Consumer Financial Services Alert - January 12, 2010 January 12, 2010
In This Issue

FRB Issues Final Rule on Credit Cards, HELOCs and Private Education Loans

Today, the FRB approved a final rule implementing the changes to Regulation Z required by the Credit Card Accountability Responsibility and Disclosure Act of 2009. The final rule also includes provisions that affect home equity lines of credit subject to Regulation Z (although the final rule does not change the proposed revisions to those portions of Regulation Z affecting HELOCs published on August 26, 2009), as well as previously adopted rules applicable to private education loans. Although the final rule has an effective date of February 22, 2010, the mandatory compliance date is July 1, 2010 for those provisions that are not requirements of the Credit Card Act.

Federal Judge Dismisses City of Baltimore’s Lending Discrimination Case Against Wells Fargo

A federal court in Maryland dismissed for lack of standing a lawsuit brought by the City of Baltimore against Wells Fargo, which alleged that Wells had engaged in the practice of “reverse redlining.” The suit, which garnered substantial publicity and resulted in several court decisions from prior attempts by Wells to have the case dismissed, alleged that Wells Fargo “targeted” minority borrowers for subprime mortgage loans, which was alleged to have harmed the City by way of lost tax revenue resulting from foreclosures, as well as increased crime and expenses. Disagreeing with the judge previously assigned to the case, the court held that the City’s allegations were based on “implausible” causal connections that could not satisfy Constitutional standing requirements, given the relatively small number of Wells foreclosures in Baltimore compared to the overall number of foreclosures in the City. The court’s rationale in finding the City lacked standing to sue was similar to that of the judge in Alabama who last year dismissed virtually identical claims by the City of Birmingham against several lenders, as reported in the August 25, 2009 Alert. Click here for City of Baltimore v. Wells Fargo Bank, No. 1:08 CV-00062 (D. Md. January 6, 2010).

HUD Updates New RESPA Rule FAQs

HUD released an update to its FAQs of the new Real Estate Settlement Procedures Act rules. The update provides guidance on situations where one provider conducts the settlement and another provider performs the remainder of the title-related services. The FAQs give instructions on how to document this arrangement on the GFE and HUD-1, as well as for what should be noted on the “Written List of Providers.”