Many lenders may agree that one of the thornier consumer protection regulations is the Equal Credit Opportunity Act’s rule that limits the ability of a lender to require a spousal guarantee. Regulation B lays out the rule in 12 CFR §1002.7(d)(1), and makes some effort to clarify the rule in its Official Interpretations. In a nutshell, the rule bars a creditor from requiring the signature of a spouse or other person that is not a joint applicant, on any debt instrument if the applicant qualifies individually for the amount and terms of credit requested under the lender’s standards of creditworthiness.
Financial institutions are generally cognizant of their obligations to protect the confidential information of their customers, and that a failure to do so has legal and reputational consequences. Because this is such an important aspect of the business’ operations, we share the below story. Although it does not directly involve a financial institution or the privacy protection requirements of the Gramm-Leach-Bliley Act, it nevertheless serves as real-world reminder that financial institutions’ security plans should also deal with the disposal of its office equipment. Read More ›
When victims of Ponzi schemes, also referred to as fraudulent investment schemes, cannot collect from the persons who committed the fraud and "stole" their money, they often look to the bank that handled the deposit account used in the fraud as the deep pocket for recovery. After the July 30, 2013 decision in Parlin Fund LLC, et al., v. Citibank N.A., Case No. 1:13-CV-111, 2013 U.S. Dist. LEXIS 106511 (S.D. Ohio, July 30, 2013, J. Beckwith), individuals damaged by investing in Ponzi schemes may find it much harder to pursue banks. Read More ›
In May, the Indiana legislature enacted HB 1081, which, among other things, alters the state’s Uniform Consumer Credit Code (UCCC). The bill includes a variety of changes that will affect financial institutions, such as changes to: (1) the territorial scope, (2) threshold loan amounts, (3) surety bond requirements, and (4) the Department of Financial Institution’s (DFI) administrative powers. Read More ›
In Wallace v. Midwest Fin. & Mortg. Serv., No. 12-5208, 2013 WL 1729587 (6th Cir. April 23, 2013), Harold Wallace, a subprime mortgage borrower, brought suit against, among others, the lender (MortgageIT) and the broker (Midwest Financial), claiming that the defendants fraudulently appraised the value of his home to force him into a high-cost, adjustable rate mortgage. The district court granted summary judgment to the defendants, finding that Wallace had not shown that the fraudulent appraisal proximately caused his injuries. Read More ›
A Warning to Financial Institutions: Failure to Issue a Litigation Hold May Have Serious Consequences
As electronic discovery has become more prevalent and voluminous, national standards for the preservation of evidence have evolved dramatically in the past decade. Through a proliferation of electronic discovery orders involving discovery compliance, courts have addressed when the duty to preserve evidence arises, signifying a party’s duty to issue a “litigation hold.” Courts have not answered, however, whether a party can withhold documents generated before issuing a litigation hold on the basis of work product protection. Both the duty to preserve evidence and the work product doctrine require the “anticipation of litigation.” Thus, can a party anticipate litigation for purposes of asserting work product protection before it anticipates litigation for purposes of issuing a litigation hold? Read More ›
On the somewhat unusual occasions when your judgment debtor has assets, the question turns to how do I maximize my judgment and collect every penny legitimately owed to my client? Here are some thoughts: Read More ›
A recent guidance published by the Consumer Financial Protection Bureau is a helpful reminder of one of the risks associated with indirect auto lending. The guidance is directed toward auto lenders who rely upon auto dealers to generate consumer loans. The auto dealer may provide vehicle financing directly to the consumer, or may facilitate indirect financing for a vehicle purchase through a financial institution, a nonbank affiliate of a financial institution, or an independent or “captive” nonbank.
 CFPB Bulletin 2013-02.
John Williamson, a local bank vice president, meets with Ronnie Roma and Harry Levine about a $25,000 equipment loan for their closely-held business, Highland Farms, LLC. After the initial conversation, Roma takes the lead on negotiating the loan. Levine is unaware of the progress of things until Roma emails Levine a blank “Personal Guaranty” to sign so they can “do that loan we discussed with the bank.” Because the loan is supposed to close the following day, Levine signs the guaranty that includes an obligation to guaranty all the debts of the “Debtor” to the bank, but the name of the “Debtor” is blank when he signs it and the document contains no reference to the specific transaction. Levine emails a signed copy of the guaranty to Roma. Read More ›
In a recent lawsuit rising from cyber account-takeover fraud, the defending financial institution won summary judgment on two issues of apparent subjective analysis under the Uniform Commercial Code’s Chapter 4A. “The tension in modern society between security and convenience is on full display in this litigation.” Choice Escrow and Land Title, LLC v. BancorpSouth Bank, (U.S.D.C., WD of Missouri; Case No. 10-03531-CV-S-JTM. Read More ›
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Vincent E. Mauer represents clients in commercial and business disputes with particular emphasis on financial institutions and instruments, including financial institution bonds, securities, insurance policies and commercial loans.