Mortgage Banking & Consumer Financial Products Alert

Transcription

1 Mortgage Banking & Consumer Financial Products Alert January 2010 Authors: Nanci L. Weissgold Morey E. Barnes K&L Gates is a global law firm with lawyers in 33 offices located in North America, Europe, Asia and the Middle East, and represents numerous GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market participants and public sector entities. For more information, visit New York s New Year s Gift to Servicers: Banking Department Proposes Business Conduct Rules On December 15, 2009, the New York Banking Department (the Department ) gave the industry an early holiday present draft proposed rules relating to the business conduct of mortgage loan servicers (the Draft Rules ). Although these Draft Rules contain many problematic provisions for those servicing New York residential mortgage loans (including those exempt from the state s registration obligation), they are a gift in that the industry is given the opportunity to comment on them before the Department officially introduces proposed rules and promulgates final rules. Written comments must be submitted by January 15, The Department also will hold a meeting on the Draft Rules on January 19, We have been invited to attend, and plan on doing so. It is our understanding that after the meeting, the Department will officially introduce proposed rules (hopefully revised) and publish them in the New York register, after which the Draft Rules will be subject to a full 90-day comment period before the Department can adopt them on a permanent basis. The Department proposed the Draft Rules in response to amendments to Article 12- D of the New York Banking Law (the Licensed Mortgage Bankers Act or the Act ). Effective July 1, 2009, Section 590(2)(b-1) of the Act provides that no person or entity may engage in the business of servicing mortgage loans without being registered as a mortgage loan servicer with the Superintendent of Banks (the Superintendent ). 1 As a first step to implementing this requirement, the Department initially adopted on an emergency basis Part 418 of the Superintendent s Regulations establishing the application and registration procedures for servicers (including application denial or registration revocation, as well as the financial responsibility requirements for servicers and entities exempt from servicer registration). 2 The Draft Rules reflect the Department s move to the second step imposing substantive restrictions on servicers, including those entities exempt from the servicing registration requirement. The Draft Rules contain plenty of fodder for servicers to chew as we enter a new year. In addition to voluminous reporting obligations and prohibitions on improper or fraudulent business practices, the Draft Rules would impose a general duty of good faith and fair dealing, regulate loss mitigation activities, prescribe servicer conduct in response to certain consumer inquiries, prohibit any fee not expressly authorized in the loan instruments, and create requirements related to escrow accounts and the timing of crediting of payments. We discuss these requirements in more detail below. Additionally, the Draft Rules would require servicers to comply not only with their requirements and those of Part 418 of the Superintendent s Regulations and Article 12-D of the Banking Law, but also with all applicable federal and New York state laws and regulations relating to mortgage loan servicing, including but not limited to RESPA, the Truth-in-Lending Act, Regulation Z, Section 6-k of the New York Banking Law, and Article 9 of Title 3-A of the New York Real Property Tax Law.

2 Of course, servicers must comply with all applicable federal and state laws, but by making such compliance an express requirement under the Draft Rules, the Department can more readily sanction servicers for non-compliance with other federal and state laws. While the Superintendent is mandated to promulgate rules governing the establishment of grounds to impose a fine or penalty with respect to the activities of a mortgage loan servicer, 3 the Draft Rules do not address penalties. Rather, the Licensed Mortgage Bankers Act provides that any servicer who violates its provisions or related rules or regulations may be subject to a civil penalty, among other remedies. 4 An Overview of the Proposed Rules Servicer Duties The Draft Rules would impose a duty of good faith and fair dealing on servicers, applicable in all communications, transactions, and course of dealings with each borrower in connection with the servicing of the borrower s mortgage loan. Following North Carolina s lead, 5 specific duties would include: (i) safeguarding and accounting for any money handled for the borrower; (ii) following reasonable and lawful instructions from the borrower; and (iii) acting with reasonable skill, care, and diligence. Other duties include promptly providing the borrower with an accurate statement of account; and making available trained personnel and telephone facilities sufficient to respond promptly to borrower inquiries regarding their mortgage loans. With regard to loan modifications, the Draft Rules would require servicers to make borrowers in default aware of available loss mitigation options and services, and to pursue loss mitigation with borrowers whenever possible. Loss Mitigation As the federal government has begun to emphasize the role of modifying loans in resolving the foreclosure crisis, the Draft Rules recognize the important role servicers may play