also yesterday evening, a Federal District Court Judge refused to block Mick Mulvaney from taking over as the interim head of the CFPB while continuing to serve as the Director of the Office of Management and Budget. I haven’t seen a transcript of the proceedings yet but according to this article, the Judge explained “Nothing in the statutes prevents Mr. Mulvaney from holding both of these positions.” Hopefully this silliness can end soon and we can start concentrating on working with Mr. Mulvaney to bring much needed mandate relief to credit unions.

November 29, 2017 at 9:11 am Leave a comment

Two Things You Need To Know Before Thanksgiving

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I’m exaggerating a little with the headline but I’m going on hiatus until next Monday and there are a couple of things I thought you should know about before then.

Mulvaney To Be CFPB Director?

First, if CBS news is correct, former conservative Congressman and current Office of Management and Budget Director Mick Mulvaney will soon be named the interim director of the CFPB. This is big news. Mulvaney made a name for himself as one of the most fiscally conservative members of Congress. This morning, a lot of his quotes bashing the CPFB are getting attention. But for astute credit union junkies, or people paid to follow this stuff, Mulvaney’s name should ring a bell for another reason. He was one of the harshest critics of former NCUA Chairman Debbie Matz’s obstinate refusal to hold public budget hearings. She even suggested at one point that lobbyists pushing for these hearings were not really representing the interest of credit unions. Here is part of his response that I find most amusing: “Are you a CU member? I am,” continued Mulvaney. “And I think they are representing me when they ask for those things. As a member of the credit union, I like the fact the credit union is trying to guard my money and be conservative with that.”

Suffice it to say that if Mulvaney takes hold of the CFPB, we are in for some interesting times.

NY To Propose Work Scheduling Rules

With the caveat that I am not an employment law lawyer, after talking to a workmate who actually does know this stuff (aka Chris Pajak), I’ve decided to give you a head’s up about regulations to be posted by the Department of Labor on November 22, 2017. NY has a 45 day comment period.

This regulation is the accumulation of a series of hearings held by the New York State Department of Labor over the next several months. Employee groups complain that low wage employees are increasingly being given less than a week’s notice of their schedule, making it difficult to make arrangements for accommodations like childcare and these employees often show up for work only to be sent home. Generally speaking, under New York’s existing “Report To Pay” rules, there are circumstances when employers are required to pay employees for reporting to work even if the employer has no work for them. Specifically, a non-exempt employee is entitled to the lesser of four (4) hours of pay or the pay he/she would have received had he/she worked the shift.

On that note, I will be back on Monday. Enjoy your Thanksgiving and thanks for reading.

November 21, 2017 at 7:15 am Leave a comment

3 Things You Need To Start Your Credit Union Day

  1. New York City Employment History Ban takes effect. This one just impacts the credit unions in NYC but it’s the type of thing that could get consideration in next year’s legislative session. Yesterday, a local law took effect banning employers in New York City from inquiring about an applicant’s compensation history. Specifically, Local Law No. 67 prohibits employers from inquiring about the salary history of a job applicant or relying on salary history in determining salary benefits or other compensation including in the negotiation of contracts. The draft is provided that where a job applicant “voluntarily and without prompting” discloses his or her salary history, then an employer may consider past compensation.  I can see the lawsuits already. Captain Obvious here: for those of you in the city who haven’t already provided additional training to persons who conduct job interviews on your behalf, do so ASAP.
  2. CFPB introduced a new tool to help track mortgage delinquencies. Love it or hate it, what the CFPB does, it tends to do well. Yesterday it introduced a new part of its website that will allow people to track mortgage delinquency rates on the local, state and national levels. I can’t help but think that if such a tool had been available about 11 years ago, more policy makers and lenders would have been better positioned to prevent the worst of the Great Recession.
  3. Here’s a weird story courtesy of the CU Times that I looked into: The Illinois Division of Financial Institutions recently issued a cease and desist order against 1st Provision Credit Union located in Ottawa, Illinois. What makes this story odd is that 1st Provision is not chartered by either the state of Illinois or NCUA. Is this a case of incredibly sloppy paperwork or is there more to come about this story?

