MBA Compliance
Essentials

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Consumer Complaints
Resource Guide

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Mitchell H. Kider
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DISCLAIMER

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PLEASE TAKE NOTE: These materials have been produced by Weiner Brodsky Kider PC.
These materials...
MBA Compliance Essentials℠:
Consumer Complaints Resource Guide

TABLE OF CONTENTS

Author Biographies and Information abou...
MBA Compliance Essentials℠:
Consumer Complaints Resource Guide

AUTHOR BIOGRAPHIES AND INFORMATION ABOUT THE FIRM

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MBA Compliance Essentials℠:
Consumer Complaints Resource Guide
Jim currently serves as Outside General Counsel to the Nati...
MBA Compliance Essentials℠:
Consumer Complaints Resource Guide

SUMMARY OF COMPLIANCE RESOURCE CONTENTS
This section of th...
MBA Compliance Essentials℠:
Consumer Complaints Resource Guide
acknowledged or investigated the matter and indicated to th...
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MBA Compliance Essentials: Consumer Complaints Resource Guide

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The MBA Compliance Essentials Consumer Complaints Resource Guide™ is a part of the MBA Compliance Essentials Program, which includes deep-dive webinars and comprehensive resource guides to serve as base for the development of your company's policies and procedures in these important areas. This is only a sample purchase the full Resource Guide at www.campusmba.org

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MBA Compliance Essentials: Consumer Complaints Resource Guide

