Ballard Spahr
Legal Alert

Mortgage Banking Update - July 6, 2023

July 6, 2023
In This Issue:

 

Biden Administration Continues Efforts to Crackdown on “Junk Fees”

During his remarks in a meeting with private sector companies on June 15, 2023, President Biden described junk fees as “these hidden charges that companies sneak into your bill to make you pay more and without you really knowing it initially.” President Biden was joined by representatives from Live Nation, SeatGeek, xBk, Airbnb, the Pablo Center at the Confluence, TickPick, DICE, and the Newport Festivals Foundation — companies that currently provide or have committed to providing all-in pricing in response to the President’s call to action on “junk fees” in his State of the Union.

After taking credit for “reducing overdrafts by $5.5 billion a year and bounced checks cost by another $2 billion a year,” the President turned his focus on the ticketing and lodging industries and stated the solution is “all-in pricing.” All-in pricing is “where companies fully disclose their fees upfront when you start shopping so you’re not surprised at the end when you check out.” Quite notably, other fees that President Biden has attacked as “junk fees,” like overdrafts and credit card late fees, are clearly out of scope of his “junk fee” definition. Overdraft and credit card late fees are not hidden charges. They are disclosed upfront in all-in pricing prior to account opening using model disclosures set forth in Regulation E and Regulation Z respectively. Additionally, overdraft and credit card late fees are reasonably avoidable by consumers.

During his State of the Union, President Biden announced his administration “is also taking on ‘junk’ fees, those hidden surcharges too many businesses use to make you pay more” and took credit for “reduc[ing] exorbitant bank overdraft fees.” In October 26, 2022, President Biden appeared at the White House with Rohit Chopra, CFPB Director, and Lina Khan, FTC Chair, to announce that his Administration is taking action to eliminate all “junk fees,” such as fees for deposited checks that are returned unpaid, surprise banking overdraft fees, hidden hotel booking fees and termination charges to stop people from changing cable plans.

In addition to the efforts by the CFPB and FTC to attack “junk fees,” the Department of Transportation (DOT) proposed a rule in September 2022 that would require airlines to disclose all of their fees, from baggage fees to wireless internet to seat changing fees, up front when you’re first comparing prices. The Federal Communications Commission (FCC) finalized a rule in November 2022 to require cable and internet providers to list fees and services up front with an easy-to-read consumer friendly label.

On March 21, 2023, the White House convened a bipartisan panel of leading scholars and business leaders to discuss the economic case in support of the Biden Administration’s efforts to crack down on “junk fees” inviting scholars, practitioners and representation from 16 agencies, including DOT, CFPB, FTC, FCC, and HUD, to discuss “How Junk Fees Distort Competition.” In prepared remarks delivered by Director of the National Economic Council Lael Brainard, claimed that junk fee regulation is smart economics because “[j]unk fees weaken competition, penalize honest businesses that want to be transparent up front about the all-in price, and lead to a race to the bottom.” After discussing drip pricing (where additional costs are “dripped in” as the consumer goes through the shopping process) in concert tickets and food delivery, hotel report fees, and mandatory apartment fees, the conversation shifted to bank wire fees. The written materials stated that banks typically charge $10-$35 for incoming and outgoing wires when the actual cost to the bank from the Federal Reserve through FedWire cannot exceed $0.92. This Fed cost does not include processing and other fees that a bank may pay to an intermediary bank for the wire. The written materials further stated that “[a] consumer is typically captive at the moment they need to send or receive a wire transfer and have no choice but to pay the fee, as it would be costly and time-intensive to move their banking relationship to another bank with lower fees.”

Kristen E. Larson

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CFPB Files Brief With Seventh Circuit in Appeal From District Court Ruling in Townstone Mortgage That ECOA Only Applies to Applicants

The CFPB has filed its opening brief in its appeal to the U.S. Court of Appeals for the Seventh Circuit from the district court’s decision in the CFPB’s enforcement action against Townstone Mortgage (Townstone). In the case, the district court ruled that a redlining claim may not be brought under the Equal Credit Opportunity Act (ECOA) because the statute only applies to applicants.

The CFPB’s lawsuit against Townstone represented the Bureau’s first ever redlining complaint against a nonbank mortgage company. In its complaint, the CFPB alleged violations of the ECOA and Consumer Financial Protection Act. The U.S. District Court for the Northern District of Illinois granted Townstone’s motion to dismiss the CFPB’s complaint on the grounds that the ECOA applies to applicants and not to prospective applicants.

While the ECOA only refers to applicants, Regulation B provides that a “creditor shall not make any oral or written statement, in advertising or otherwise, to applicants or prospective applicants that would discourage on a prohibited basis a reasonable person from making or pursuing an application.” (emphasis added.) The CFPB argued that the court, applying the Chevron framework, should defer to its interpretation of the ECOA in Regulation B.

Since the U.S. Supreme Court’s 1984 decision in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., the “Chevron framework” has typically been invoked by courts when reviewing a federal agency’s interpretation of a statute. Under the Chevron framework, a court will typically use a two-step analysis to determine if it must defer to an agency’s interpretation. In step one, the court looks at whether the statute directly addresses the precise question before the court. If the statute is ambiguous or silent, the court will proceed to step two and determine whether the agency’s interpretation is reasonable. If it determines the interpretation is reasonable, the court will ordinarily defer to the agency’s interpretation.

The district court, applying step one of the Chevron framework, concluded that the “plain text of the ECOA . . . clearly and unambiguously prohibits discrimination against applicants, which the ECOA clearly and unambiguously defines as a person who applies to a creditor for credit.” As a result, the court concluded that it “need not move on to the second step of the Chevron analysis because it is clear that the ECOA does not apply to prospective applicants.” (Internal quotation marks and citations removed.)

