Consumer Financial Services Alert - September 9, 2008 September 09, 2008
In This Issue

Ninth Circuit Reinstates Part of California Affiliate Information Sharing Law

The Ninth Circuit held that preempted portions of California’s 2004 Financial Information Privacy Act were severable from portions that were not preempted by FCRA. The California law allows consumers to opt out of information sharing arrangements between financial institutions and affiliates. FCRA, meanwhile, prohibits state restrictions on the sharing of information between affiliates. The Ninth Circuit previously held that FCRA preempted the affiliate-sharing provision of the California law to the extent it related to “consumer report” information under FCRA. On remand, the district court found that the California law did not survive FCRA preemption, and even if a portion did survive, it could not be severed from the preempted whole. The Ninth Circuit reversed, noting that not all nonpublic personal information under the California law constituted “consumer report information” under FCRA. It held that California law permits severing the statute as to non-consumer report, nonpublic personal information. Click here for Am. Bankers Ass'n v. Lockyer, No. 05-17163 (9th Cir. Sept. 4, 2008).

FDIC Issues Best Practices on LMI Mortgage Lending

The FDIC issued a Financial Institution Letter detailing best practices discussed at a forum on mortgage lending for low- and moderate-income households. The letter discusses many existing and proposed practices banks and others can use to increase the availability of LMI mortgage loans, including extending repayment schedules and expanding alternative underwriting processes for consumers with limited credit history. Click here for the letter.

OTS Issues Guidance on Terminating, Reducing and Suspending HELOC Accounts

The OTS issued guidance on managing home equity line of credit risk through terminating, reducing and suspending accounts. The guidance states that federal savings banks must follow federal laws and rules designed to protect HELOC customers when taking such actions. The guidance outlines these laws and rules. Click here for the guidance.

FRB Publishes Consumer Mortgage Refinancing Guide

The FRB published A Consumer's Guide to Mortgage Refinancings on its website. The guide, among other things, addresses the eligibility requirements for refinancings, costs and the "break-even point" of refinancings, and shopping for a new loan. Click here for the guide.