Two enforcement actions filed by the CFPB recently went to trial in federal district court.

One of the cases was filed by the CFPB in July 2014 in a Wisconsin federal district court against two law firms and four of the firms’ attorneys for alleged violations of Regulation O, formerly known as the Mortgage Assistance Relief Services Rule, and for engaging in alleged deceptive practices in violation of the CFPA UDAAP prohibition.  The CFPB’s complaint alleged that the defendants violated Regulation O by charging advance fees to consumers before obtaining a loan modification, making various misrepresentations, and failing to provide required disclosures.  It alleged that the defendants violated the CFPA UDAAP prohibition by various actions that included deceiving consumers into thinking that they would receive legal representation even though many consumers never spoke with an attorney or had their case reviewed by one.

The district court held a five-day bench trial that began on April 24, 2017.  In various pre-trial rulings, the district court found that the defendants had engaged in conduct that would constitute a violation of Regulation O unless they could establish at trial that they satisfied the Regulation O attorney exemption.  (For example, the court found that they had charged advance fees before obtaining a loan modification and failed to provide required disclosures.)  Other issues to be decided at trial included whether the defendants had made certain of the misrepresentations alleged by the CFPB.  Post-trial briefs are due later this month.

The second case was filed by the CFPB in May 2015 in a California federal district court against two related companies offering a biweekly mortgage payment program and their individual owner.  The CFPB’s complaint alleged that the defendants engaged in deceptive telemarketing acts or practices in violation of the Telemarketing Sales Rule and engaged in abusive and deceptive acts or practices in violation of the CFPA UDAAP prohibition by making false representations regarding the costs of the defendants’ program and the savings consumers could achieve through the program.

The district court held a six-day bench trial that also began on April 24, 2017 at which the CFPB sought to prove that the defendants engaged in the conduct alleged in its complaint.  Post-trial briefs are due to be filed next month and the court has scheduled closing arguments for June 26, 2017.