BankBCLP.com

Main Content

Reverse Mortgage Update: New York Law Mandates New Foreclosure Notices and Certificate of Merit

New York has signed into law an amendment redefining a reverse mortgage as a “home loan.” With this amendment, statutory pre-foreclosure ninety day notices (RPAPL 1304) and a “certificate of merit” (CPLR 3012-b) will be required in all New York reverse mortgage foreclosures. Additionally, New York’s foreclosure settlement conference law (CPLR 3408) now incorporates by reference the new “home loan” definition.

The legislation was signed by Gov. Andrew Cuomo on April 12, 2018 but “shall be deemed to have been in full force and effect on and after April 20, 2017.” However, the pre-foreclosure notice requirement specific to reverse mortgages has an effective date of May 12, 2018.

Under the new legislation, for actions commenced after May 12, 2018, lenders, assignees or servicers are required to provide a pre-foreclosure notice at least 90 days before commencing legal action against the borrower or borrowers at the property address and any other addresses of record. The language of the notice is set by statute.

Although the 90-day waiting period does not apply, or ceases to apply under certain circumstances (i.e. where a borrower no longer occupies the residence as a principal dwelling),the 90 Day Notice is a condition precedent which, if not strictly complied with, may subject a foreclosure action to dismissal. Further, the foreclosing party is required by statute to deliver the notices by first class and certified mail. Relevant case law makes clear that evidencing the proof of mailing may require tracking documentation for first class mail and certified receipts for notices sent by certified mail.

Read More

The Atlanta Banking Landscape

Jonathan and I discuss the evolving landscape for banking in our hometown, Atlanta, Georgia, in this latest episode of The Bank Account.

the-bank-accountSince the beginning of 2018, there has been steady stream of significant deals affecting the Atlanta MSA.

  • January – Ameris Bancorp’s acquisition of Hamilton State Bancshares for $405 million, priced at 2.05x tangible book;
  • March – Renasant Corporation’s acquisition of Brand Group Holdings for $453 million, priced at 2.35x tangible book;
  • April – CenterState Bank Corporation’s purchase of Charter Financial Corporation for $362 million, priced at 1.95x tangible book;
  • April – National Commerce Corporation’s purchase of Landmark Bancshares for $115 million, priced at 2.22x tangible book; and
  • May – Cadence Bancorporation’s purchase of State Bank Financial Corporation for $1.4 billion, priced at 2.48x tangible book.

The landscape looking forward is significantly changed.  Below is a pro forma list of the community banks (for these purposes, banks with total deposits of less than $15 billion) with the largest remaining presence in the Atlanta MSA.

Bank Atlanta MSA Deposits Percentage of Total Deposits in Atlanta MSA
Fidelity Bank $3,062,430 78%
Renasant Bank (with Brand) 2,740,319 30%
United Community Bank 2,533,770 27%
Atlantic Capital Bank 1,572,642 74%
Ameris Bank (with Hamilton) 1,416,141 18%
Cadence Bank (with State Bank) 1,271,128 11%
United Bank 980,658 84%
National Bank of Commerce (with First Landmark) 754,549 25%
Metro City Bank 740,409 78%
CenterState Bank (with Charter) 711,779 8%
Read More

Regulators Update BSA/AML Exam Manual Sections

Just in time for the effective date of FinCEN’s Customer Due Diligence (CDD) and Beneficial Ownership Rules, on May 11, 2018 the Federal Financial Institutions Examination Council (FFIEC) published updates to its Bank Secrecy Act/Anti-Money Laundering Examination ManualThe FFIEC is an interagency body comprised of representatives of the U.S. Federal Reserve Board, the FDIC, OCC, CFPB, NCUA, and state banking regulators.  The agencies’ changes (1) replace existing CDD sections of the manual and (2) add new Beneficial Ownership overview and exam procedures sections, in each case corresponding to the new CDD and Beneficial Ownership requirements.

The publication of this new content was announced through separate press releases by the FDIC, OCC, and NCUA.  The OCC’s release (OCC Bulletin 2018-12) makes the technical point that the new CDD content replaces pages 56-59 of the FFIEC manual, last updated in 2014, and the FDIC’s release (FIL-26-2018) adds that the new sections will be incorporated into the manual in its next update.  The FFIEC’s examination manual is used by the bank regulators in conducting supervisory BSA/AML exams and features step-by-step review procedures to be used by examiners, consistent with the FFIEC’s statutory purpose of establishing uniform forms and regulatory examination processes.