through imposing a series of requirements. As part of their duty of good faith to engage in loan modifications (discussed above), the Draft Rules would require servicers to make reasonable and good faith efforts consistent with usual and customary industry standards... to engage in appropriate loss mitigation options, including loan modifications, to avoid foreclosure, particularly with regard to borrowers who are 60 days or more delinquent. The Draft Rules rely heavily on the assumption that many servicers will be participating in the federal Home Affordable Modification Program ( HAMP ) by requiring servicers participating in HAMP to provide loan modifications in compliance with HAMP guidelines and/or directives where appropriate, including with regard to the timeline for acknowledging a request for a loan modification and for making a decision regarding such a request. Furthermore, the Draft Rules provide that a servicer offering loan modifications in accordance with HAMP guidelines and directives will be presumed to fulfill its duty to engage in good faith in loss mitigation efforts. (This requirement parallels one found under California s Foreclosure Prevention Act, which also emphasizes conformity to the standards established under HAMP.) The Draft Rules would require servicers to maintain protocols for servicing delinquent loans in order to facilitate loan modifications, including providing delinquent borrowers with information on available legal and counseling resources. The Draft Rules do not limit the servicer s responsibility to provide information on such resources only within the borrower s geographic area, which may prove burdensome to servicers. Fees The Draft Rules contain one of the most restrictive fee limitations, seemingly beyond those contained in North Carolina s law, 6 in the recent Federal Trade Commission ( FTC ) settlement, 7 or in the federal Fair Debt Collection Practices Act. 8 Specifically, the Draft Rules would require a servicer to maintain and update (on at least a semiannual basis), and to post on its website, a schedule of standard and common fees, including NSF fees. However, the Draft Rules would separately require that any fees charged by a servicer be: (i) reasonable; (ii) for bona fide services rendered or costs incurred; (iii) expressly authorized by the mortgage loan instruments (presumably, the note and/or mortgage); and (iv) not otherwise prohibited by law. Although this provision of the Draft Rules appears to have been adopted from a similar North Carolina law limiting servicing fees to those permitted under applicable law and the contracts between the parties, 9 the language of the Draft January

3 Rules exceeds that found in the North Carolina version and other laws. Given this very restrictive fee limitation, it is unclear what fees a servicer could include in its schedule of standard and common fees. Further restrictions would apply to late fees. Late fees would be limited to two percent (2%) of the past due payment, compared to the limitation under current New York law to two percent (2%) of the delinquent installment (if the payment is late by more than 15 days) for loans secured by interests in one-to-six family owner-occupied residences. The Draft Rules do not define the term past due payment (whereas the term delinquent installment is defined under current New York law) or limit the scope of this restriction based on occupancy. The Draft Rules would prohibit a servicer from charging a late fee: (i) more than once, with respect to a single past due payment; or (ii) when the only delinquency is attributable to late fees assessed on an earlier payment, when the payment is otherwise a full payment for the applicable period and is made on the due date or within the grace period, if applicable (this practice is commonly referred to as pyramiding ). The Draft Rules also would require a servicer to send a borrower a payment reminder at his or her last known address within 17 days of the date on which the payment becomes due and remains unpaid. How this requirement would apply to a borrower in bankruptcy or foreclosure is not clear. Timing and Crediting of Payments Part of the Draft Rules responds to the legislature s specific authorization to promulgate rules governing crediting of payments. For any mortgage loan originated on or after January 1, 2010, the Draft Rules would require a servicer to credit all payments received from a borrower first to the interest and principal due before applying them to taxes, insurance, or fees. This appears consistent with servicers existing contractual obligations under the Fannie/Freddie Uniform Instrument for New York, so it is curious why this requirement is slated only for new originations. Additionally, except if the servicer uses the scheduled method of accounting, all amounts received by the servicer shall be accepted and credited, or treated as credited, on the business day received. Curiously, if the servicer uses the scheduled method of accounting, any regularly scheduled payment made prior to the scheduled due date shall be credited no later than the due date or 30 days from the date of receipt. We note that this requirement appears to have been adopted from North Carolina law, which also requires scheduled payments to be credited no later than the scheduled due date. 10 However, we are unaware of the origin of the alternative of permitting a payment to be scheduled no later than 30 days after the date of receipt, which seems inconsistent with the general requirement. In addition to the above, the Draft Rules require servicers to establish written policies and procedures for handling of payment overages and shortages. Finally, the Draft Rules provide that if a servicer receives payment on a mortgage loan but does not credit it or treat it as credited to the borrower s account, the servicer must notify the borrower within 10 business days that the payment was not credited and what the borrower must due to make the loan current. Consumer Inquiries and Requests The Draft Rules would dictate servicers actions in response to certain consumer inquiries. In addition to complying with RESPA, a servicer would be mandated to maintain procedures to respond to and resolve borrowers inquiries and complaints in a prompt and appropriate manner. Such obligation would require a servicer to designate a contact to whom borrowers may direct complaints and inquiries (as well as providing borrowers with a tollfree telephone number or collect calling service available during the servicer s regular business hours). In the case of a large servicing entity, we question whether the designation of a single customer service contact would be sufficient to provide the required customer service. The Draft Rules also contain a number of servicing prohibitions relating to consumer inquiries. For example, the Draft Rules would prohibit a servicer from failing to take timely action in response to a request from a borrower to correct errors relating to the allocation of payments, amounts charged, or final balances, for purposes of paying off a loan or avoiding foreclosure. The Draft Rules would require a servicer to respond within 15 business days to a request from a borrower (or the borrower s financial representative) to provide the identity, address, and other relevant contact information of January

4 the current legal or beneficial owner of the loan. The intent of this requirement is unclear. For loans that have been securitized, although we recognize that such a requirement arises under federal law, 11 providing the trustee s contact information may not be meaningful to the borrower, as the trustee would likely refer any borrower questions back to the loan servicer. The Draft Rules also would prohibit a servicer from refusing to communicate with an authorized representative of the borrower who possesses written authorization to act on the borrower s behalf. The Draft Rules would permit a servicer to adopt reasonable procedures related to verifying that the representative is in fact authorized to act on behalf of the borrower. However, such verification may prove difficult for servicers to obtain, given that New York does not license persons or companies offering to assist borrowers to modify their loans. Finally, the Draft Rules would prohibit a servicer from misrepresenting or omitting any material information, including: (i) the amount, nature, or terms of any fee or payment due or claimed to be due on a loan; (ii) the terms and conditions of the servicing agreement; or (iii) the borrower s obligations under the loan. (The Draft Rules do not specify under what circumstances misrepresentations or omissions are prohibited.) Statements Monthly, Annual, Payoff/Satisfaction The Draft Rules would impose certain disclosure obligations on each regular account statement. The Draft Rules would require a servicer to include on each regular account statement an address to which borrowers can direct complaints and inquiries and a toll-free number or collect calling service through which borrowers can access a live person trained to answer inquiries and help resolve complaints. Each regular account statement also must disclose that the servicer is registered with the Superintendent (if applicable), and that a borrower may file complaints with or obtain additional information from the Department. With the phrase regular account statement undefined, it is unclear if servicers who currently provide coupon books would be required to change their systems to provide monthly account statements (an expensive undertaking) or whether annual statements may qualify as such. It is also unclear in what form the servicer would be required to make these disclosures (i.e., on the front or the back of the statement). The Draft Rules also would require the servicer to disclose any payments from a borrower s escrow account clearly and conspicuously in the next periodic statement provided to the borrower. If a servicer advances funds for a disbursement on a borrower s behalf, when the need for the advancement did not result from a borrower s default under the terms of the mortgage documents, the Draft Rules would require the servicer to conduct an analysis of the escrow account to determine the reasons for and extent of the underlying deficiency before requesting reimbursement from the borrower. Because the Draft Rules do not address the possibility that a borrower may not have an escrow account, the intent of this part of the Draft Rules is unclear. The Draft Rules also would dictate a servicer s course of action in the case of escrow shortages, surpluses, and deficiencies, requiring the servicer to handle these events in accordance with RESPA. Alternatively, in the case of a surplus, the Draft Rules would permit a servicer to apply any such excess balance to the principal balance of the mortgage loan, given the borrower s consent. This may not be consistent with RESPA, which gives a servicer two options in case of an escrow account surplus. If the surplus is $50 or more, the servicer may refund that amount to the borrower; if the surplus is less than $50, the servicer may refund the amount or may credit it against the next year s escrow payments. 12 The Draft Rules would require a servicer to provide an annual statement to the borrower within 30 days of the end of the computation year. While the format and content of the annual statement must conform to RESPA, the Draft Rules do not specify by what method delivery must or may take place (i.e., by U.S. mail or electronic mail), including whether such delivery must be consistent with RESPA. The Draft Rules would specifically prohibit a servicer from charging the borrower for the annual escrow statement or one payment history furnished to a borrower in a 12-month period. January