In its brief filed in the Seventh Circuit, the CFPB makes the following key arguments in support of reversal of the district court’s decision:

  • Under step one of the Chevron framework, the Seventh Circuit should conclude that Congress has clearly spoken to the precise question at issue in this case–whether, consistent with the ECOA, Regulation B can prohibit discriminatory discouragement. In delegating ECOA rulemaking authority to the Federal Reserve Board, Congress specifically intended the Board (and now the CFPB) to regulate conduct not specifically mentioned in the ECOA if the failure to regulate would frustrate the ECOA’s purpose or permit evasion of the ECOA. Regulation B has expressly protected prospective applicants from discriminatory discouragement since 1975 and Congress has never repudiated this interpretation of the ECOA. Congress evidenced its intent to protect prospective applicants by amending the ECOA in 1991 to add a referral provision that states specified agencies shall “refer [a] matter to the Attorney General whenever the agency has reason to believe that 1 or more creditors has engaged in a pattern or practice of discouraging or denying applications for credit in violation of section 1691(a) of this title.”
  • Even if the Seventh Circuit concludes that Congress has not specifically addressed the question at issue, Congress has not foreclosed the Bureau’s interpretation of Regulation B. Under the second step of the Chevron framework, the Seventh Circuit should find that Regulation B’s prohibition on the discouragement of prospective applicants is reasonable because it furthers the purpose of the ECOA to prohibit discrimination in credit transactions. “Absent a prohibition on discouragement, a discriminating lender could easily frustrate the intent of Congress by discouraging applications on the basis of race, sex, or any of the other protected categories listed in section 1691(a). Indeed, there may be no more obvious way to frustrate the central purpose of ECOA than by discouraging prospective applicants.”

The Supreme Court recently agreed to hear a case next Term (Loper Bright Enterprises, et al. v. Raimondo) in which the petitioners are directly challenging the continued viability of the Chevron framework. There is considerable speculation that the Court’s conservative majority will curtail, if not overrule, Chevron. Accordingly, the Seventh Circuit might defer any ruling in Townstone pending the Supreme Court’s decision in Loper. (To listen to our recent podcast episode in which we discuss Loper, click here.)

Richard J. Andreano, Jr. & John L. Culhane, Jr.

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FTC and Consumer Groups File Amicus Briefs in Seventh Circuit in Support of CFPB’s Appeal From District Court Ruling in Townstone Mortgage That ECOA Only Applies to Applicants

The FTC has filed an amicus brief in support of the CFPB’s appeal to the U.S. Court of Appeals for the Seventh Circuit from the district court’s decision in the CFPB’s enforcement action against Townstone Mortgage (Townstone). In the case, the district court ruled that a redlining claim may not be brought under the Equal Credit Opportunity Act (ECOA) because the statute only applies to applicants.

In its brief, the FTC makes the following principal arguments for why the district court’s decision should be reversed:

  • The ECOA’s stated purpose is “to require that financial institutions and other firms engaged in the extension of credit make that credit equally available to all credit-worthy customers without regard to [whether a customer is a member of a protected class.]” The ECOA provides that the CFPB (previously the Federal Reserve Board) “shall prescribe regulations to carry out the purposes of [the ECOA]. These regulations may contain but are not limited to such classifications, differentiation, or other provision…as in the judgment of the Bureau are necessary or proper to effectuate the purposes of [the ECOA], to prevent circumvention or evasion thereof, or to facilitate or substantiate compliance therewith.” The prohibition of discouraging credit applications from protected classes is an obvious and essential method of preventing evasion of the ECOA. As such, the prohibition falls within the CFPB’s mandate to further the ECOA’s purpose and prevent its evasion.
  • By amending the ECOA to require enforcement authorities to refer to the Attorney General cases where a creditor has engaged “in a pattern or practice of discouraging or denying applications in violation of [the ECOA],” Congress affirmed that discouragement violates the ECOA.
  • The district court’s holding “would greenlight egregious forms of discrimination so long as they occurred ‘prior to the filing of an application.’”

In addition to the FTC, amicus briefs in support of the CFPB have been filed by a variety of consumer groups including the National Consumer Law Center, the National Fair Housing Alliance, and the American Civil Liberties Union.

John L. Culhane, Jr. & Richard J. Andreano, Jr.

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CFPB Files Opposition to Preliminary Injunction Motion in Lawsuit Challenging Section 1071 Final Rule

The CFPB has filed its opposition to the motion seeking a preliminary injunction filed by the plaintiffs in the lawsuit challenging the validity of the CFPB’s final rule implementing Section 1071 of the Dodd-Frank Act (Rule). The plaintiffs in the amended complaint are the Texas Bankers Association (TBA), the American Bankers Association (ABA), and Rio Bank, McAllen, Texas.

The amended complaint alleges that the Rule is invalid because the CFPB’s funding structure is unconstitutional and because portions of the Rule also violate various requirements of the Administrative Procedure Act. The plaintiffs’ constitutional argument is that because the CFPB’s funding structure violates the Appropriations Clause, the Rule is invalid and should be vacated based on Community Financial Services Association of America Ltd. v. CFPB in which a Fifth Circuit panel held that the CFPB’s funding is unconstitutional. The U.S. Supreme Court has agreed to review the CFSA decision in its next Term. In their preliminary injunction motion, the plaintiffs ask the court to enjoin the Rule and stay the compliance dates and to keep the preliminary injunction in place pending the Supreme Court’s decision in CFSA.

In opposing the preliminary injunction motion, the CFPB argues:

Standing/venue. The plaintiffs have not established their standing for preliminary relief or that venue is proper in the Southern District of Texas because:

  • Although Rio Bank alleged in the amended complaint that it made 409 small business and agricultural loans in 2022, it has failed to establish or even allege that any of these loans meet Rule’s definition of a covered credit transaction. Even assuming that at least 100 of such loans were covered transactions, Rio Bank would only be covered by the Rule if it also originates at least 100 covered transactions in 2023. Rio Bank does not assert that it has done so or even that it expects to do so. Accordingly, Rio Bank has failed to establish that it will be subject to the Rule and thus has not established standing for preliminary relief.
  • While TBA and ABA can proceed on behalf of their members under the doctrine of associational standing, neither TBA nor ABA have offered any specific facts to establish that at least one identified member has suffered or will suffer harm as a result of the Rule.
  • The plaintiffs’ failure to provide the details needed to establish standing not only deprives the court of the ability to assess its jurisdiction but also makes the court unable to assess its propriety as a venue. The plaintiffs primarily rely on Rio Bank’s location in claiming that venue in the Southern District of Texas is proper. However, the plaintiff on whom venue is based must have standing to sue. Because the plaintiffs have not met their burden of establishing that a plaintiff residing in the Southern District of Texas has standing, they also have not shown that venue is proper in the Southern District of Texas.

