But conflict in the courts has put all of this on hold, with cases in two states producing opposite rulings. Now, FinCEN has put the new reporting on hold until it gets sorted out by the courts.
Jay Beitel (pictured top), mortgage attorney and partner at Polunsky Beitel Green, said two courts, one in Texas and the other in Florida, both led by judges appointed by President Donald Trump, came to completely different conclusions.
“The first one was in Florida in February, and the plaintiff was claiming that the real estate reporting regulation that FinCEN implemented and that went into effect on March the first was not properly authorized under the Bank Secrecy Act, and therefore they shouldn’t have to comply with it,” Beitel told Mortgage Professional America. “In Florida, the federal district court held that the rule was within the statutory language that it targets transactions that are suspicious and are relevant to potential violations of law. So essentially, they upheld the rule.”
“Well, 30 days later, in March, there was a case in federal district court in Texas where the plaintiffs essentially claimed the identical issues. And the court said the fact that some bad actors have conducted non-financed real estate transactions does not make such transactions categorically suspicious. So the court in Texas said no, the rule does not fall within the authority of the Bank Secrecy Act, it isn’t authorized to impose such a requirement, and it vacated the rule.”
FinCEN steps in
Typically, rulings within a court circuit only apply within that specific circuit. This could mean that without FinCEN intervention, those in the Florida circuit’s jurisdiction would have to continue this reporting, while those in the Texas one would not. So FinCEN put the new rules on hold until this gets sorted out.
