Mortgage Lending, Servicing + Banking

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In this episode of The Consumer Finance Podcast, host Chris Willis is joined by Troutman Pepper Locke Partner Lori Sommerfield and Relman Colfax Co-Managing Partner Stephen Hayes for a candid discussion about how redlining has traditionally been defined, how redlining was defined and applied during the Biden administration, and how it may return under a future administration or in cases brought by state regulators or private litigants. This episode further explores the tension between the standards set forth in enforcement actions and those applied in supervisory examinations, and the role of statistical analysis and HMDA data in redlining cases. The podcast also tackles issues like digitally targeted advertising and what shifting regulatory priorities under the current administration may mean for future redlining enforcement risk, offering a balanced look at where redlining law has been — and where it may be headed next.

On this episode of FCRA Focus, Kim Phan is joined by Rachel Kelley and Alisha Sears from the Mortgage Bankers Association to discuss the Homebuyers Privacy Protection Act, which amends the Fair Credit Reporting Act to address residential mortgage trigger leads with the goal of curbing abusive calls while preserving meaningful competition. This law now requires both a firm offer of credit and documented consumer authorization, with limited exceptions for current originators, servicers, and depository institutions/credit unions holding an account. They discuss how the law places the primary obligations on consumer reporting agencies, what lenders should expect around consent certifications, the Government Accountability Office study on trigger-leads, and the upcoming effective date.

On November 25, the New York Court of Appeals issued a pair of decisions — Art. 13 LLC and Van Dyke — that provide definitive guidance on the hotly contested and heavily litigated issue of the Foreclosure Abuse Prevention Act’s (FAPA) reach. In both cases, New York’s high court confirmed that FAPA applies retroactively to foreclosure actions where a final judgment of foreclosure and sale has not been enforced, and rejected all constitutional challenges to the statute.

On November 10, the Tenth Circuit reversed the district court’s preliminary injunction in the challenge to Colorado’s H.B. 23‑1229, holding that Colorado may enforce its Uniform Consumer Credit Code (UCCC) interest‑rate caps for loans to Colorado borrowers even when originated by out‑of‑state, state‑chartered banks. Interpreting the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) § 525’s opt‑out phrase “loans made in such State,” the court concluded it encompasses loans in which either the lender or the borrower is located in the opt‑out state. Because Colorado has opted out, § 1831d no longer preempts Colorado rate caps for loans from out‑of‑state state banks to Colorado residents, and the preliminary injunction “falls apart.”

On October 29, the Consumer Financial Protection Bureau (CFPB or Bureau) officially rescinded its rule requiring nonbank entities to register certain agency and court orders with the Bureau. This decision follows a proposal made earlier this year (discussed here), which highlighted concerns about the regulatory burden and costs imposed on nonbank entities, which could ultimately affect consumers.

In a significant development for lenders and borrowers alike, on October 6, the U.S. Supreme Court declined to review the Fox decision, leaving unresolved questions about the retroactive application of the Foreclosure Abuse Prevention Act (FAPA). This decision has shifted the focus to the New York State Court of Appeals where oral argument was heard on October 16, and potentially to the U.S. Court of Appeals for the Second Circuit.

Recently, the U.S. Department of Housing and Urban Development (HUD) issued two memoranda that clarify HUD’s role in enforcing the Fair Housing Act (FHA), explain how future enforcement efforts will proceed, and officially rescind several guidance documents related to disparate impact and redlining, among other topics.

On September 5, President Trump signed into law the Homebuyers Privacy Protection Act (HPPA) (H.R. 2808). This bipartisan legislation, sponsored by Representatives John Rose (R-TN) and Ritchie Torres (D-NY), aims to safeguard homebuyers’ personal financial information.

As a follow up to our May post, FAPA in the Spotlight Again: Second Circuit Renews Call for NY Court of Appeals Review, the New York Court of Appeals has finally agreed to consider New York’s Foreclosure Abuse Prevention Act’s (FAPA) reach and constitutionality in the case of Art. 13 LLC. Interestingly, on the same day the Court of Appeals accepted the Second Circuit’s request, New York’s highest court also agreed to review a separate decision from the First Department, which found that it is constitutional to apply the FAPA amendments retroactively in the case of Van Dyke. Both appeals stem from actions seeking to cancel and discharge mortgages, where the New York trial courts previously held that the statute of limitations for foreclosure had expired.

On July 10, the U.S. Department of Housing and Urban Development (HUD) and the Office of Management and Budget (OMB) jointly announced the effective disbandment of the interagency Property Appraisal and Valuation Equity (PAVE) Task Force, a Biden-era initiative aimed at addressing discrimination in real estate appraisals through a whole of federal government approach. The announcement states that this decision to eliminate “the core policies of the PAVE Task Force” is in response to President Trump’s Executive Orders, including Ending Radical and Wasteful Government DEI Programs and Preferencing and Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis.