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Top Story Lending Related

10/27/2021

OCC takes enforcement action against mortgage subservicer

The OCC on Tuesday announced it had issued a Consent Cease and Desist Order against Cenlar FSB (Ewing, NJ), the largest mortgage sub-servicer in the country, performing servicing duties on behalf of financial institution clients throughout the United States, and the second largest mortgage servicer in the United States.

The OCC's action was based on the bank’s failure to establish effective controls and risk management practices related to its mortgage servicing and subservicing activities. The order requires the bank to take comprehensive corrective actions to address identified deficiencies and implement internal controls and risk management practices that are appropriate to the bank’s risk profile and the size of its mortgage subservicing operations.

The order also limits excessive growth and prioritizes remediation by requiring the bank to receive no supervisory objection from the OCC before adding new subservicing clients and prior to declaring or paying dividends to shareholders while the order is effective.

10/27/2021

Hsu discusses the end of LIBOR and its replacement

The OCC has released remarks of Acting Comptroller of the Currency Michael J. Hsu on the importance of maintaining trust in the banking system during the transition from LIBOR to replacement rates at the Alternative Reference Rates Committee (ARRC) Symposium.

His remarks highlighted the importance of a smooth transition away from LIBOR and the potential negative effects that complacency by bank management over LIBOR’s cessation and replacement can have on bank operations, safety and soundness.

10/27/2021

OCC FAQs on proposal to rescind CRA rule

With Bulletin 2021-50, issued yesterday, the Office of the Comptroller of the Currency has issued responses to frequently asked questions about a notice of proposed rulemaking soliciting comments on the proposal to rescind the OCC’s Community Reinvestment Act (CRA) rule issued on June 5, 2020. The notice, which was published in the Federal Register on September 17, 2021, proposes that the June 2020 CRA rule largely be replaced with the rules adopted jointly by the OCC, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation in 1995, as revised.

The FAQs provide information on the rulemaking process and the OCC’s consideration of potential CRA transition issues, including:

  • the impact of the proposed rule on CRA bank type.
  • qualifying activities and the qualifying activity confirmation request system.
  • the transition period.
  • examination administration.
  • assessment areas.
  • targeted geographic areas.
  • strategic plans.
  • public comments.

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10/27/2021

House prices continue to climb

The Federal Housing Finance Agency has reported that house prices rose nationwide in August, up 1.0 percent from the previous month, according to the latest Federal Housing Finance Agency House Price Index. House prices rose 18.5 percent from August 2020 to August 2021. The previously reported 1.4 percent price change for July 2021 remained unchanged.

For the nine census divisions, seasonally adjusted monthly house price changes from July 2021 to August 2021 ranged from -0.1 percent in the New England division to +1.9 percent in the South Atlantic division. The 12-month changes ranged from +14.9 percent in the West North Central division to +25.8 percent in the Mountain division.

10/27/2021

CFPB makes annual Reg Z inflation adjustments

The CFPB is issuing a final rule amending the official interpretations for Regulation Z, which implements the Truth in Lending Act (TILA). The Bureau is required to calculate annually the dollar amounts for several provisions in Regulation Z. This final rule revises the dollar amounts for provisions implementing TILA and amendments to TILA, including under the CARD Act, HOEPA, and the Dodd-Frank Act.

The adjustments are effective January 1, 2022.

  • For open-end consumer credit plans under TILA, the threshold that triggers requirements to disclose minimum interest charges will remain unchanged at $1.00
  • For open-end consumer credit plans under the CARD Act amendments to TILA, the adjusted dollar amount in 2022 for the safe harbor for a first violation penalty fee will increase to $30 and the adjusted dollar amount for the safe harbor for a subsequent violation penalty fee will increase to $41
  • For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2022 will be $22,969.
  • The adjusted points-and-fees dollar trigger for high-cost mortgages in 2022 will be $1,148.
  • For qualified mortgages (QMs) under the General QM loan definition in § 1026.43(e)(2), the thresholds for the spread between the annual percentage rate (APR) and the average prime offer rate (APOR) in 2022 will be:
    • 2.25 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $114,847
    • 3.5 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $68,908 but less than $114,847 6.5 or more percentage points for a first-lien covered transaction secured by a manufactured home with a loan amount less than $114,847
    • 3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $68,908
    • 6.5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $68,908
  • For all categories of QMs, the thresholds for total points and fees in 2022 will be:
    • 3 percent of the total loan amount for a loan greater than or equal to $114,847
    • $3,445 for a loan amount greater than or equal to $68,908 but less than $114,847
    • 5 percent of the total loan amount for a loan greater than or equal to $22,969 but less than $68,908
    • $1,148 for a loan amount greater than or equal to $14,356 but less than $22,969
    • 8 percent of the total loan amount for a loan amount less than $14,356
The changes have been posted to the affected sections of Regulation Z in BankersOnline's Regulations pages.

