Topline Q2 2016

General information

Filed a brief in a California court case where a guarantor on a commercial real estate loan  escaped liability by refuting its own legal status as a corporation, and by asserting that the creditor created a sham guarantee by treating the guarantor as the primary obligor on the loan. 

Issued Regulatory Compliance Bulletins on the following topics:

  • A California Supreme Court decision that clarifies employers’ responsibilities to provide suitable seating to employees under California wage orders.

  • A final rule issued by the CFPB that expands the number of small banks eligible for exemptions from qualified mortgage standards related to the prohibition on balloon payments and the requirement to establish escrow accounts for high priced mortgages.

  • Recent action by the federal banking agencies to raise the threshold for banks eligible for expanded examination cycles from $500 million to a new maximum of $1 billion in total assets if: (1) the bank is well capitalized, (2) the bank has a CAMELS composite rating of 1 or 2 and (3) the bank is well managed.

  • The CFPB’s anticipated proposal to implement Section 1071 of the Dodd-Frank Act requiring HMDA-like recordkeeping and reporting on loans made to women-owned businesses, minority-owned businesses, and small businesses.  

  • Guidance issued by the federal banking agencies regarding reconciling deposit discrepancies. The issue arises from the regulatory enforcement orders against Citizens Bank of Pennsylvania over its practice of not reconciling to the penny discrepancies between amounts stated on customer deposit slips and actual deposits.

  • A U.S. Supreme Court decision in Spokeo Inc. v. Robins affirming that technical and procedural violations of law that result in no actual harm do not automatically satisfy the constitutional “standing” requirement.

  • An analysis of UCC Section 4406 in its current form which does not include a safe harbor against customer claims. The statute formerly protected banks if they disclosed customer transactions in account statements by item number, amount, and date of payment.  
  • A California court decision, which held that an allegedly erroneous assignment of a residential mortgage is not void and does not give the debtor standing to challenge the assignment. 

 Issued regulatory comment letters to support:

  • Increasing the asset size threshold for banks to have an 18-month examination cycle
  • Expanding eligibility to make balloon payment loans and to be exempted from the requirement to establish escrow accounts for high cost mortgage loans