Practice Areas
Practice Areas

Consumer Financial Services

Practice Leaders: Richard P. Eckman and Gary Apfel

Pepper Hamilton LLP offers counseling and litigation services in all aspects of the federal and state regulation of consumer financial services, including mortgage lending, credit card and consumer lending, private banking, insurance, broker-dealer/’40 Act questions and the distribution of securities products, electronic banking, including issues relating to the Internet, and auto finance and leasing.

Regulatory Compliance

A primary area of our practice is regulatory compliance and new product development, with special emphasis on residential mortgage lending. We counsel financial services clients on issues involving fair lending and fair credit reporting, the Truth-In-Lending Act and Regulation Z, Real Estate Settlement Procedures Act (RESPA) and Regulation X, Equal Credit Opportunity Act and Regulation B, Electronic Funds Transfer Act, Community Reinvestment Act, Fair Credit Reporting Act, state insurance laws, state and local predatory lending laws, and the myriad of other federal and state laws affecting consumer financial services.

We deal with issues relating to federal preemption, interest rate exportation and the offering of consumer financial services nationally, including issues involving state laws that may affect such programs. We often are called upon to survey and analyze the state laws involved in offering new consumer products across the country, including through direct mail or other third parties, and have built a substantial national database.

Such engagements involve new product design and implementation, and the preparation of documentation, disclosures and procedures for various types of mortgage products, as well as open- and closed-end secured and unsecured credit programs, insurance programs, and auto and recreational vehicle finance and leasing programs.

These programs range from more traditional products, such as standard adjustable-rate mortgage loans and home equity lines of credit, to innovative reverse-annuity mortgage products and price-level-adjustable mortgages, asset-management accounts and financial products delivered over the Internet. We conduct audits of the forms and procedures used by lenders, and assist clients in complying with applicable federal and state laws.

This service involves the review of consumer-credit forms, loan applications, adverse-action notices, commitment letters, interest rate lock-in agreements, notes, mortgages and deeds of trust, security instruments, Truth-in-Lending and ARM disclosures, home equity line-of-credit agreements and related materials, advertisements, compliance and procedures manuals, and written internal memos of instructions to loan officers. In certain states, we also represent clients in government relations regarding proposed and existing statutes and regulations.


Pepper represents clients in state and federal courts throughout the nation. Our philosophy of litigation is to advocate our clients’ cause vigorously and cost effectively. In addition to trial and appellate practice for individual cases, we have defended numerous state and federal class actions, and we have been recognized for our work defending clients in multi-district litigation. We frequently represent clients in arbitration and mediation, and we litigate to enforce arbitration clauses.

We represent some of the largest consumer financial services companies in class action and individual lawsuits throughout the country alleging violations of the Equal Credit Opportunity Act, the Truth-in-Lending Act, the Fair Credit Reporting Act, the Fair Debt Collections Practices Act, RESPA, and other federal and state laws. We represent these same clients faced with inquiries and investigations by various state attorneys general. We defend claims under the federal statutes and regulations that govern consumer financial services and under state consumer finance laws including the Uniform Commercial Code, motor vehicle sales finance laws, and unfair and deceptive trade practices laws.

Representative engagements include representing a bank in the defense of claims in several states made under RESPA related to yield- spread premiums. We represent a bank in second-mortgage class actions and, in many states, a finance company with respect to its refund anticipation loan program, including a matter in which the U.S. Supreme Court denied certiorari. We also represented the New Jersey Mortgage Bankers Association in connection with its successful amicus participation in the New Jersey Supreme Court’s decision in Glukowsky v. Equity One, which upheld the OTS’ regulation preempting New Jersey’s law prohibiting prepayment penalties.