5 The Draft Rules would require a servicer to provide a payoff statement within five business days of receiving a request from the borrower (or the borrower s authorized representative). The Draft Rules would prohibit a servicer from charging a fee for the provision of a payoff statement for up to five requests per year. A servicer would be prohibited from charging a fee for a lien release upon full repayment. Interestingly, existing New York Real Property Law already contains two different payoff statement provisions depending on the nature of the request, but the Draft Rules do not address the existing requirements nor suggest how the requirements could co-exist. Current New York law also requires a lender to record a lien release. Reporting and Recordkeeping Obligations The Draft Rules would impose broad-based reporting requirements, including quarterly, annual and other periodic and topical reporting, as well as recordkeeping requirements. First, the Draft Rules would impose quarterly reporting requirements on servicers. Within 30 days of the conclusion of a calendar quarter, a servicer would be required to submit to the Superintendent a report including, among other information: (i) the number and type of mortgage loans being serviced and those that are delinquent, categorized by delinquency period; (ii) information on the servicer s loss mitigation activities, including workout arrangements and re-defaults; (iii) information on loan modifications, categorized by the result(s) of each modification, such as term extensions or reductions in principal; (iv) servicer participation in settlement conferences (which, effective January 14, 2010, will be mandatory for all home loans, under Senate Bill 66007); (v) the number of pre-foreclosure notices served pursuant to Section 1304 of the Real Property Actions and Proceedings Law, foreclosure actions commenced, judgments obtained, and foreclosure sales concluded in New York; (vi) the number and type of REO properties held; and (vii) explanations of the reasons for the delinquency of loans, to the extent the servicer knows the reasons. While the requirements of the Draft Rules are similar to obligations existing under the laws of other states such as New Jersey and North Carolina the Draft Rules appear to be more stringent in the range of information they require servicers to report. With the continued improvement of coordination among state regulations, we would hope to see greater uniformity in the content, timing and delivery of such reporting obligations to ease servicers burden in responding to such duplicative, yet inconsistent requests. Second, with regard to periodic reports, the Draft Rules would require a servicer to submit a quarterly financial report and certification of net worth within 45 days of the end of a fiscal quarter. On an annual basis, the Draft Rules also would require a servicer to conduct an internal assessment of its servicing activity and to submit to the Department an annual financial statement (within 90 days of the close of its fiscal year). Annual evaluation of a servicer s operations would be bolstered by a requirement that each servicer have in place internal controls, commensurate with the size and complexity of the servicer s operations, to periodically assess compliance with servicing standards and procedures. Third, the Draft Rules would impose additional recordkeeping and reporting requirements. Servicers would be responsible for conducting periodic audits of payment processing functions to ensure that borrowers payments, including those remitted via certified mail, are properly credited. The Draft Rules do not clarify the frequency or scope of these audits. Fourth, the Draft Rules also would require servicers to maintain and analyze data on delinquency and foreclosure rates as a means of evaluating the effectiveness of the servicer s collection efforts and the overall performance of its servicing portfolio, and of identifying discriminatory trends in its servicing. Servicers would be required to review their data to further determine how [their] delinquency and foreclosure rates compare with rates in reports published by the industry, investors and others and [to] analyze significant variances between [their] foreclosure and delinquency rates and those found in reports and publications and take appropriate corrective action. This self-evaluation requirement could be quite onerous for servicers to satisfy. However, as the Draft Rules provide no time frame within which servicers must undertake the evaluation or guidance on how to do so, it remains unclear how much of a burden it will January

