Maryland Legal Alert for Financial Services

In this Issue:

NEWEST SURVEY OF CFPB UDAAP ACTIONS RELEASED

EXTENDED CARES ACT BANKRUPTCY PROVISIONS SET TO EXPIRE

CFPB PUTS AUTO REPOSSESSIONS IN ITS CROSSHAIRS

NFT AGREEMENTS REQUIRE SPECIFIC TERMS

Newest Survey of CFPB UDAAP Actions Released

We have updated our recurring article, A Survey of Activities Identified as Unfair, Deceptive, or Abusive by the CFPB. The article provides a detailed summary of enforcement actions brought by the Consumer Financial Protection Bureau (CFPB) concerning unfair, deceptive and abusive acts or practices (UDAAPs) in the second half of 2021.

A review of the specific acts or practices identified by the CFPB as being problematic and resulting in UDAAP violations is instructive for industry participants in conducting their own internal compliance reviews to ensure that they do not engage in similar practices.

If you have questions about this topic or for assistance with any compliance review, please contact Bryan M. Mull or Christopher R. Rahl.

CONTACT BRYAN M. MULL | 410-576-4227

CONTACT CHRISTOPHER R. RAHL | 410-576-4222

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Extended CARES Act Bankruptcy Provisions Set to Expire

Among many other accommodations, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided small business and individual debtors with expanded access to bankruptcy relief. The extended provisions include:

Increasing the debt limit from $2,725,625.00 to $7,500,000.00 for debtors seeking to file a Chapter 11 bankruptcy petition as a small business debtor under the new subchapter V provisions in the Small Business Reorganization Act;

• Amending the definition of “income” to exclude federal relief payments related to COVID-19 for chapters 7 and 13;
• Excluding federal COVID-19 relief payments from the calculation of disposable income for Chapter 13 plan confirmation purposes; and
• Permitting debtors in Chapter 13 to seek plan modifications when experiencing COVID-19-related financial hardships, including extending the plan term to seven years.

Originally set to expire in March 2021, these provisions were extended for another year to March 27, 2022, pursuant to the COVID-19 Bankruptcy Relief Extension Act of 2021. While there appears to be bipartisan support for a similar extension, we have yet to see a concrete proposal to extend some or all of the CARES Act bankruptcy provisions.

Practice Point: Small business debtors and their creditors should be mindful of the approaching expiration of the increased debt limit for subchapter V eligibility. Unless a legislative intervention materializes, there may be an uptick in filings before the end of the month by debtors who wish to take advantage of the increased debt limit.

For additional information on the impact of the coronavirus, visit our information hub for a list of up-to-date content.

For questions about this topic, please contact Bryan M. Mull.

CONTACT BRYAN M. MULL | 410-576-4227

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CFPB Puts Auto Repossessions in its Crosshairs

The Consumer Financial Protection Bureau (CFPB) recently published a compliance bulletin addressing its concerns over observed trends in automobile repossessions.

Amid an overheated market for used cars, the CFPB noted that auto loan servicers may be incentivized into risky repossession practices. The CFPB reported that it has observed servicers engaged in unfair, deceptive or abusive acts and practices in connection, including, such as:

• Repossessing vehicles from borrowers who brought payments current or agreed to a payment plan with the servicer;
• Conducting misleading repossessions resulting from inaccurate coding, sloppy record keeping and lack of communication between repo agents and servicers;
• Failing to provide accurate balance statements to borrowers, which can result in borrowers failing to pay the appropriate amount to resolve a delinquency;
• Misleading borrowers about how servicers will apply payments;
• Charging unlawful fees, such as unnecessary force placed insurance, which drives borrowers into delinquency; and
• Demanding payment from borrowers before returning personal items from a repossessed vehicle.

Practice Point: According to the bulletin, auto loan servicers should review their policies and procedures to ensure appropriate processes in place to cancel unwarranted repossessions and halt repo referrals in a timely fashion. The CFPB also urges servicers to review consumer complaints to identify any potential infirmities in their repossession processes and identify noncompliant service providers.

For questions about this topic, please contact Bryan M. Mull.

CONTACT BRYAN M. MULL | 410-576-4227

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NFT Agreements Require Specific Terms

Click here to read this article by Ned T. Himmelrich.

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