Requirements for preliminary relief. Even if the plaintiffs have established standing, they have not carried their burden on all four requirements for preliminary relief because:

  • None of the plaintiffs have provided specific evidence establishing that they will be imminently harmed without the preliminary relief they seek. Rio Bank stated that it has already begun compliance preparations and estimated that its related costs will be at least $20,000 for the remainder of 2023. Even assuming Rio Bank will be subject to the Rule, the Bank did not explain why it must expend those resources now rather than later on. Accordingly, the Bank is not entitled to preliminary relief based on alleged injuries from expenditures without having shown that those expenditures could not be deferred until later. TBA stated that some banks have been advised by consumer compliance experts to begin preparing for the Rule immediately and estimated costs of approximately $100,000 will be incurred by each of its member banks in preparing to comply. However, TBA did not identify any particular member that it believes is facing irreparable harm or any specific costs that a member bank is currently incurring nor did it attempt to establish that it is necessary for a member bank to incur these costs now rather than at some future time. ABA stated that it has advised its members to begin implementation immediately and that some members have begun doing so. However, it also failed to identify any specific costs that any particular member is required to incur now, as opposed to in the future.
  • The balance of equities weighs against preliminary relief and an injunction is not in the public interest. Rather, there is a strong public interest in Section 1071’s requirements coming into effect without undue delay so that small businesses can begin to receive the benefits that Congress intended them to receive from Section 1071.
  • Even if the plaintiffs can establish a likelihood of success on the merits of their constitutional challenge, this is not enough to justify preliminary relief. To be entitled to preliminary relief, the plaintiffs must carry the burden of persuasion on all four requirements for preliminary relief.
  • If the court concludes that the plaintiffs are entitled to preliminary relief, such relief should be appropriately tailored by limiting it to those plaintiffs or their members who the plaintiffs have shown would be irreparably harmed without such relief. In addition, any preliminary relief granted by the court should terminate automatically upon a reversal by the Supreme Court in CFSA.

John L. Culhane, Jr. & Richard J. Andreano, Jr.

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CFPB Files Amicus Brief in Support of Private Plaintiffs in Reverse Redlining Lawsuit

The CFPB has filed an amicus brief in the U.S. Court of Appeals for the Second Circuit in a private lawsuit brought by a group of eight Black and Hispanic plaintiffs who alleged that the named defendants, which included a bank and its affiliated mortgage company, violated the Equal Credit Opportunity Act (ECOA) and other laws by targeting Black and Hispanic borrowers and neighborhoods with predatory mortgage loans.

In Robert Saint-Jean et al. v. Emigrant Mortgage Co. et al., filed in a New York federal district court, the plaintiffs had obtained mortgage loans from the defendant mortgage company. A jury found that the defendants violated the ECOA and awarded compensatory damages to six of the plaintiffs. The jury did not award damages to two plaintiffs because they had released their claims pursuant to a waiver provision in a loan modification agreement.

Following the trial, both sides filed post-trial motions. The defendants asked the court to overturn the liability verdict and damages award while the plaintiffs asked the court to find the waiver provision signed by two of the plaintiffs to be invalid. In ruling on the motions, the district court upheld the jury verdict finding the defendants’ loans unlawful but ordered a new trial on damages. The district court also concluded that the waiver provision was void because it violated public policy. The second jury subsequently awarded compensatory damages and the court entered a final judgment. The defendants thereafter filed an appeal with the Second Circuit from the final judgment.

To explain its interest as amicus, the CFPB states that “[a]s the agency primarily responsible for interpreting, implementing, and enforcing ECOA, the Bureau has an interest in safeguarding private litigants’ ability to exercise their statutory right to enforce ECOA and in advancing a proper understanding of ECOA’s legal standards.”

In its amicus brief, the CFPB makes the following primary arguments:

  • On appeal, the defendants argue that equitable tolling does not apply to the plaintiffs’ ECOA claims because they cannot establish that the defendants concealed the existence of the cause of action. The CFPB argues that discriminatory targeting is “inherently self-concealing” because “to succeed, [discriminatory targeting] must remain concealed from the victims of the targeting.” Moreover, according to the CFPB, “a victim of discriminatory targeting has no way of becoming aware, until meeting with counsel or other victims, of not only the predatory nature of the scheme but also its discriminatory nature.” In response to the defendants’ argument that there was no “self-concealed” scheme because all of the credit terms were disclosed to the plaintiffs at closing, the CFPB argues that “this scheme is about more than loan terms; it is about [the defendants’] entire equity-stripping model behind the scenes—i.e., that [the defendants] targeted people with low credit scores and high equity in their homes for loans that were designed to fail.” The CFPB also asserts that the defendants engaged in “affirmative concealment” through actions such as “burying predatory loan terms within large stacks of papers” and “rushing Plaintiffs to sign documents without reading them.”
  • The district court instructed the jury that the plaintiffs could prove an ECOA violation by showing either intentional discrimination or discriminatory effect. The defendants argue on appeal that the jury instructions on intentional discrimination were erroneous for various reasons, including that they provided that the plaintiffs could prevail by showing that race was a “significant” factor in the defendants’ conduct rather than a “motivating” factor. The CFPB argues that the jury was properly instructed because a plaintiff only needs to show that a protected characteristic was at least in part a motivating factor in the defendants’ conduct. The defendants also argue that the court’s instructions on disparate impact were erroneous for reasons that included the court’s instruction to the jury that the plaintiffs could prevail by establishing that the defendants’ practices had a “substantial adverse impact” on Black or Hispanic borrowers rather than a “disproportionate impact.” According to the defendants, the plaintiffs could not have shown a disproportionate impact because the majority of the alleged predatory loans were made to non-Hispanic white borrowers. The CFPB argues that the relevant inquiry does not look at absolute numbers or whether a majority of victims are white and instead focuses on proportional statistics. According to the CFPB, the plaintiffs satisfied the standard for disparate impact by showing that the proportion of the defendants’ alleged predatory loans in predominately minority neighborhoods was nearly double the proportion of such loans in white neighborhoods.
  • The CFPB argues that the district court was correct to find that the waivers contained in the loan modification agreement signed by two of the plaintiffs were void as against public policy. According to the CFPB, “[t]he policies embodied in the ECOA and federal consumer financial protection laws would be undermined by upholding a waiver of civil rights claims in a loan modification agreement related to mortgages.” Responding to the defendants’ argument that the waiver is consistent with the public policy interest in settling disputes, the CFPB argues that the loan modification was not “the type of voluntary settlement reached by compromise that courts hold in high regard” and instead “was part and parcel of [the defendants’] discriminatory scheme, allowing [the defendants]to continue collecting payments on the loan before finally instituting foreclosure proceedings.”