10/26/2021

$1B+ in SBA Hurricane Ida assistance delivered

SBA Administrator Isabella Casillas Guzman announced yesterday that the agency has delivered more than $1 billion in disaster rescue funds to small businesses, homeowners, renters, and private nonprofit organizations recovering from damages caused by Hurricane Ida in September.

As of October 25, the SBA Office of Disaster Assistance (ODA) has approved more than 20,600 low-interest disaster loans delivering a combined $1 billion in financial assistance to areas impacted by Hurricane Ida. The SBA is rapidly processing applications and will continue working to meet the needs of all those affected by this disaster. Businesses, homeowners, renters, and private nonprofit organizations in 67 counties and parishes across Georgia, Louisiana, Maryland, Mississippi, New Jersey, New York, and Pennsylvania are eligible to apply for low-interest disaster loans to help repair the physical damage caused by Hurricane Ida.

The deadline for residents of Louisiana impacted by Hurricane Ida to apply for financial assistance is October 28, 2021. Those that have not applied to receive aid yet are encouraged to apply as soon as possible. The owners of private property impacted by natural disasters, like Hurricane Ida, are eligible for up to 20% of their total physical losses, as verified by SBA, to incorporate protective measures to protect them against the next disaster.

10/26/2021

Chopra speaks out on 'digital redlining'

At the joint Justice Department, OCC, and CFPB news conference on the Trustmark National Bank enforcement action on Friday, CFPB Director Rohit Chopra said that the Bureau will be watching for "digital redlining, disguised through so-called neutral algorithms, that may reinforce the biases that have long existed." He continued, "Technology companies and financial institutions are amassing massive amounts of data and using it to make more and more decisions about our lives, including loan underwriting and advertising. While machines crunching numbers might seem capable of taking human bias out of the equation, that’s not what is happening....When consumers and regulators do not know how decisions are made by the algorithms, consumers are unable to participate in a fair and competitive market free from bias. Algorithms can help remove bias, but black box underwriting algorithms are not creating a more equal playing field and only exacerbate the biases fed into them."

Chopra added, "Given what we have seen in other contexts, the speed with which banks and lenders are turning lending and advertising decisions over to algorithms is concerning. Too many families were victimized by the robo-signing scandals from the last crisis, and we must not allow robo-discrimination to proliferate in a new crisis.

"We should never assume that algorithms will be free of bias. If we want to move toward a society where each of us has equal opportunities, we need to investigate whether discriminatory black box models are undermining that goal."

10/26/2021

Justice announces new initiative to combat redlining

The Department of Justice announced the launch on Friday of the department’s new Combatting Redlining Initiative. Redlining is an illegal practice in which lenders avoid providing services to individuals living in communities because of the race or national origin of the people who live in those communities. The new Initiative represents the department’s most aggressive and coordinated enforcement effort to address redlining, which is prohibited by the Fair Housing Act and the Equal Credit Opportunity Act.

This Initiative, which will be led by the Civil Rights Division’s Housing and Civil Enforcement Section in partnership with U.S. Attorney’s Offices, will build on the longstanding work by the division that seeks to make mortgage credit and homeownership accessible to all Americans on the same terms, regardless of race or national origin and regardless of the neighborhood where they live. The Initiative will:

  • Utilize U.S. Attorneys’ Offices as force multipliers to ensure that fair lending enforcement is informed by local expertise on housing markets and the credit needs of local communities of color.
  • Expand the department’s analyses of potential redlining to both depository and non-depository institutions. Non-depository lenders are not traditional banks and do not provide typical banking services, but engage in mortgage lending and now make the majority of mortgages in this country.
  • Strengthen DOJ's partnership with financial regulatory agencies to ensure the identification and referrals of fair lending violations to the Department of Justice.
  • Increase coordination with State Attorneys General on potential fair lending violations.

10/26/2021

Census tract reminder from CFPB

The CFPB has sent out reminders that, when providing census tract information required by HMDA Regulation C for calendar year 2022 applications and loans, financial institutions should use census tract information provided in the 2020 census. The FFIEC's Geocoder will use 2020 census tract information beginning January 1, 2022.

10/25/2021

Real estate lending guidelines amended

The FDIC has announced in FIL-71-2021 that the FDIC Board has adopted a final rule to amend the Interagency Guidelines for Real Estate Lending Policies to incorporate consideration of the capital framework established in the community bank leverage ratio (CBLR) rule into the method for calculating the ratio of loans in excess of the supervisory loan-to-value limits (LTV limits). The amendment provides a consistent approach for calculating the ratio of loans in excess of the supervisory LTV limits at all FDIC-supervised institutions without requiring the computation of total capital.

The final rule was adopted without any changes from the notice of proposed rulemaking published on June 25, 2021.

The final rule will become effective 30 days after publication in the Federal Register.

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