  1. 1. MBA Compliance Essentials io n. or g SM ba ed uc at Consumer Complaints Resource Guide m Mitchell H. Kider Managing Partner, Weiner Brodsky Kider PC James M. Milano Member, Weiner Brodsky Kider PC 13597
  2. 2. DISCLAIMER io n. or g PLEASE TAKE NOTE: These materials have been produced by Weiner Brodsky Kider PC. These materials provide an overview of some of the federal and state laws and regulations, and investor guidelines that may affect or apply to mortgage originators and/or servicers in connection with consumer complaints in connection with residential mortgage loans. These materials are designed to provide the reader with a general overview and understanding of several of the provisions of federal and state law. These materials are not intended to and do not provide legal advice, and do not create an attorney-client relationship between the law firm of Weiner Brodsky Kider PC and the recipient. Provisions of law and guidelines described herein are, in many instances, paraphrased, and a careful reading of the relevant laws or guidelines may reveal exceptions or different interpretations that might be applicable to a particular set of facts. These materials cover areas in which the proper interpretation of law or guidelines can be highly dependent upon particular facts. Accordingly, taking action simply upon the basis of information provided in these materials is not advisable. The materials are not a substitute for consultation with qualified legal counsel regarding the manner in which the laws referenced herein may be interpreted and apply to particular facts. These materials are for informational and educational purposes only to serve as a basis for policies and procedures subject to further consultation with counsel, and are not a solicitation and should not be construed as such. m ba ed uc at ©2013 Weiner Brodsky Kider PC                                         Copying or other unauthorized redistribution of this publication — in whole or in part — violates U.S. copyright law. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the copyright owner. MBA is not responsible for the content of these materials
  3. 3. MBA Compliance Essentials℠: Consumer Complaints Resource Guide TABLE OF CONTENTS Author Biographies and Information about the Firm............................................................................. Page 3 Summary of Compliance Resource Contents ........................................................................................ Page 5 Statutory Sources of Requirements for Handling Consumer Complaints .......................................... Page 5 State Law Requirements ......................................................................................................................... Page 13 g Implications and Specific Requirements and Procedures .................................................................. Page 16 n. or Model Policy and Disclosures ............................................................................................. Page 21, Exhibit A m ba ed uc at io CFPB Company Portal Manual ............................................................................................ Page 33, Exhibit B 2
  4. 4. MBA Compliance Essentials℠: Consumer Complaints Resource Guide AUTHOR BIOGRAPHIES AND INFORMATION ABOUT THE FIRM n. or g Mitchel H. Kider is an attorney and author residing in the Washington, DC metropolitan area. He has been actively involved in the housing policy arena for 39 years. Currently, Mitch is the Chairman and Managing Partner of Weiner Brodsky Kider PC, a national law firm specializing in the representation of financial institutions, residential homebuilders, and real estate settlement service providers. In his 32 years as a practicing attorney, Mitch has represented banks, mortgage companies, homebuilders, credit card issuers, and other financial service companies in a broad range of regulatory, compliance, policy and litigation matters. As a litigator, Mitch has defended clients in more than 100 class action lawsuits in federal and state courts throughout the country. In addition, he represents his clients in investigative and enforcement matters before the United States Consumer Financial Protection Bureau, Department of Housing and Urban Development, the Department of Veterans Affairs, the Department of Justice, the Federal Trade Commission, Ginnie Mae, Fannie Mae, Freddie Mac, and various state and local regulatory authorities and Attorneys General offices. uc at io Mitch acts as outside General Counsel to smaller companies and special regulatory and litigation counsel to Fortune 500 companies. He is a frequent speaker on real estate finance and mortgage banking matters before trade associations and other industry groups, including the Mortgage Bankers Association (MBA), state and local mortgage bankers associations, the Real Estate Settlement Providers Council, Inc. (RESPRO), the National Association of Home Builders (NAHB), the Leading Builders of America, October Research, Thompson Reuters, and Building Champions. Mitch is frequently sought out by the national media for his expertise in real estate finance and mortgage banking. He is a Faculty Fellow of the Mortgage Bankers Association, and a former lecturer at the Learning Center for Real Estate Finance and the School of Mortgage Banking. ed Mitch is the author of six law books pertaining to residential mortgage finance and he has also written a number of articles on the subject. His most recent book, Consumer Protection and Mortgage Regulation Under Dodd-Frank (2012 Edition), was published by West/Thomson Reuters. ba Mitch is a member of a Housing Industry Advisory Council for the Residential Energy Services Network (RESNET). The Council’s role includes review of the RESNET Strategic Planning framework and the annual priorities of the organization. m Mitch received his undergraduate degree from the University of Wisconsin – Madison in 1978 and his law degree from Washington University School of Law in 1981. While in law school, Mitch was a law review editor and a research assistant to Daniel Mandelker the Howard A. Stamper Professor of Law and one of the nation’s leading legal authorities on land use, housing and environmental law. * * * Jim Milano is a Member of the law firm of Weiner Brodsky Kider PC. Jim focuses his practice on federal and state consumer financial services regulatory compliance, and transactional matters that affect consumer finance and mortgage companies, investors and the vendors that serve such entities. Jim is nationally recognized as one of the leading lawyers on reverse mortgage law. 3
  5. 5. MBA Compliance Essentials℠: Consumer Complaints Resource Guide Jim currently serves as Outside General Counsel to the National Reverse Mortgage Lenders Association, and is a former Chairman of the Manufactured Housing Institute's Finance Lawyers Committee. Jim frequently publishes articles in journals and is a regular speaker at mortgage banking conferences and webinars. Jim received several undergraduate degrees from Louisiana State University in 1983 and 1986, and his law degree from Louisiana State University in 1989, and an LL.M. from Emory University in 1991. Jim is licensed to practice law in the District of Columbia, Maryland and Virginia, as well as Georgia and Louisiana. Prior to joining Weiner Brodsky Kider in 2000, Jim worked as Corporate Counsel and General Counsel, starting in 1992, at several large consumer finance and mortgage banking companies. n. or g Weiner Brodsky Kider PC is a Washington, D.C.-based firm with a national practice focused on compliance, regulatory, transactional and litigation matters related to financial services concerns. The firm represents a broad client base, from start-up businesses to Fortune 500 companies, throughout the United States. io The firm concentrates its practice in consumer financial services and litigation. The firm also counsels clients with regard to corporate and trade association matters and assists clients in dealing with a variety of government agencies in connection with both compliance and transactional matters requiring regulatory approval. m ba ed uc at Weiner Brodsky Kider's clients include financial institutions, mortgage banking companies, private equity firms, insurance companies, investment bankers, large municipalities, real estate developers, home builders, and trade associations. 4
