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Top Story Lending Related

01/29/2024

FHFA house price index up 0.3 percent in October 2023

The Federal Housing Finance Agency has reported that U.S. house prices rose in October, up 0.3 percent from September, according to the Federal Housing Finance Agency (FHFA) seasonally adjusted monthly House Price Index. House prices rose 6.3 percent from October 2022 to October 2023. The previously reported 0.6 percent price increase in September was revised to a 0.7 percent increase.

For the nine census divisions, seasonally adjusted monthly price changes from September 2023 to October 2023 ranged from -0.3 percent in the New England division to +1.1 percent in the Middle Atlantic division. The 12-month changes ranged from +2.6 percent in the Mountain division to +9.9 percent in the Middle Atlantic division.

01/25/2024

Fed ending Bank Term Funding Program March 11

The Federal Reserve Board announced yesterday that the Bank Term Funding Program (BTFP) will cease making new loans as scheduled on March 11. The program will continue to make loans until that time and is available as an additional source of liquidity for eligible institutions. After March 11, banks and other depository institutions will continue to have ready access to the discount window to meet liquidity needs, said the Board.

As the program ends, the interest rate applicable to new BTFP loans has been adjusted such that the rate on new loans extended from now through program expiration will be no lower than the interest rate on reserve balances in effect on the day the loan is made. This rate adjustment ensures that the BTFP continues to support the goals of the program in the current interest rate environment. This change is effective immediately. All other terms of the program are unchanged.

01/22/2024

CFPB and 7 states sue debt-relief enterprise for illegal actions

The CFPB has announced it has joined seven state attorneys general in suing Strategic Financial Solutions (SFS) and its web of shell companies for running an illegal debt-relief enterprise. The CFPB and state attorneys general also sued the chief architects of the illegal enterprise, Ryan Sasson and Jason Blust. The CFPB and attorneys general allege the enterprise has collected hundreds of millions of dollars in exorbitant, illegal fees from vulnerable consumers. The CFPB and attorneys general filed the suit under seal on January 10, 2024. They are requesting the court to order a stop to the enterprise’s illegal actions, order redress for consumers, and impose a civil money penalty. The seven states joining with the CFPB are Colorado, Delaware, Illinois, Minnesota, New York, North Carolina, and Wisconsin.

The Bureau's announcement says Strategic Financial Solutions markets itself as providing debt relief services. It has offices in New York City and Buffalo, New York. Ryan Sasson is the chief executive officer of SFS. SFS sits at the top of a web of shell companies and façade law firms, which are controlled by Sasson and fellow scheme architect Jason Blust. SFS runs an alleged scheme, involving dozens of entities, to dupe consumers and regulators. The company uses third parties to target financially vulnerable consumers with advertisements. The advertisements lead consumers to believe they may qualify for loans to help pay down debts. SFS employees then discuss these loans with consumers over the phone. Though SFS tells most, if not all, consumers that they do not qualify for the advertised loans, SFS encourages consumers to enroll in its debt-relief services. SFS promises that its network of law firms and lawyers will negotiate lower debt amounts.

In reality, say the CFPB and attorneys general, SFS provides little, if any, debt-relief service. SFS requires customers to make immediate payments into an escrow account. Long before it settles any debts, however, SFS collects the fees from the escrow account. While the illegal fees and false claims of legal assistance leave consumers worse off, Sasson and Blust pad their pockets through their web of shell companies that siphon the fees from the escrow accounts.

The CFPB and seven state attorneys general allege the actions of SFS violate the Telemarketing Sales Rule. The lawsuit also alleges violations of New York and Wisconsin state laws. Specifically, the complaint alleges that SFS harms consumers by charging illegal advance fees before any of a consumer's debts have been settled, and by falsely claiming that contracted law firms will negotiate lower payoff amounts.

01/19/2024

FTC pauses CARS Rule effective date

The Federal Trade Commission reported yesterday that is has issued an order postponing the effective date of the Combatting Auto Retail Scams (CARS) Rule while a legal challenge against the rule is pending.

Two industry groups have petitioned to overturn the rule, asserting that the rule should be stayed while the court challenge is pending. In its order, the Commission notes that these assertions rest on mischaracterizations of what the rule requires. Specifically, the Commission’s order points to the inaccurate argument that the rule will increase compliance costs for car dealers, which is not true for dealers who currently follow the law.

The rule was set to go into effect July 30, 2024.