6 impose. Equally unclear but potentially imposing is the provision in the Draft Rules under which the Superintendent may require servicers to file regular or special reports, including reports regarding delinquencies or foreclosures, upon request of the Superintendent. Fifth. the Draft Rules also would require each servicer to keep books and records including: (1) information on all loans, including payments and disbursements, principal balance, amounts and due dates of all installments, servicing histories, and the servicing of loans that are delinquent and/or in foreclosure; and (2) a telephone log and all written communications (including fax and ) relating to the servicing of mortgage loans, including communications with any previous loan servicers, lenders or loan owners, mortgage holders, borrowers and/or their authorized representatives, and governmental entities. The servicer must keep records for a minimum of three years (unless a longer period is required by applicable statute), and must do so in a manner that will permit the Superintendent to determine whether the servicer is complying with applicable laws and regulations. Improper or Fraudulent Business Practices In addition to the prohibitions described above, the Draft Rules would prohibit a servicer from engaging in certain conduct. Notably, the Draft Rules would regulate the forced placing of insurance, which previously was unregulated in New York (other than a mid-1990s circular on the topic). First, a servicer would be prohibited from either failing to provide notice to a borrower upon taking action to place hazard, homeowner s or flood insurance on the mortgaged property or from force placing insurance on the property regardless of knowing or having reason to know that the borrower has an effective 1 The Licensed Mortgage Bankers Act authorizes the Banking Board to promulgate regulations to: (i) protect New York consumers; and (ii) define improper or fraudulent business practices in connection with the activities of registered mortgage loan servicers and exempt organizations. N.Y. Banking Law 590. The Superintendent may also prescribe regulations relating to: (i) the provision of disclosures to borrowers regarding the basis for interest rate resets; (ii) requirements for the provision of payoff statements; (iii) government of the timing of the crediting of borrower payments; and (iv) the imposition of fines and penalties relating to the conduct of policy for such insurance. Second, a servicer could not fail[] to provide to the borrower a refund of unearned premiums paid by a borrower or charged to the borrower for hazard, homeowner s or flood insurance placed by either the servicer or a lender, if the borrower provides reasonable proof that [he or she] has obtained coverage such that forced placement insurance is no longer necessary and the property is insured. Finally, a servicer would not be permitted to place hazard, homeowner s, or flood insurance on a mortgaged property, or to require a borrower to obtain such insurance on the property, in excess of the replacement cost of the improvements on the mortgaged property. The Draft Rules also would require servicers to comply with the requirements of Section 1304 of New York s Real Property Actions and Proceedings Law, which recently were amended to require that pre-foreclosure notice be provided to any borrower of a home loan (an owner-occupied, one-to-four family, primary residence). However, the Draft Rules do not specifically limit this requirement to provide pre-foreclosure notice to home loans. Conclusion An old, often overused proverb says, never look a gift horse in the mouth. With many problematic provisions in the Draft Rules, servicers should accept the Department s end-of-year gift and submit comments before the Draft Rules are formally proposed. Let us know if we can assist you in drafting comments or presenting your concerns at the Banking Department s meeting. mortgage loan servicers. Id. 595-b. Although the proposed rules address many of these topics, interestingly they do not reach either: (i) disclosures relating to interest rate resets; or (ii) fines and penalties. 2 Part 418 of the Superintendent s Regulations was most recently adopted on an emergency basis effective December 22, 2009; those regulations had previously been in effect as interim emergency regulations effective September 23, This client alert does not address the content of those regulations. 3 N.Y. Banking Law 595-b. January

7 4 Id. 598; see also N.Y. Comp. Codes R. & Regs. tit. 3, See N.C. Gen. Stat North Carolina Session Law (2008 House Bill 2463), effective January 1, 2009, amended North Carolina s Mortgage Lending Act to require all licensed servicers to file with the North Carolina Commissioner of Banks a complete and current schedule of the range of costs and fees charged for servicing-related activities and to prohibit all persons acting as mortgage servicers (arguably to include entities exempt from licensing) from charging or collecting any fee or servicing any loans with terms prohibited under North Carolina law. 7 The FTC settlement with EMC Mortgage and Bear Stearns resolved allegations that, among other actions, the companies charged borrowers unauthorized fees in violation of the FTC Act. As part of the settlement, the companies were prohibited from charging any such unauthorized fees. See 8 See 15 U.S.C. 1692f. 9 N.C. Gen. Stat Effective April 1, 2008, North Carolina Session Law (2008 House Bill 2188) amended the North Carolina Mortgage Debt Collection and Servicing Act, requiring among other obligations that if a servicer does not credit any payment received from a borrower within 10 days of receipt, the