John L. Culhane, Jr. & Richard J. Andreano, Jr.

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HUD Requires Use of Supplemental Consumer Information Form for FHA Mortgage Loans

The U.S. Department of Housing and Urban Development (HUD) recently announced in Mortgagee Letter 2023.13 that lenders must use the Supplemental Consumer Information Form (SCIF) of Fannie Mae and Freddie Mac in connection with FHA insured mortgage loans with application dates on or after August 28, 2023.

As previously reported, in May 2022 the Federal Housing Finance Agency announced that for residential mortgage loans to be sold to Fannie Mae or Freddie Mac with application dates on or after March 1, 2023, the lender must present a SCIF to collect information on the applicant’s language preference. The SCIF also allows the applicant to indicate any homeownership education or housing counseling that they have received.

HUD advises as follows in the Mortgage Letter:

“FHA recognizes the nation’s growing diversity and the importance of understanding Borrowers’ language preferences and removing barriers that make the homebuying process less accessible to some prospective homebuyers. Therefore, FHA seeks to increase the ease of use of its programs for prospective Borrowers with Limited English Proficiency (LEP) and/or a lack of familiarity with the homebuying process. Toward this end, FHA is adopting industry-standard requirements regarding the provision of the Fannie Mae/Freddie Mac Form 1103, [SCIF], to a Borrower at the time of application for an FHA-insured Mortgage.

The SCIF collects information about the Borrower’s language preference and any homeownership education and housing counseling the Borrower may have received. Mortgagees can use the information collected to better understand a Borrower’s possible language barriers and their understanding of the homebuying process. Borrowers may elect to provide their Mortgagees with none, some, or all information requested in the SCIF.”

HUD also advises that lenders are responsible for using the most recent version of the SCIF and other forms as of the date of completion of the forms.

Richard J. Andreano, Jr.

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CFPB Publishes FAQs on Small Business Lending Rule

Last week, the CFPB added a set of Frequently Asked Questions to the compliance resources on its website for its small business lending rule implementing Dodd-Frank Section 1071.

The CFPB also published a slide deck for a webcast it held titled “Determining institutional coverage pursuant to the small business lending rule.” The CFPB has indicated that it plans to present the webcast again this month.

For more information about and to listen to our two-part episode of the Consumer Finance Monitor Podcast titled “The Consumer Financial Protection Bureau’s Final Section 1071 Rule On Small Business Data Collection: What You Need To Know,” click here and here.

Richard J. Andreano, Jr. & John L. Culhane, Jr.

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Court Looks to FCRA in Interpreting MLA Statute of Limitations

In dismissing a class action last month alleging violations of the Military Lending Act (MLA), a federal district court in Virginia held that the MLA’s two-year statute of limitations is triggered by discovery of the facts underlying the violation, not by discovery that the MLA had been violated. Finding the MLA’s text to be inconclusive on this issue, the court looked to case law interpreting a similar statute of limitations in the Fair Credit Reporting Act (FCRA) for guidance.

The plaintiffs in Wood v. Omni Financial of Nevada, Inc. alleged in an amended complaint that Omni Financial of Nevada, Inc. (Omni) charged interest rates that exceeded the 36% military annual percentage rate (MAPR) cap, extended loans that rolled over prior loans, conditioned payment of loans through military allotment, and required borrowers to provide a security interest in their bank accounts as a condition for receiving loans. Omni moved to dismiss the complaint for lack of standing and for failure to state a claim.

In its May 31, 2023 decision, the court denied Omni’s motion to dismiss for lack of standing, finding plaintiffs had sufficiently alleged a concrete injury under the MLA in light of unlawful repayment conditions and loan terms; however, the court granted Omni’s motion to dismiss for failure to state a claim, finding the plaintiffs’ MLA claims regarding the majority of the loans at issue were time-barred by the two-year statute of limitations.

The MLA provides that:

An action for civil liability under this paragraph may be brought in any appropriate United States district court, without regard to the amount in controversy, or in any other court of competent jurisdiction, not later than the earlier of—(i) two years after the date of discovery by the plaintiff of the violation that is the basis for such liability; or (ii) five years after the date on which the violation that is the basis for such liability occurs.

10 U.S.C. § 987(f)(5)(E) (emphasis added).

According to the court, the MLA’s two-year discovery provision is properly viewed as a statute of limitations, whereas the five-year provision is considered a statute of repose, which limits the time to file a claim in the absence of discovery. Finding the text of the discovery provision inconclusive, the court sided with the defendant’s interpretation that the provision looks to whether a plaintiff has discovered the facts constituting the basis for the violation and not whether there has been a MLA violation.

Looking to an identical statute of limitations provision in the FCRA, the court found that all courts that have considered the issue have found that knowledge of the law was not required to trigger the two-year limitations period, and that a cause of action accrues as soon as a plaintiff became aware or should have become aware of an injury, not when the plaintiff knows or should know that such injury constitutes a legal wrong. Applying the statute of limitations to the named plaintiffs’ claims, the court found some claims were completely time-barred by the MLA’s five-year statute of repose and others were time-barred by the two-year statute of limitations because the plaintiffs knew of the alleged facts that constituted MLA violations – including the MAPR, rollover of loans, repayment by allotment, and granting of a security interest – when they entered into the loans.

The court also found grounds to dismiss claims that were not time-barred, including roll-over claims on a 2022 loan, finding the amended complaint failed to sufficiently allege that Omni was a “creditor” within the meaning of 32 C.F.R. § 232.8(a), which required a creditor to be engaged in the business of payday lending or deferred presentment transactions. Likewise, the court found that the facts pled in support of the allotment and security interest claims did not run afoul of the MLA — the remaining loans (as to which the plaintiffs’ MLA claims were not time-barred) were not repaid by allotment and plaintiffs’ failed to allege that the MAPR exceeded 36% on those loans. This allegation was necessary to allege an MLA violation, as a creditor is not prohibited from taking a security interest where the MAPR does not exceed 36%.