  • Publication info: Published at 89 FR 13267 in the 2/22/2024 Federal Register

01/19/2024

NCUA to increase number of fair lending exams

On Thursday, January 18, 2024, the National Credit Union Administration Board held its first open meeting of the year and unanimously approved the agency’s 2024 Annual Performance Plan and received a briefing on the Diversity, Equity, Inclusion, and Accessibility Strategic Plan, 2024–2026. The performance plan, which provides specific direction and guidance toward achieving the mission, was approved on a 3-0 vote.

“As I have often said, if you don’t measure it, you can’t manage it. That’s what makes this plan so important,” Chairman Todd M. Harper said. “The NCUA in 2024 will continue to address consumer financial protection on equal footing with safety and soundness, including by increasing the number of fair lending exams. Also, the NCUA will continue to focus on the rising and continuing challenges within the credit union system. Those risks include liquidity, interest rate, credit, and compliance risk, as well as the omnipresent cybersecurity risk.”

01/19/2024

MLA site maintenance scheduled January 27-28

The Department of Defense has posted a notice on its Military Lending Act (MLA) website indicating that the MLA system is scheduled for maintenance from 6 pm PST Saturday, January 27 to 3 am PST on Sunday, January 28, 2023.

01/19/2024

Regulatory relief for weather-impacted Rhode Island institutions

The FDIC, in FIL-2-2004, has announced steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Rhode Island affected by severe storms, flooding, and tornadoes that caused significant property damage in areas of the state September 10–13, 2023.

01/19/2024

Fed Board issues prohibition order

Yesterday, the Federal Reserve Board reported it has issued a consent prohibition order against Andrew M. Ellison, formerly the Graves County market president at Community Financial Services Bank, Benton, Kentucky, after a finding that Ellison had, in or around May 2020 and September 2021, applied for and obtained an SBA economic injury disaster loan (EIDL) of $500,000 for a business in which he was the sole proprietor and used the funds for unauthorized expenses under the terms of the EIDL program. According to the order, Ellison repaid the loan to the SBA in full, with interest.

01/18/2024

OCC enforcement actions announced

The Office of the Comptroller of the Currency (OCC) yesterday released enforcement actions taken against national banks and federal savings associations (banks), and individuals currently and formerly affiliated with banks the OCC supervises.

  • The previously announced $15 million civil money penalty against U.S. Bank, N.A., for violations of law relating to the bank’s administration of a prepaid card program to distribute public unemployment insurance benefit payments
  • Notices of Charges seeking Cease and Desist Orders against three subsidiary banks of Industry Bancshares, Inc., Industry, Texas: The First National Bank of Shiner, Shiner, Texas; Bank of Brenham, N.A., Brenham, Texas; and The First National Bank of Bellville, Bellville, Texas. The Notices of Charges allege, among other things, that each bank engaged in unsafe or unsound practices relating to an investment strategy concentrated in long-term securities that exposed each bank to excessive interest rate risk without sufficient sources of contingency funding and contingency capital, and that each bank failed to timely mitigate such risk.
  • A Formal Agreement against EH National Bank, Beverly Hills, California, for unsafe or unsound practices, including those relating to inadequate capital and strategic planning, inadequate interest rate risk management, and failure to maintain adequate levels of liquidity and satisfactory liquidity management practices.
  • A Formal Agreement against Jackson Federal Savings and Loan Association, Jackson Minnesota, for unsafe or unsound practices, including those relating to inadequate strategic planning, dereliction of the obligation to maintain adequate levels of liquidity and satisfactory liquidity management practices, and lack of appropriate succession planning.
  • A Formal Agreement against North Side Federal Savings and Loan Association of Chicago, Chicago, Illinois, for unsafe or unsound practices, including those relating to Board and management oversight, earnings, information technology management, sensitivity to market risk, consumer compliance, and violation of law, rule or regulation, including those relating to the Truth in Lending Act and the Flood Disaster Protection Act.

01/17/2024

CFPB unveils proposal on overdraft fees of large banks

The CFPB on Jan. 17, 2024, announced a proposed rule to limit overdraft fees charged by insured financial institutions with more than $10 billion in assets. The proposal would amend Regulation Z to eliminate the exclusion of overdraft fees greater than required to recoup costs at an established benchmark or at a cost the banks calculate, if they show their cost data, from the definition of "finance charge."

Very large financial institutions would be required to treat overdraft loans like credit cards and other loans and to provide clear disclosures and other protections, using a credit account separate from the consumer's deposit account. It would also amend Regulation E to prohibit very large financial institutions from conditioning an extension of overdraft credit to a consumer on the consumer's repayment by preauthorized electronic fund transfers.

Comments on the CFPB’s proposal will be accepted through April 1, 2024. The CFPB proposes that a final rule relating to the proposal would have an October 1 effective date at least 6 months after the final rule is published in the Federal Register.

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