servicer must notify the borrower within 10 days of the reason why the payment was not credited. However, the notification is not required if the servicer complies with: (1) the terms of any agreement made with the borrower regarding the application and credit of payments made by the borrower; and (2) all applicable federal and state laws when applying and crediting payments to the borrower s account. Additionally, under North Carolina law the servicer is exempt from providing notice if the borrower: (1) and the servicer have entered into a written loss mitigation or similar forbearance agreement, which specifies the manner in which the servicer will apply and credit payments; (2) has elected to participate in an alternative payment plan, which specifies the manner in which the servicer will apply and credit payments; or (3) is making payments as part of a bankruptcy plan. 11 We note that under federal law, a creditor that purchases or receives, through assignment or other transfer, a mortgage loan must provide the borrower with notice of its identity and contact information for an agent or party having authority to act on its behalf within 30 days of the date on which the sale, transfer, or assignment occurs. See 15 U.S.C. 1641(g)(1) (as amended by P.L ) C.F.R (f)(2). January

8 K&L Gates Mortgage Banking & Consumer Financial Products practice provides a comprehensive range of transactional, regulatory compliance, enforcement and litigation services to the lending and settlement service industry. Our focus includes first- and subordinate-lien, open- and closed-end residential mortgage loans, as well as multi-family and commercial mortgage loans. We also advise clients on direct and indirect automobile, and manufactured housing finance relationships. In addition, we handle unsecured consumer and commercial lending. In all areas, our practice includes traditional and e-commerce applications of current law governing the fields of mortgage banking and consumer finance. For more information, please contact one of the professionals listed below. LAWYERS Boston R. Bruce Allensworth bruce.allensworth@klgates.com Irene C. Freidel irene.freidel@klgates.com Stephen E. Moore stephen.moore@klgates.com Stanley V. Ragalevsky stan.ragalevsky@klgates.com Nadya N. Fitisenko nadya.fitisenko@klgates.com Brian M. Forbes brian.forbes@klgates.com Andrew Glass andrew.glass@klgates.com Phoebe Winder phoebe.winder@klgates.com Charlotte John H. Culver III john.culver@klgates.com Los Angeles Thomas J. Poletti thomas.poletti@klgates.com Miami Paul F. Hancock paul.hancock@klgates.com New York Philip M. Cedar phil.cedar@klgates.com Elwood F. Collins elwood.collins@klgates.com Steve H. Epstein steve.epstein@klgates.com Drew A. Malakoff drew.malakoff@klgates.com San Francisco Jonathan Jaffe jonathan.jaffe@klgates.com Seattle Holly K. Towle holly.towle@klgates.com Washington, D.C. Costas A. Avrakotos costas.avrakotos@klgates.com Melanie Hibbs Brody melanie.brody@klgates.com Daniel F. C. Crowley dan.crowley@klgates.com Eric J. Edwardson eric.edwardson@klgates.com Steven M. Kaplan steven.kaplan@klgates.com Phillip John Kardis II phillip.kardis@klgates.com Rebecca H. Laird rebecca.laird@klgates.com Laurence E. Platt larry.platt@klgates.com Phillip L. Schulman phil.schulman@klgates.com Nanci L. Weissgold nanci.weissgold@klgates.com Kris D. Kully kris.kully@klgates.com Morey E. Barnes morey.barnes@klgates.com David L. Beam david.beam@klgates.com Emily J. Booth emily.booth@klgates.com Holly Spencer Bunting holly.bunting@klgates.com January 2010

9 Krista Cooley Elena Grigera Melissa S. Malpass David G. McDonough, Jr Stephanie C. Robinson Kerri M. Smith David Tallman Director of Licensing Washington, D.C. Stacey L. Riggin Regulatory Compliance Analysts Washington, D.C. Dameian L. Buncum Teresa Diaz Jennifer Early Robin L. Gieseke Allison Hamad Brenda R. Kittrell Dana L. Lopez Patricia E. Mesa Jeffrey Prost Anchorage Austin Beijing Berlin Boston Charlotte Chicago Dallas Dubai Fort Worth Frankfurt Harrisburg Hong Kong London Los Angeles Miami Newark New York Orange County Palo Alto Paris Pittsburgh Portland Raleigh Research Triangle Park San Diego San Francisco Seattle Shanghai Singapore Spokane/Coeur d Alene Taipei Washington, D.C. K&L Gates is a global law firm with lawyers in 33 offices located in North America, Europe, Asia and the Middle East, and represents numerous GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market participants and public sector entities. For more information, visit K&L Gates comprises multiple affiliated partnerships: a limited liability partnership with the full name K&L Gates LLP qualified in Delaware and maintaining offices throughout the U.S., in Berlin and Frankfurt, Germany, in Beijing (K&L Gates LLP Beijing Representative Office), in Dubai, U.A.E., in Shanghai (K&L Gates LLP Shanghai Representative Office), and in Singapore (K&L Gates LLP Singapore Representative Office); a limited liability partnership (also named K&L Gates LLP) incorporated in England and maintaining offices in London and Paris; a Taiwan general partnership (K&L Gates) maintaining an office in Taipei; and a Hong Kong general partnership (K&L Gates, Solicitors) maintaining an office in Hong Kong. K&L Gates maintains appropriate registrations in the jurisdictions in which its offices are located. A list of the partners in each entity is available for inspection at any K&L Gates office. This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer K&L Gates LLP. All Rights Reserved. January 2010