Nutter Bank Report, August 2011

Headlines

1. Court Says Bank Must Halt Foreclosure, Consider Loan Modification
2. Federal Reserve Imposes New Restrictions on Dividend Waivers
3. Division of Banks Proposes Foreclosure Notice and Reverse Mortgage Rules
4. FDIC Clarifies Statement of Policy Under Section 19 of FDI Act
5. Other Developments: Social Media and SLHC Regulatory Reports

1. Court Says Bank Must Halt Foreclosure, Consider Loan Modification

The U.S. District Court for the District of Massachusetts recently ruled that borrowers may proceed with a lawsuit to prevent foreclosure of a residential mortgage loan where the borrowers claimed they were induced by the bank to default on the loan as a first step in negotiating a modification of the loan. The July 22 ruling involved joint borrowers who were not in default under their home mortgage loan, but stopped making payments when the bank allegedly told them it would consider them for a loan modification if they first defaulted and then