Examples of our consumer finance class action experience include:
  • Mar v. Life Bank (Jackson Co. MO 2001) (consumer finance class action dismissed on federal preemption grounds)
  • Russell v. Interbay (Ch. Ct. Cook Co., IL) (consumer finance case settled after dismissal of class allegations)
  • Searcy v. Impac Funding (Wayne Co., MI) (pending consumer finance class action)
  • Hayes v. Impac Funding (Vandenburgh Co., IN) (pending consumer finance class action, consolidated with eight other similar cases)
  • Frazier v. Preferred Credit (W.D. Tenn.) (consumer finance class action, removed from state court, is pending)
  • Skinner v. Preferred Credit (Durham Co. NC) (consumer class action, to be consolidated with nine other class actions, is pending)
  • Hill v. Fieldstone Mortgage (Balt. City, MD) (pending consumer class action, consolidated with nine other class actions)
  • lead counsel for a financial services company defending a class action alleging violations of the Pennsylvania Motor Vehicle Sales Finance Act
  • defending numerous class action and individual claims alleging violations of the Truth In Lending Act, Fair Debt Collection Practices Act, state unfair trade practices acts, and other federal and state statutes governing consumer financial services
  • lead counsel for a financial services company defending a class action alleging abusive and harassing debt collection activities.
Secondary Market/Servicing Transactions

We represent clients in a variety of secondary-mortgage-market transactions, including asset sales and purchases, and servicing arrangements. We represent clients in mortgage transactions, correspondent arrangements, the bulk purchase and sale of mortgages, mortgage-warehouse transactions and custodial arrangements. In addition, we develop and negotiate servicing, master servicing and subservicing agreements. We develop programs and related model forms and procedures, as well as deal-specific forms for related transactions.


Pepper’s financial services lawyers, working with lawyers from the firm’s corporate and securities, real estate, taxation and bankruptcy practice groups, represent clients in complex securitization transactions and structured financings, including public offerings and private placements. We have represented clients in numerous asset-backed transactions, including securitizations of student loans, credit card and trade receivables, consumer loans, small-business loans, consumer auto leases, equipment leases, cash servicing for non-bank automated-teller machines, government receivables, noninsured medical procedure receivables, and mortgages and mortgage-servicing rights.

Engagements of our lawyers in this area include representing:
  • one of the country’s largest credit-card issuers in the first Master Trust credit-card securitization in the country, involving a series of multi-billion-dollar public transactions, which included drafting disclosure documents, negotiating opinions with the rating agencies, and advising the parties on credit-enhancement issues, including the use of letters of credit, senior subordinated structures and of cash collateral accounts
  • Bank of New York (Delaware) in a $400 million securitization of a portion of its credit-card portfolio using a senior subordinated structure
  • First Omni Bank in a $400 million securitization of a portion of its credit-card portfolio using a senior subordinated structure
  • First Union National Bank as trustee of a pooling and servicing agreement involving Charming Shoppes’ securitization of the credit-card receivables of Spirit of America National Bank, a national banking affiliate, in its sale to a receivables conduit of Citicorp, a public offering and a private placement
  • a cash services management company in securitization of cash used in non-bank automated teller machines
  • a mortgage lender (which acted as sponsor and servicer) and its subsidiaries in registering a $300 million securitization of mortgage loans using a REMIC structure. In the first offering under the shelf registration, $102,841,606 in Mortgage Pass-Through Certificates representing beneficial interests in a pool of mortgage loans were sold by a special purpose corporation in an underwritten public offering.
  • a federal agency as issuer of more than $5 billion of securities backed by government-guaranteed obligations of participants in community development and venture capital programs
  • a mortgage company in an $88,751,000 securitization of mortgage loans using a REMIC structure; the securitization resulted in the issuance of Mortgage Backed Notes and Residual Interest Certificates
  • a REIT in the securitization of approximately $275 million of mortgage loans, structured as a sub-pool of collateral backing designated securities using a REMIC structure and offered alongside other securities being issued under a Lehman shelf registration.
We monitor legal developments, publish articles, submit amicus briefs, and participate in industry and bar association groups on consumer finance issues and civil justice reform. Our members are active in the American Bar Association’s Consumer Financial Services Committee (a partner is chairman the Consumer Litigation Section of the committee), the Mortgage Bankers Association, the Consumer Bankers Association and various other national and local organizations involved in the consumer financial services industry.

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