Top Story Compliance Related

The Federal Emergency Management Agency has published in this morning's Federal Register [at 81 FR 51808] a final rule that identifies communities where the sale of flood insurance has been authorized under the National Flood Insurance Program (NFIP) that are scheduled for suspension on September 2, 2016, for noncompliance with the floodplain management requirements of the program. The affected communities are in the states of California, Washington and West Virginia.

The CFPB has issued a final rule to require residential mortgage loan servicers to provide certain borrowers with foreclosure protections more than once over the life of the loan, clarify borrower protections when the servicing of a loan is transferred, and provide important loan information to borrowers in bankruptcy. The changes also help ensure that surviving family members and others who inherit or receive property generally have the same protections under the CFPB’s mortgage servicing rules as the original borrower. The Bureau issued a proposed rule in November 2014, but has made several changes in the final rule based on comments received from the public. The rule will—

• require servicers to provide certain borrowers with foreclosure protections more than once of the life of their loan;
• expand consumer protections to surviving family members and other homeowners (successors in interest) when a borrower dies;
• reqire servicers to notify borrowers when loss mitigation applications are complete;
• protect struggling borrowers during servicing transfers;
• Clarify servicers’ obligations to avoid dual-tracking and prevent wrongful foreclosures; and
• Clarify when a borrower becomes delinquent.

The rule also provides servicers some flexibility to comply with certain force-placed insurance and periodic statement disclosure requirements, and clarify several requirements regarding early intervention, loss mitigation, information requests, and prompt crediting of payments, as well as the small servicer exemption.

Additionally, the Bureau issued an interpretive rule under the Fair Debt Collection Practices Act relating to servicers' compliance with certain mortgage servicing provisions as amended by the final rule.

Most of the provisions of the final rule will take effect 12 months after publication in the Federal Register. The provisions relating to successors in interest and the provisions relating to periodic statements for borrowers in bankruptcy will take effect 18 months after publication.

The Board of Governors of the Federal Reserve System has ordered Goldman Sachs Group to pay a $36.3 million civil money penalty for its unauthorized use and disclosure of confidential supervisory information, and to implement an enhanced program to ensure the proper use of confidential supervisory information. Additionally, the Board announced that it is instituting enforcement proceedings against Joseph Jiampietro, a former managing director at Goldman Sachs, seeking to impose a fine and permanently bar him from the banking industry stemming from his and his subordinates' unauthorized use and disclosure of confidential supervisory information.

The firm's activities previously resulted in the Federal Reserve's November 2015 permanent ban from banking of another former Goldman Sachs employee, and a fine of $50 million imposed by the New York Department of Financial Services in October 2015.

See "Goldman Sachs fined for disclosing confidential info," in our Penalties pages, for further details.

The Treasury Department's Office of Foreign Assets Control (OFAC) has added an individual and an entity to its Specially Designated Nationals List. See our OFAC Update for identity information.

The Consumer Financial Protection Bureau (CFPB) has outlined consumer protection principles to guide mortgage servicers, investors, government housing agencies, and policymakers as they develop new foreclosure relief solutions. The Bureau’s action comes as the Department of Treasury’s Home Affordable Modification Program, a foreclosure relief program put in place in response to the financial crisis, is nearing its expiration date. The CFPB’s proposed principles are meant to inform the discussion of potential options to help prevent avoidable foreclosures. The principles promote:

• Accessibility: Consumers should easily be able to obtain and use information about loss mitigation options, and how to apply for those options.
• Affordability: Repayment plans and mortgage loan modifications should generally be designed to produce a payment and loan structure that is affordable for consumers.
• Sustainability: Loss mitigation options used for home retention should be designed to provide affordability throughout the remaining or extended loan term.
• Transparency: Consumers should get clear, concise information about the decisions servicers make.

The Bureau's principles don't establish legal requirements, but are instead intended to complement ongoing discussions amount industry, consumer groups and policymakers.

The OCC has released the ratings received by 25 national banks and federal savings associations recently evaluated for compliance with the Community Reinvestment Act (CRA). Five institutions received a rating of outstanding, 19 were rated satisfactory, and one was given a "substantial noncompliance" rating.

The Board of Governors, FDIC and OCC have announced how the financial institutions they regulate may begin to voluntarily submit self-assessments of their diversity policies and practices as of year-end 2015. The Dodd-Frank Act required the federal financial regulatory agencies to establish an Office of Minority and Women Inclusion (OMWI) and instructed the OMWI Director at each agency to develop standards for assessing the diversity policies and practices of its regulated institutions. The standards, which became effective on June 10, 2015, (see our Top Story) reflect input received during a public comment period, as well as information gathered during outreach sessions. The standards provide a framework for regulated institutions to assess and establish or strengthen their diversity policies and practices. Frequently Asked Questions (FAQs) about the process were also released.

The Federal Reserve Board and the FDIC have jointly announced that the December 31, 2016 deadline for 38 firms to submit their next resolution plans has been extended one year to December 31, 2017. These firms include 36 domestic bank holding companies and foreign banking organizations, as well as two nonbank financial companies designated by the Financial Stability Oversight Council (FSOC).

OFAC has announced the issuance of findings of violation of the Foreign Narcotics Sanctions Regulations by a life insurance company and a heath insurance company. The life insurance company was found to have facilitated and/or processed payments and maintained two health insurance policies in which one or more Specially Designated Nationals (SDNs) had an interest. The health insurance company was found to have facilitated and/or processed payments and serviced two health insurance policies in which one or more SDNs had an interest.

The Bureau has posted an article in Spanish and English on the ways language barriers create financial challenges. The articles include links to information in both languages to help all consumers, including non- and limited English-speaking consumers navigate the financial marketplace.