In Cooper v. Fay Servicing, LLC, 2015 WL 4470213 (S.D. Ohio July 17, 2015), the mortgagors sued the servicer of their real estate loan asserting claims for alleged violations of Regulation X relating to the loss mitigation process. Critical to this case was the timing of the loss mitigation process that resulted in the alleged Regulation X violations, the date of the foreclosure filing, and the date of the foreclosure sale. Specifically, the foreclosure proceeding was initiated on January 4, 2014, six days prior to the effective date of the CFPB’s new Mortgage Rules, while the alleged Regulation X violations occurred in December 2014. The foreclosure sale had not been completed.

Defendants argued that Plaintiffs were precluded from enforcing their Regulation X claims because the complaint initiating the foreclosure action was filed on January 4, 2014, six days prior to Regulation X’s January 10, 2014 effective date. Citing Campbell v. Nationstar Mortg., 2015 WL 2084023, Defendants argued that applying Regulation X would be impermissibly retroactive. However, the District Court distinguished Campbell, where both the loss mitigation process and foreclosure sale occurred before the January 10, 2014 effective date. Here, the foreclosure sale had not yet occurred.

Relying on White v. Wells Fargo Bank, 2015 WL 1842811 and Lage v. Ocwen Loan Servicing LLC, 2015 WL 631014, the District Court held that Plaintiffs’ Regulation X claims did not constitute an impermissible retroactive application of Regulation X because the language of 12 C.F.R. § 1024.41 contemplates that a party may seek to enforce his or her rights after a foreclosure complaint is filed, which was presumably during the effective time period of the new CFPB Mortgage Rules. Specifically, the District Court held that “while it would constitute retroactive application to apply 12 C.F.R. § 1024.41 to a case where the date of enactment [of the new Mortgage Rules] trailed the foreclosure sale, the regulation contemplates application after a foreclosure action has been brought.” Therefore, since Plaintiffs are permitted to assert their loss mitigation rights up to 37 days prior to the foreclosure sale (during the effective time period of the new Mortgage Rules), their Regulation X claims were not impermissibly retroactive.

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