This is not the first time that Omni has dealt with allegations of MLA violations. In December 2020, Omni entered into a consent order with the Consumer Financial Protection Bureau (“CFPB”), settling allegations that the lender had violated the MLA by requiring repayment of loans to MLA covered borrowers by military allotment. According to the CFPB, more than 99% of servicemembers who received loans from Omni agreed to do so. Additionally, the CFPB alleged that Omni violated the Electronic Funds Transfer Act by conditioning extensions of credit to borrowers not covered by the MLA on their agreement to repay by preauthorized electronic fund transfers. The consent order required Omni to pay a civil monetary penalty in the amount of $2,175,000 and prohibited it from requiring covered servicemembers or their dependents to repay loans by allotment or conditioning any loan on a borrower’s agreement to repay with a preauthorized electronic fund transfer. The CFPB has focused on abuse of military allotments, highlighting the issue last year in a blog post.

The court’s decision in this case is significant as the facts supporting many potential MLA violations, such as violations of the MAPR or the MLA prohibition of compulsory arbitration, are evident at origination of most consumer credit agreements. As such, other courts adopting the decision’s holding should find that MLA claims not brought within two years of a consumer entering into a credit agreement are time-barred.

Brian Turetsky

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This Week’s Podcast Episode: A Look at the Treasury Department’s April 2023 Report on Decentralized Finance or “DeFi”

The report examines the vulnerabilities in DeFi, including potential gaps in the United States’ Bank Secrecy Act/anti-money laundering regulatory, supervisory, and enforcement regimes for DeFi. We first discuss how Treasury defines DeFi, the report’s findings regarding the use of DeFi services in the process of transferring and laundering illicit proceeds, the BSA’s application to DeFi services and the impact of decentralization on BSA coverage, and the report’s recommendations. We then discuss state efforts to regulate digital assets and federal enforcement actions against cryptomixers, including the challenge to OFAC’s authority. We conclude with a discussion of the focus of state regulators on BSA/AML policies and procedures and steps businesses in the digital asset space can take to mitigate compliance risk.

Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, leads the conversation, joined by Lisa Lanham, a partner in the Group, and Peter Hardy, a partner in and Co-Leader of the firm’s Anti-Money Laundering Group.

To listen to the episode, click here.

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FTC Action Against Amazon Targets Alleged Use of Digital Dark Patterns as Unfair to Consumers; Ballard Spahr to Hold Aug. 16 Webinar

Last week, the FTC filed a civil case against Amazon alleging that the company used “dark patterns” to enroll people in its Prime program. The case continues a pattern initiated by FTC Chair Lina Khan of challenging web-based marketing tactics of consumer-facing businesses as deceptive and anticompetitive on the grounds that they impede consumer choice and can be used by dominant firms as a tactic to exclude competitors.

For more about the Amazon case, see our legal alert. On August 16, 2023, from 12:00 p.m. to 1:00 p.m. ET, Ballard Spahr will hold a webinar, “Shining a Bright Light on Digital Dark Patterns.” Click here to register.

Two “footnotes” regarding the FTC’s action are worth adding. First, the FTC, in the summary of the case set forth in the complaint, alleges that “Amazon used manipulative, coercive, or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically-renewing Prime subscriptions.” However, the FTC’s primary legal theory, as set forth in Count I of the complaint, appears not to rely on deception but rather on unfairness. Specifically, in Count I of the complaint, the FTC alleges that, by enrolling customers without their express informed consent, Amazon engaged in unfair acts or practices in violation of Section 5 of the FTC Act.

While the complaint does allege “unfair or deceptive acts or practices” by Amazon, it only does so in connection with Amazon’s alleged violations of the Restore Online Shoppers’ Confidence Act (ROSCA). The FTC alleges Amazon violated ROSCA by failing to clearly and conspicuously disclose all material terms of the transaction before obtaining consumers’ billing information, by failing to get consumers’ express informed consent before charging them, and by failing to provide a simple cancellation mechanism. In Counts II through IV of the complaint, the FTC alleges that because Amazon’s ROSCA violations are violations of a rule promulgated under Section 18 of the FTC Act, they constitute an unfair or deceptive act or practice in violation of Section 5 of the FTC Act.

In March 2023, the FTC issued a Notice of Proposed Rulemaking seeking comment on proposed amendments to the FTC’s Negative Option Rule. The proposed amendments, which would expand the scope of the rule’s coverage to all forms of negative option marketing and consolidate various requirements dispersed across various statutes and regulations such as ROSCA, include a “click to cancel” provision which would require a simple cancellation mechanism for consumers to easily cancel subscriptions by using the same method they used to initially enroll.

Second, it is also worth noting that the CFPB has indicated that the use of “dark patterns” and other marketing practices can constitute an abusive act or practice under the Consumer Financial Protection Act (CFPA). In April 2023, the CFPB issued a new policy statement regarding what constitutes abusive conduct. The CFPA defines “abusive” acts or practices as conduct that: “(1) materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or (2) takes unreasonable advantage of (A) a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service; (B) the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or (C) the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.”

The CFPB indicated there are two categories of conduct it finds generally abusive: (1) actions that obscure important features of a product or service, and (2) actions taking unreasonable advantage of consumers in certain circumstances. It described the first category of conduct it finds abusive as arising in situations where an entity “materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service.” The CFPB indicated that the forms that interference can take include “buried disclosures, physical or digital interference, or overshadowing.” As examples of buried disclosures, the CFPB listed “fine print, complex language or jargon, or providing disclosures after the consumer has made a decision.” With respect to physical and digital interference, the CFPB listed “the use of pop-up or drop-down boxes, multiple click-throughs, or other actions or ‘dark patterns’ that have the effect of making the terms and conditions materially less accessible or salient.”

In January 2023, the CFPB issued a circular addressing the circumstances in which negative option marketing can be unfair, deceptive, or abusive acts or practices under the CFPA. In the circular, the CFPB stated that “[d]ark patterns can be particularly harmful when paired with negative option programs, causing consumers to be misled into purchasing subscriptions and other services with recurring charges and making it difficult for consumers to cancel and avoid such charges.”

We recently discussed dark patterns, including what regulators consider to be dark patterns and why they are a focus of regulatory concern, in an episode of our Consumer Finance Monitor podcast for which our special guest was Andrew Nigrinis, PhD, the Managing Principal of Edgeworth Economics and a former CFPB enforcement economist. Dark patterns were also discussed in an episode of our Consumer Finance Monitor podcast for which our special guest was Malini Mithal, Associate Director, FTC Division Of Financial Practices. For more information and to listen to the podcasts, click here and here.

Michael Gordon & Alan S. Kaplinsky

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Certiorari Petition Filed in Second Circuit Case Rejecting Constitutional Challenge to CFPB’s Funding

In CFPB v. Law Offices of Crystal Moroney, a three-judge panel of the U.S. Court of Appeals for the Second Circuit unanimously ruled in March 2023 that the CFPB’s funding structure does not violate the Appropriations Clause of the U.S. Constitution and rejected Moroney’s attempt to invalidate the CFPB’s civil investigative demand issued to Moroney. Last week, Moroney filed a petition for a writ of certiorari in the U.S. Supreme Court.

In its decision, the Second Circuit panel expressly declined to follow the Fifth Circuit panel decision in Community Financial Services Association of America Ltd. v. CFPB that reached the opposite conclusion. In February 2023, the Supreme Court granted the CFPB’s certiorari petition seeking review of the Fifth Circuit decision and agreed to hear the case next Term. Moroney’s petition asks the Court to hold the petition pending its decision in CFSA and to then dispose of the petition as appropriate in light its decision. It seems unlikely that the CFPB will oppose Moroney’s petition.

Michael Gordon & Alan S. Kaplinsky

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FTC Settles Lawsuit Against Publishers Clearing House Involving Alleged Use of “Dark Patterns”; Ballard Spahr to Hold Aug. 16 Webinar

Less than a week after announcing that it had filed a civil case against Amazon alleging that the company used “dark patterns” to enroll people in its Prime program, the FTC announced that it has entered into a settlement with Publishers Clearing House (PCH) to settle charges involving PCH’s use of “dark patterns.” The proposed stipulated order requires PCH to pay $18.5 million in monetary relief and make various changes to prevent the practices that were the subject of the complaint.

On August 16, 2023, from 12:00 p.m. to 1:00 p.m. ET, Ballard Spahr will hold a webinar, “Shining a Bright Light on Digital Dark Patterns.” Click here to register.

In its complaint, the FTC alleged that PCH used “dark patterns” in the form of manipulative phrasing and website design to convince consumers that they needed to buy a product to enter the company’s sweepstakes or increase their chances of winning. However, unlike its complaint against Amazon in which the FTC alleges that Amazon’s use of “dark patterns” in its website design violated the prohibition of unfair acts or practices in Section 5 of the FTC Act, the FTC’s complaint against PCH alleges that PCH violated the Section 5 prohibition of deceptive acts or practices by making various misrepresentations. Rather than alleging that PCH’s use of “dark patterns” in itself constituted a violation of Section 5, the FTC appears to be alleging that PCH use of “dark patterns” was part of an overall scheme to deceive consumers in violation of Section 5. According to the complaint:

PCH also employs dark patterns throughout the consumer’s experience, by among other things: linking and conflating “ordering” products and “entering” the sweepstakes through trick wording and visual interference; placing disclosures in small and light font and in places where a consumer is unlikely to see them; bombarding customers with emails that pressure them to take immediate action by clicking on the email or purportedly risk losing the opportunity to enter or win the sweepstakes; and making it difficult for consumers to enter the sweepstakes without an order.

The complaint also alleges that PCH engaged in deceptive acts or practices in violation of Section 5 by misrepresenting the total cost of products or the amount of additional charges through the addition of surprise shipping and handling fees, misrepresenting that ordering is “risk free” when there is are substantial shipping costs to return products, and misrepresenting its policies on selling users’ personal data to third parties. The complaint also alleges that PCH violated the CAN-SPAM Act by using misleading e-mail subjects. (The CAN-SPAM Act establishes requirements for commercial e-mails.)

Alan S. Kaplinsky

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Bill to License Commercial Lenders Proposed in New York

New York Senator James Sanders Jr. recently proposed Senate Bill 1450A (S1450), which would require those making or soliciting “commercial financing products” in New York State to obtain a license and comply with specified requirements.

Section 363-A of proposed S1450 defines a “commercial financing product” as any advance of funds to a commercial or business enterprise made for the purpose of assisting the business with its capital needs. This definition explicitly includes, but is not limited to, transactions in the amount of $500,000 or less involving certain loans, receivable purchases, merchant cash advances, and lease transactions.

Additionally, § 363-B of proposed S1450 exempts the following from the license requirement:

  • Any person who makes or solicits five or fewer commercial financing products within any twelve month period;
  • Any banking organization;
  • Any federal credit union;
  • Any insurance company;
  • Any purchases of the ownership, in whole or part, of a business or commercial enterprise; and
  • Certain persons authorized by other applicable New York law to make or solicit commercial financing products.

Section 363-D provides that licenses are perpetually effective until surrendered, revoked, or suspended. Should a licensee seek to add a new location, change their address, or effectuate a change of control, sections 363-C, E, F respectively impose necessary approval processes. Pursuant to § 363-C, potential licensees must submit an application containing:

  • A list of locations where the applicant seeks to make or solicit commercial financing products;
  • The licensing and investigation fees that the superintendent will prescribe for each proposed location;
  • An affidavit of financial solvency demonstrating that the applicant meets the capitalization and access to credit requirements that the superintendent will prescribe.

Pursuant to § 363-C, the superintendent will grant a license if the applicant can demonstrate that:

  • The applicant commands the confidence of the community and warrants belief that the business will be operated honestly, fairly, and efficiently;
  • The applicant has $50,000 available in liquid assets per proposed location for the operation of business; and
  • The applicant otherwise satisfies the licensing regulations prescribed by the superintendent as the superintendent is empowered to do so by § 363-M.

According to § 363-L, all commercial financing products made by a person without a license are void. Also according to § 363-L, violations of proposed S1450 may constitute a misdemeanor. To further ensure compliance, § 363-I imposes record keeping requirements on licensees, including an annual report due to the superintendent on or before April 1st. Similarly, § 363-H gives the superintendent broad examination powers over licensee books and facilities.

Upon showing good cause, the superintendent may suspend a license for a period of up to 30 days pending investigation without notice or hearing. Section 363-G specifies the grounds for suspension or revocation of a license, including:

  • Failure to pay any sum of money lawfully demanded by the superintendent;
  • Failure to comply with any demand, ruling, or requirement of the superintendent within a reasonable period of time;
  • Violating any provision of the proposed bill; and
  • The existence of facts or conditions that would have warranted denial of license if it had existed at the time of the original application.