One doesn’t generally expect new substantive guidance or interpretation to emerge from the FFIEC examination procedures, but a review of this new content emphasizes the following:

(1) BSA/AML exams including scope periods on or after May 11, 2018 will feature scrutiny of new accounts opened on or after that date.  At this point, the CDD and Beneficial Ownership rules are live and in full effect, and institutions will be expected to adhere to them.  For example, the revised examiner’s guide specifies:  “3. On the basis of a risk assessment, prior examination reports, and a review of the bank’s audit findings, select a sample of new accounts opened for legal entity customers since May 11, 2018 to review for compliance with the Beneficial Ownership Rule.”  The transition and implementation period for this rule is officially over.

Read More

GDPR Considerations for Community Banks

The May 25, 2018, compliance effective date of the EU’s General Data Protection Regulation (GDPR) is just weeks away, and many U.S.-based companies have at least by now taken stock of their EU customer base and operations, and developed a baseline set of compliance plans.  For many, that might only entail a data inventory and controls that would ensure that changes to the company’s business plan, advertising strategies, and physical footprint would be assessed for GDPR compliance in advance, just as with any other area of compliance.  However, for companies whose business relies upon the gathering and use of consumer data, the GDPR implementation process has been onerous.

In particular, as recent American Banker coverage has described, this compliance effort is hitting financial institutions of all sizes hard.  While the exact nature and magnitude of enforcement exposure is still unclear, U.S. banks should take a broad view of their overseas business – including where U.S. customers temporarily work or travel – in order to stay ahead of GDPR compliance issues.

For U.S.-based small businesses, including community banks, the conventional wisdom has focused on whether the institution solicits or services EU customers.  Unfortunately this approach may cause banks or other businesses to underestimate their potential exposure.

For purposes of the GDPR, compliance obligations for companies without a physical presence in the EU are generally only implicated if the company (1) offers goods and services in the EU or (2) monitors the behavior of EU customers (referred to affectionately as “data subjects” in the regulation).

Of particular concern for community banks is whether tourists, foreign work assignments, or overseas service members could cause the bank to become subject to GDPR obligations.

Read More

S Corp Workshop

S Corp Workshop

May 2, 2018

Authored by: Bryan Cave

On Monday, May 14, 2018, we will be hosting, with our friends at Porter Keadle Moore, LLC and FIG Partners, an S Corp Workshop exploring issues affecting S Corp banks following adoption of the Jobs and Tax Cuts Act.

Operating as an S Corp has historically been an appealing choice for many financial institutions that have the flexibility to be taxed in a variety of ways. In light of the recent tax reform, however, an S Corp structure may not be as beneficial as it has traditionally been in the past. Whether you’re an existing S Corp considering converting, or just want to learn more about key decision points, join us as we take a deeper dive into the mechanics and calculations as well as discuss case studies on how using this election can help you thrive in today’s dynamic business environment.

Monday, May 14
7:30 am – 5:30 pm
Office of Bryan Cave Leighton Paisner
One Atlantic Center, 14th Floor
1201 W. Peachtree St., N.W.
Atlanta, GA 30309

Click here for Agenda.

Read More

New Mortgage Servicing Rules for “Successors in Interest”

Effective as of April 19, 2018, successors in interest to property secured by mortgage loans that are covered by the Real Estate Settlement Procedures Act (“RESPA”) and Truth In Lending Act (“TILA”) now have certain rights under those acts.

These amendments are part of the Consumer Financial Protection Bureau’s 2016 Mortgage Servicing Rule amendments to RESPA and TILA.  The CFPB issued the new rules because “it had received reports of servicers either refusing to speak to a successor in interest or demanding documents to prove the successor in interest’s claim to the property that either did not exist or were not reasonably available.”  81 Fed. Reg. 72,160 at 72,165. The rules are therefore designed to make it easier for potential successors in interest to communicate with servicers and establish that they are successors in interest.

At the outset, the new rules define a “successor in interest” as anyone who obtains an ownership interest in a property secured by a mortgage loan, provided that the transfer occurs under one of the scenarios listed in the new rule.  The scenarios range from a transfer resulting from the death of the borrower to a transfer from the borrower to a spouse or child.  The person does not have to assume the loan in order to be a successor in interest.