 

November 1, 2017 at 8:55 am Leave a comment

Wacky Week Ahead In D.C. Will Impact CU’s

Image result for Washington DCFor better or worse, this is shaping up to be one of these key weeks in Washington that will impact your credit union operations. Here’s what you should be keeping an eye on:

First, President Trump used this somewhat bizarre video to announce that he would shortly be picking his choice to be the next Chairman of the Federal Reserve. Don’t fool yourself, the Federal Reserve Chairman is the second most powerful person in Washington. And the selection of a replacement for Janet Yellen, whose term expires in February 3, 2018, is particularly important given the many uncertainties that surround the economy. Rarely have there been so many good arguments for taking divergent paths on interest rates.

Second, the tax battle will take center stage as the House leadership unveils a tax legislation on Wednesday. Now we get to see who wins and who loses, setting off a frenzy of lobbying, the likes of which we haven’t seen since the last major tax overhaul in the mid 80’s.

Third, all this is likely to have a unique impact on New York. New York Republican representatives will play a pivotal role in the upcoming House debate. The budget resolution passed by the House on Thursday includes the elimination of tax deductions for state and local taxes. These provisions clearly would hit high tax states like New York, the hardest. It’s not a coincidence that seven House Republicans voted against the plan, including Hudson Valley Congressman John Fasso, Central New York Congresswoman Claudia Tenney, and Veteran Long Island Congressman Peter King. Western New York Congressman, Tom Reed and Chris Collins provided crucial yes votes for the resolution which passed 216-212.

Depending on how things play out in Washington, you may also see pressure grow for legislators to return to Albany before January. The impact that a Republican controlled Congress could have on red state New York has been a question that has been hanging over Albany for several months now. In fact, this year’s state budget even included a provision allowing New York’s Budget Director to adjust spending during the fiscal year to account for a significant loss of federal aid. If federal support is reduced by $850 million or more.

Fourth, all this is taking place against the backdrop of a special counsel investigation and unprecedented attacks between a sitting President and members of his own party. All this makes for an extremely unstable political environment which emphasizes the need for industry coordination on both the state and federal level.

October 30, 2017 at 9:00 am Leave a comment

Treasury Body Slams CFPB’s Arbitration Analysis

The CFPB proudly proclaims that it is a data driven regulator for the 21st Century. So you can bet it went apoplectic yesterday when it received a Treasury analysis of its arbitration rule. The report is a well-reasoned explanation of why the CFPB over-stated the value of class action lawsuits and did so at the expense of financial institutions and their members who will ultimately pay the cost for frivolous class action litigation.

In the Dodd-Frank Act, Congress authorized the CFPB to ban the use of arbitration agreements in consumer financial contracts if it concluded that such restrictions were in the public interest and for the protection of consumers. The Bureau responded to this mandate with a 2015 report that laid the ground work for its rule earlier this year banning arbitration clauses that prohibit consumers from joining class action lawsuits.

What makes the report particularly damning is that it uses the CFPB’s own analysis to demonstrate how flawed the CFPB’s reasoning is. For example, according to the Bureau’s own data, only 13% of consumer class action lawsuits filed result in class-wide recovery—meaning that in 87% of cases, either no plaintiffs or only named plaintiffs receive relief of any kind. In addition, on average, only 4% of plaintiffs entitled to claim class settlement funds actually do so. This suggests that consumers value class action litigation far less than the Bureau believes they should. In fact, according to the Treasury, plaintiffs who do receive claims from class action settlements receive slightly more than $32.

The Treasury’s report amounts to a legal argument that the Bureau did not comply with its legal obligations when it decided to ban the use of arbitration clauses that prohibit class action lawsuits by consumers in financial transactions. In fact, according to the Treasury, “The Bureau has not made a reasoned showing that increased consumer class action litigation will result in a net benefit to consumers or to the public as a whole. Based on the Bureau’s own data, it is far more likely that the Rule will generate massive economic costs—borne by businesses and consumers alike—that dwarf the speculative benefits of the Bureau’s theorized increase in compliance.”

New York Releases Paid Family Leave Form

I just wanted to give you a heads up, courtesy of this blog by Bond, Schoeneck & King that New York State released the forms to be used by employees applying for paid family leave under New York State law. I get the sense that some of you are pulling the blanket back over your head when it comes to getting ready for this new mandate, but this of course is not a good idea. Especially for your smaller credit unions, which could experience an increase in the number of employees that have to be replaced on a temporary basis.

 

October 24, 2017 at 9:44 am Leave a comment

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Authored By:

Henry Meier, Esq., 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.

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