  6. 6. MBA Compliance Essentials℠: Consumer Complaints Resource Guide SUMMARY OF COMPLIANCE RESOURCE CONTENTS This section of the guidebook discusses the various provisions of federal and state law, and agency guidelines that address or impact how lenders handle complaints from residential mortgage loan borrowers and others with respect to mortgage origination and loan servicing. The section on "Statutory Sources of Requirements for Handling Consumer Complaints" explains the legal basis for consumer complaint systems. n. or g The discussion of Implications and Specific Requirements, Policies and Procedures describes the implications of the requirements for a mortgage company to maintain policies and procedures for customer complaints, including a process for in-take of consumer complaints, documenting, tracking, monitoring and resolving such complaints. It also discusses allowing for appeals and providing for investor or other third party reporting of complaints. Finally, this section discusses the CFPB’s creation of the Consumer Complaint Portal. The discussion of Disclosures and Notices describes the form, content, and timing requirements or suggestions for handling of consumer complaints. It also includes intake materials for the CFPB system. at io STATUTORY SOURCES OF REQUIREMENTS FOR HANDLING CONSUMER COMPLAINTS uc Mortgage companies can receive complaints that originate directly from consumers or come from various agencies in different forms. The discussion in this section regarding sources of consumer complaints provides an overview of the separate agencies and regulators responsible for coordinating consumer complaints. Companies have varying responsibilities depending on the source of the complaint. As discussed below, companies should take note of the numerous media and sources from which potential complaints may be received. m ba ed Further, companies should take note of the timing requirements under the various agency issuances to ensure compliance with specific regulatory provisions. For example, the CFPB consumer complaint portal manual requires companies to respond to a consumer complaint within 15 days and close out the complaint within 60 days of receipt. Other regulators, such as the FHA, encourage “prompt” responses but do not require a specific time requirement for providing a consumer with a response. Meanwhile, recently finalized regulations under the Real Estate Settlement Procedures Act (RESPA) require mortgage servicers to send an acknowledgment of receipt to the consumer within five (5) days. These requirements will become effective on January 10, 2014. Moreover, states have their own mortgage banking regulations and statutes with which companies must comply. For those companies subject to state law, note that federal law does not preempt state law regarding consumer complaints, thus states are free to establish their own requirements for answering consumer complaints. Also, some states have established offices tasked with monitoring or receiving consumer complaints against companies conducting business within the states. Relevant state provisions regarding consumer complaints are outlined below. A “complaint” may differ under various regulatory requirements or a mortgage company’s policies and procedures. For instance, a "complaint" may or may not be defined to be a Qualified Written Request (QWR) under the RESPA, or an escalated process under HAMP or the Fannie Mae and Freddie Mac Servicer Alignment Initiative. Also, a "response" could mean a lender has 5
  7. 7. MBA Compliance Essentials℠: Consumer Complaints Resource Guide acknowledged or investigated the matter and indicated to the consumer the next steps for resolution. And, "resolution" could have a prescribed meaning, such as under the Regulation Z billing error notice requirements for HELOCs, or such term could be used merely to describe one of several outcomes in a voluntary consumer complaint process. n. or g Thus, financial services companies should have in place policies and procedures, along with applicable timelines to address consumer complaints, in order to protect against reputational risk, operate in safe and sound manner and otherwise comply. A mortgage company should have procedures and systems in place to be able to respond to borrower inquiries and complaints relating to the origination and servicing of mortgage loans. A mortgage company should ensure that these consumer inquiries and complaints are provided fair consideration, given timely and appropriate responses, and that consumers are provided a sufficient resolution. Companies can achieve these measures by implementing the appropriate policies and procedures to manage the consumer complaints that arise. uc Administrative Oversight at io Most importantly, mortgage companies should remember that consumer complaints can come from various sources and require different timeframes for acknowledging and responding to the consumer. The assorted agencies and regulators also have varying timeframes for responding to complaints, requests for information, or notices of error. Moreover, within one agency’s rules, there may be different timeframes required depending on the type of consumer complaint or request. For example, CFPB regulations will generally require a company to acknowledge a qualified written request within five (5) days but allow lenders 15 days to respond to other consumer complaints received through the CFPB Portal. Finally, note that certain aspects of this area of regulation and guidance is new and evolving, some of the provisions outlined below are merely guidelines or suggestions, and the rules and expectations in the area of handling consumer complaints undoubtedly will continue to evolve. ba ed The CFPB has enforcement authority with respect to Federal consumer financial laws over “covered persons”, including non-bank mortgage companies and "large" depository institutions.1 Federal banking agencies also retain enforcement authority as prudential regulators over institutions subject to or transferred to their jurisdiction (the OCC for “small” national bank and thrifts, the Federal Reserve, NCUA and Farmer Credit Administration for small creditors subject to their supervisory authority). m Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), Congress directed the CFPB to establish, in consultation with the appropriate Federal regulatory agencies, reasonable procedures to provide a timely response to consumers, in writing where appropriate, to complaints against, or inquiries concerning, a covered person (encompasses depository institutions and mortgage companies), including:    1 2 steps that have been taken by the regulator in response to the complaint or inquiry of the consumer, any responses received by the regulator from the covered person, and any follow-up actions or planned follow-up actions by the regulator in response to the 2 complaint or inquiry of the consumer. 12 U.S.C. §§ 5481(12)(G), 5514(c), and 5515(c). Dodd-Frank Act section 1034(a). 6

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