The amendments create several potential pitfalls for servicers because certain obligations are triggered when a servicer receives actual or inquiry notice that someone might be a successor in interest.  As discussed below, the amendments require servicers to “promptly” communicate with anyone who may be a successor in interest.  Servicers must also only request documents “reasonably” required to confirm whether that person is in fact a successor in interest.  And a “confirmed” successor in interest now has the same rights as the original borrower under RESPA and TILA mortgage servicing rules.

Read More

Ragnar!

Ragnar!

April 20, 2018

Authored by: Robert Klingler

On April 13 and 14, 2018, the Financial Services Corporate and Regulatory Team of Bryan Cave Leighton Paisner sponsored two teams at the Atlanta Ragnar Trail race.  On this episode of The Bank Account, Jonathan and I discuss the Ragnar race, our thoughts about the Ragnar race, the ambiance of the Ragnar race, the decline of multi-bank charter bank holding companies, and a few final thoughts about the Ragnar race.  We also give thanks to so many colleagues that helped us with the Atlanta Ragnar Trail race.  In other words, if you’re interested about the Atlanta Ragnar Trail race, this is a great episode.

 

The BCLP Ragnar Teams

We divided into two teams, Team BSA (Bankers Speed Ahead) and Team AML (Awkwardly Moving Lawyers).  On paper, it looked like it would be a tight race.  However, the trails proved to be significantly different than running on paper.  In addition, the Awkwardly Moving Lawyers became significantly more awkwardly moving (and slower) when our fastest colleague, Dan Wheeler, badly twisted his ankle on his first leg of the race.  (As one banker commented, the lawyers were quite effective in ensuring that their clients would prevail.)

Team BSA finished in 21 hours, 51 minutes and 50 seconds; 23rd overall and 1st in the corporate team division.

The bankers that sped ahead were as follows:

  • Charlie Crawford, Hyperion Bank
  • Heath Fountain, Planters First Bank
  • Bo Brannen, Georgia Bankers Association
  • Nick Clark, Charter Bank
  • Jim Walker, PrimeSouth Bank
  • JW Dukes, Ameris Bank
  • Jackson McConnell, Pinnacle Bank
  • Dennis Zember, Ameris Bank

Several hours later, Team AML finished in 23 hours, 38 minutes and 19 seconds; 63rd overall and 6th in the corporate team division.

The awkwardly moving lawyers were as follows:

  • Ryan Barrow, Porter Keadle Moore (but an honorary lawyer for the weekend)
  • Megan Canning
  • Crystal Homa
  • Dan Wheeler
  • Kevin Strachan
  • Jonathan Hightower
  • Sean Christy
  • Myself

Charlie Crawford, Jackson McConnell, and Dennis Zember were the three fastest runners for the weekend from Teams BSA and AML, but I believe all had a good time.

the-bank-accountIn actual banking news, we discussed Hilary Burns story in the American Banker, “Do multiple charters still make sense?” In our discussion of the landscape of the U.S. banking environment last year, we touched on the statistical decline in multi-bank charters.

  • In 2016, 632 charters were held by 241 multi-bank holding companies (representing 2.6 charters each).
  • In 2006, 1,670 charters were held by 518 multi-bank holding companies (representing 3.2 charters each).

In 2018, we struggle (and in the podcast, the struggle is awkward silence) to provide any material benefit to the multi-bank charter structure.

Read More

Introducing BCLP and Barry Hester

Jonathan and I discuss two major deals for our us: the formation of Bryan Cave Leighton Paisner (BCLP) and the return or Barry Hester in this latest episode of The Bank Account.

Bryan Cave Leighton Paisner LLP is the result of the mergers of historically U.S.-based Bryan Cave LLP and historically U.K.-based Berwin Leighton Paisner LLP.  As a truly global firm with over 1,600 lawyers operating literally around the clock, we believe Bryan Cave Leighton Paisner is well positioned to serve clients around the globe.  Our blog is still available at BankBryanCave.com, but is also now available at BankBCLP.com.  We’ll figure out over time what our branding looks like.

the-bank-accountBarry Hester re-joins our financial institutions practice after serving for many years as an assistant general counsel for EverBank and TIAA FSB.  In this episode of The Bank Account, we talk with Barry about his experience with the “good guy” and “bad guy” banking compliance laws.  The “good guy” laws include the Servicemembers Civil Relief Act and the Military Lending Act, while the “bad guy” laws include the Bank Secrecy Act and Anti-Money Laundering laws.  As noted in the podcast, Barry has already been busy contributing good content for our blog, with a post last week about FinCEN’s new FAQ on the Customer Due Diligence rules.