Should S1450 become law, its provisions would become effective 180 days thereafter. The bill is presently in a Senate committee and has yet to be heard by either house of the New York legislature. Importantly, we note that an entity engaged in any business activities covered by S1450 should consult the full text of S1450 to determine how the bill would affect its business operations.

Lisa Lanham

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CFPB Settles Action Against Processor of Mortgage Payments for Erroneous Processing of Payments and Deficient Information Security Practices

The CFPB announced this week that it has entered into a consent order with ACI Worldwide Corp. and one of its subsidiaries, ACI Payments, Inc., in connection with more than 1.4 million erroneous electronic fund transfer payment instructions initiated by ACI through the ACH Network (ACH Entries). In its press release, the CFPB calls the matter its “first action addressing unlawful information handling practices in processing mortgage payments.” Even though the consent order recites that ACI was able to offset the ACH Entries before funds were debited from the majority of consumers’ accounts, the order nevertheless requires ACI to pay a $25 million civil money penalty.

ACI provides payment processing services to mortgage servicers. The erroneous ACH Entries were initiated on April 23, 2021, as part of performance testing conducted on ACI’s payment platform. The testing involved simulating actual ACH Entry processing. However, instead of using “dummy” consumer data that did not contain sensitive consumer financial information (SCFI) or using files that were scrubbed of SCFI, ACI’s contractors “circumvented ACI policies and processes related to the access and use of SCFI and were able to obtain and use actual, unaltered, SCFI that ACI previously obtained for legitimate debit and credit transactions” of borrowers whose mortgages were serviced by one of ACI’s largest mortgage servicer customers.

Because the platform recognized the test files as authentic and containing legitimate ACH Entries, the contractors’ actions resulted in the transmission of more than 1.4 million ACH Entries to ACI’s originating depository financial institution (ODFI), some of which resulted in electronic fund transfers (EFTs) from borrowers’ accounts. These EFTs were not authorized by the borrowers whose accounts were affected. After learning of the erroneous ACH Entries on April 24, 2021, ACI sent reversing ACH files to its ODFI which were submitted to the ACH Network on April 25, 2021. The initial ACH Entries and the correcting ACH Entries settled on April 26, 2021. The erroneous ACH Entries reduced the available balance of some consumers’ bank accounts, making some consumers unable to complete purchases or other transactions and resulting in the imposition of NSF and overdraft fees on some accounts. In addition, many consumers had to spend significant amounts of time to have corrections made to their accounts.

The CFPB found that ACI’s actions violated the Electronic Fund Transfer Act and Regulation E by initiating EFTs from consumers’ accounts without a valid written authorization. In addition to violating the Consumer Financial Protection Act (CFPA) based on its EFTA/Regulation E violations, ACI was found to have engaged in unfair acts and practices in violation of the CFPA by “erroneously process[ing] ACH Entries meant for the test environment against actual consumer accounts” and by having deficient information security practices that allowed the improper use of SCFI and did not provide adequate training and oversight of contractors “who played a critical role in its payment processing operations and had access to SCFI.”

In addition to payment of a $25-million civil money penalty, the consent order requires ACI to adopt and enforce an information security program (ISP) to ensure “Reasonable Security” appropriate to its size and complexity, the nature and scope of its activities related to providing consumer financial services, and the sensitivity of any consumer information it maintains. The term “Reasonable Security” is defined in the consent order to mean “information security policies and human and technical internal control measures that are technically substantiated by the latest knowledge, widely held within the Information Security Research Community,” and that are appropriately documented and “sufficient to defend and ensure the Confidentiality, Integrity, and Availability of SCFI and [ACI’s] systems.” (“Information Security Research Community” is also a defined term as are “Confidentiality”, “Integrity,” and “Availability.”) The consent order specifies what actions the ISP must require ACI to take, including in connection with the oversight of service providers. The consent order also prohibits ACI from using SCFI for software development or testing purposes without documenting a compelling business reason and obtaining consumer consent.

Michael Gordon

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Connecticut Enacts Significant Changes to Small Loan Act

On June 29, 2023, Connecticut’s Governor signed into law Substitute Senate Bill No. 1033 which makes significant changes to the state’s Small Loan Act. The new law takes effect on October 1, 2023.

The primary changes are as follows:

New APR calculation (Section 1, subdivision (2), Revising 36a-555(2)). Under the current law, the APR is calculated under the provisions of the federal Truth-in-Lending Act and associated regulations. Under the new law, the APR is to be calculated under the provisions of the federal Military Lending Act and associated regulations. The new law also specifies certain charges that shall be deemed to be a finance charge for purposes of calculating the APR:

  • A charge set forth in 32 C.F.R. Sec. 232.4(c)(1);
  • A charge for any ancillary product, membership or service sold in connection with or concurrent with a small loan;
  • Any amount offered or agreed to by a borrower in furtherance of obtaining credit or as compensation for the use of money; and
  • Any fee, voluntarily or otherwise, charged, agreed to or paid by a borrower in connection with or concurrent with a small loan.

Reorganized and expanded small loan definition (Section 1, subdivision (11), Revising 36a-555(11)). The new law reorganizes the definition of small loan, and more importantly, expands the definition to increase is coverage from loans in an amount or value of $15,000 or less to loans in an amount or value of $50,000 or less (where the APR is greater than 12%).

New licensing requirement for persons acting as an agent, service provider or in another capacity for persons who are exempt from licensure (e.g., a bank) if:

  • Such person holds, acquires or maintains an economic interest in a small loan;
  • Such person markets, brokers, arranges or facilitates the loan and holds the right, requirement or right of first refusal to purchase the small loans, receivables or interests in the small loans; or
  • The totality of the circumstances indicate that such person is the lender and the transaction is structured to evade the requirements of the Small Loan Act.

Circumstances weighing in favor of deeming a person a lender who must be licensed as a small loan lender include but are not limited to the person (A) indemnifying, insuring or protecting an exempt person for any costs or risks related to a small loan; (B) predominantly designing, controlling or operating a small loan program; (C) purporting to act as an agent, service provider or in another capacity for an exempt person in this state while acting as a lender in another state. (Section 2, subdivision (d)(Adding 36a-556(d))

New limitation on existing servicing-for-an-exempt-person exemption from licensure to additionally require that the person servicing does not engage in activities described in new 36a-556(d) (Section 3, subsection(a)(3), Revising 36a-557(a)(3)).

