Legal Seminar, Chicago, IL

Hypothetical B

The DFI Commissioner decides that nonbank mortgage lenders, over which she has supervisory authority, are engaging in pricing discrimination against recent immigrants. She directs an investigator to find a specific case of this conduct and bring a licensing action against the violator. She tells the investigator, “I want you to give our attorney an enforcement case ready for public filing within two months.” At the end of the two months, the investigator comes to you with a file and says, “I think this is what the Commissioner wants and I think we have enough to proceed now.” You review the file and determine there is a good faith basis to proceed, but believe further investigation before filing would substantially clarify whether a violation has occurred. What must (and should) you do with the file?

Hypothetical C A legal aid attorney refers to your DFI a case in which her elderly client on RSDI was given a adjustable rate mortgage loan with an exploding teaser rate that the legal aid attorney believes violates your state’s “suitability” requirements. The file is given to an investigator, who consults a junior attorney in the enforcement division. That attorney has the file for a month. The investigator inquires about the file and the attorney tells her that it looks like there are no violations. The investigator asks about why the loan was suitable. The attorney tells her that she has 100 open files and this one doesn’t look too bad, comparatively. The investigator reports this conversation to you, the General Counsel. Is there an ethical issue here? How should you handle the situation?