As discussed previously, we are sponsoring two teams, one of lawyers and one of bankers, for the Atlanta Ragnar Trail Run on April 13th and 14th.  Sixteen of us will be taking turns running five mile legs at the Georgia International Horse Park over a 24-hour (or so) period.  Team BSA (or Bankers Speed Ahead) will generally consist of our friendly bankers, while Team AML (or Awkwardly Moving Lawyers) will consist of our compatriots from the firm.  I expect our next podcast will relay some interesting stories from the trails.

Read More

FinCEN Provides Relief to CDD Obligations for Existing Customers

The Financial Crimes Enforcement Network (FinCEN) published long-awaited additional Frequently Asked Questions on April 3, 2018 (the “Guidance”) relating to its Customer Due Diligence (CDD) Rule, which FinCEN promulgated pursuant to the Bank Secrecy Act (the “CDD Rule”).  This comes at a time when most covered institutions are in the final stages of implementing plans to comply with the CDD Rule by its May 11, 2018 compliance applicability date.  FinCEN previously published technical amendments to the Rule on September 29, 2017 and an initial set of FAQs on July 19, 2016.  While such Guidance does not have the weight of authority of statute or regulation, it has traditionally helped to form the basis for examination and enforcement expectations.  Here we will focus on themes in the new Guidance relating to application of the rule to existing customers.

As a reminder, the CDD Rule was originally published on May 11, 2016 after years of public hearings and comment periods.  The rule sets forth CDD as a “fifth pillar” of a BSA/AML compliance program in addition to those established by the Bank Secrecy Act itself:  system of internal controls, the appointment of a responsible officer, training, and independent testing.  CDD entails upfront due diligence and ongoing monitoring, and this rule establishes the collection of Beneficial Ownership information as a required element of CDD for legal entity customers.  In releasing the CDD Rule, FinCEN emphasized that CDD is not technically a new requirement but has always been an expected part of a BSA/AML program that results in effective suspicious activity monitoring and risk mitigation.

Read More

D.C. Circuit Rejects FCC’s TCPA Interpretation

March 27, 2018

Categories

On March 16, 2018, the D.C. Circuit issued its long-awaited opinion on the FCC’s 2015 Declaratory Ruling and Order (“2015 Order”) interpreting various sections of the Telephone Consumer Collection Practices Act (“TCPA”)[1]. Of note, the Court specifically rejected and set aside the FCC’s interpretation of what constitutes an Automatic Telephone Dialing System (“ATDS”). The Court also rejected the FCC’s one-call “safe harbor” for re-assigned phone numbers. At first glance, this may seem like a win for those defending TCPA lawsuits; however, the opinion may create more questions than answers.

The Court addressed (i) what types of automatic dialing equipment fall under the TCPA’s definition of ATDS; (ii) whether a dialer violates the TCPA if a number is reassigned to another person who has not given consent to be called; (iii) how a consenting party may revoke consent; and (iv) whether the consent exemption for healthcare-related calls was too narrow. The Court’s scope was limited to whether these aspects of the FCC’s 2015 Order were “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). The Court upheld the FCC’s “approach to revocation of consent, under which a party may revoke her consent through any reasonable means” and rejected the one-call “safe harbor” for re-assigned phone numbers as “arbitrary and capricious.”

Read More
The attorneys of Bryan Cave LLP make this site available to you only for the educational purposes of imparting general information and a general understanding of the law. This site does not offer specific legal advice. Your use of this site does not create an attorney-client relationship between you and Bryan Cave LLP or any of its attorneys. Do not use this site as a substitute for specific legal advice from a licensed attorney. Much of the information on this site is based upon preliminary discussions in the absence of definitive advice or policy statements and therefore may change as soon as more definitive advice is available. Please review our full disclaimer.