New limitation on the existing exemption for bank and certain bank subsidiary loans in existing 36a-557(c) as inapplicable to loans described by new 36a-556(d). (Section 3, subsection(c)).

Conforming changes to implement the change from $15,000 to $50,000. (See e.g., Section 4, subsection (d)(1), Revising 36a-558; Section 5, subdivision (1), Revising 36a-560(1)).

Lisa Lanham & Stacey L. Valerio

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SCOTUS Agrees to Hear Case Involving Challenge to Use of Administrative Law Judges by Federal Agencies

Last Friday, the U.S. Supreme Court granted the SEC’s petition for certiorari in Jarkesy v. Securities and Exchange Commission, a case in which the respondents are challenging the constitutionality of the SEC’s use of administrative law judges (ALJs). The outcome of the case could have significant implications for the use of ALJs by all federal agencies, including the CFPB, FTC, and federal banking agencies.

The underlying case in Jarkesy involves an SEC investigation that resulted in an administrative action in which the SEC alleged that the respondents had committed securities fraud and sought both monetary and equitable relief. After an SEC ALJ’s finding that the respondents had committed securities fraud was affirmed the SEC, the respondents sought review by the Fifth Circuit. A divided 3-judge Fifth Circuit panel ruled that the proceedings suffered from three constitutional defects, vacated the SEC’s decision, and remanded the matter to the SEC for further proceedings.

The SEC’s certiorari petition presents the following questions:

  • Whether the statutory provision that empowers the SEC to initiate and adjudicate administrative enforcement proceedings seeking civil penalties violated the Seventh Amendment of the U.S. Constitution.
  • Whether statutory provisions that authorized the SEC to choose to enforce the securities laws through an agency adjudication instead of filing a district court action violate the nondelegation doctrine.
  • Whether Congress violated Article II of the Constitution by granting for-cause removal protection to ALJs in agencies whose heads can only be removed by the President for cause.

The Supreme Court will hear Jarkesy in its Term that begins in October 2023.

Alan S. Kaplinsky

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FFIEC Announces Release of 2022 HMDA Data

The Federal Financial Institutions Examination Council (FFIEC) recently announced the release of the 2022 Home Mortgage Disclosure Act (HMDA) data. The CFPB also released a summary of the data.

The FFIEC advises that the Snapshot National Loan-Level Dataset that it released contains the national HMDA datasets as of May 1, 2023, and that key observations from the Snapshot include the following:

  • The number of reporting institutions increased by about 2.63% from 4,338 in 2021 to 4,460 in 2022.
  • The 2022 data include information on 14.3 million home loan applications, that include 11.5 million closed-end credit applications and 2.5 million open-end credit applications.
    • The FFIEC notes that 287,000 applications were reported by financial institutions making use of Economic Growth, Regulatory Relief, and Consumer Protection Act’s partial exemptions from HMDA data reporting requirements, and that the institutions did not indicate whether the applications were for closed-end credit or open-end credit. We previously reported on the partial exemptions available to smaller mortgage loan volume depository institutions and credit unions that basically exempt such institutions from having to report the new HMDA data categories added by a HMDA rule adopted by the CFPB in October 2015. In its summary of the HMDA data, the CFPB notes that a total of 1,406 reporting institutions made use of the partial exemptions for at least one of the 26 data points eligible for the exemptions.
  • The share of first lien, one- to four-family, site-built, owner-occupied, home-purchase loans originated by independent mortgage companies, which are not depository institutions, decreased from 63.9% in 2021 to 60.2% in 2022. However, in its summary of the HMDA data, the CFPB advises that the share of closed-end, first lien, one- to four-family, site-built, owner-occupied, home-purchase loans independent mortgage companies increased in recent years, and rose from 63.9% in 2021 to 72.1% in that 2022.
  • The share of closed-end, first lien, one- to four-family, site-built, owner-occupied, home-purchase loans made to (1) Black or African American borrowers rose from 7.9% in 2021 to 8.1% in 2022, (2) Hispanic-White borrowers decreased slightly from 9.2% in 2021 to 9.1% percent 2022, and (3) Asian borrowers increased from 7.1% in 2021 to 7.6% in 2022.
  • In 2022 the denial rates for closed-end, first lien, one- to four-family, site-built, owner-occupied, conventional, home purchase loans were (1) 16.4% for Black or African American applicants, (2) 11.1% for Hispanic-White applicants, (3) 9.2% for Asian applicants and (4) 5.8% for non-Hispanic-White applicants.

The FFIEC announced the release of other data products, including the HMDA Dynamic National Loan-Level Dataset that is updated on a weekly basis to reflect late submissions and resubmissions, and Aggregate and Disclosure Reports that provide summary information on individual financial institutions and geographies. Additionally, the FFIEC advises that the HMDA Data Browser allows users to create custom tables and download datasets that can be further analyzed. As previously reported, in March 2023, the FFIEC made available modified Loan/Application Registers for each HMDA filer of 2022 data, as well as a combined file for all filers.

In its summary of the HMDA data, the CFPB advises that:

  • The total number of originated closed-end loans decreased by about 7.0 million between 2021 and 2022, or 50.7%. (Based on very low interest rates, 2021 had an extraordinarily high level of mortgage loan originations.)
  • The share of closed-end, first lien, one- to four-family, site-built, owner-occupied, home-purchase loans that were (1) insured by the Federal Housing Administration (FHA) decreased slightly from 17.2% in 2021 to 16.3% in 2022, and (2) guaranteed by the Department of Veterans Affairs (VA) increased slightly to 10.2% in 2022 (the share in 2021 was 9.7%).
  • The share of closed-end, first lien, one- to four-family, site-built, owner-occupied, home-refinance loans that were (1) insured by the FHA increased from 6.9% in 2021 to 10.4% in 2022, and (2) guaranteed by the VA decreased from 10.2% in 2021 to 9.5% in 2022.

Richard J. Andreano, Jr.

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Did You Know?

As of July 1, 2023, the Hawaii Division of Financial Institutions has approved the use of an electronic surety bonds for its Mortgage Servicer License.

John Georgievski

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