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Top Story Lending Related

03/24/2020

FHFA actions in response to COVID-19

The Federal Housing Finance Agency has announced has authorized Fannie Mae and Freddie Mac (the Enterprises) to enter into additional dollar roll transactions. Eligible collateral is limited to Agency mortgage-backed securities and the transactions must be undertaken via an auction or similar mechanism to ensure that they occur at a fair market price. Dollar roll transactions provide mortgage-backed securities investors with short-term financing of their positions, providing liquidity to these investors.

This FHFA's action was taken to ensure the Enterprises fulfill their mission of providing market liquidity during the coronavirus national emergency.

The FHFA also announced it has directed the Enterprises to provide alternative flexibilities to satisfy appraisal and employment verification requirements through May 27.2020.

  • To allow for homes to be bought, sold, and refinanced as our nation deals with the challenges of the coronavirus, the Enterprises will leverage appraisal alternatives to reduce the need for appraisers to inspect the interior of a home for eligible mortgages.
  • In the event lenders cannot obtain verbal verification of the borrower's employment before loan closing, the Enterprises will allow lenders to obtain verification via an e-mail from the employer, a recent year-to-date paystub from the borrower, or a bank statement showing a recent payroll deposit. Lenders should continue to utilize sound underwriting judgment to ensure these alternatives are appropriate to the borrower's circumstances.

In a third announcement, the FHFA said the Enterprises will offer multifamily property owners mortgage forbearance with the condition that they suspend all evictions for renters unable to pay rent due to the impact of coronavirus. The eviction suspensions will be in place for the entire duration of time that a property owner remains in forbearance. The forbearance is available to all multifamily properties with an Enterprise-backed performing multifamily mortgage negatively affected by the coronavirus national emergency.

03/23/2020

FTC and CFPB report FDCPA enforcement activities

The Federal Trade Commission has provided the CFPB with an annual summary of the Commission’s activities enforcing the Fair Debt Collection Practices Act (FDCPA). The FTC shares enforcement responsibility for the FDCPA with the CFPB, which provides an annual report to Congress about debt collection enforcement activities The annual report highlights both agencies’ efforts to stop unlawful debt collection practices, including law enforcement, education and public outreach, and policy initiatives.

The CFPB also released its annual report to Congress.

03/23/2020

Statement on working with borrowers affected by COVID-19

The Fed, CFPB, FDIC, NCUA, OCC, and the Conference of State Bank Supervisors have issued an interagency statement encouraging financial institutions to work constructively with borrowers affected by COVID-19 and providing additional information regarding loan modifications.

The agencies encourage financial institutions to work with borrowers, will not criticize institutions for doing so in a safe and sound manner, and will not direct supervised institutions to automatically categorize loan modifications as troubled debt restructurings (TDRs). The joint statement also provides supervisory views on past-due and nonaccrual regulatory reporting of loan modification programs.

The agencies view prudent loan modification programs offered to financial institution customers affected by COVID-19 as positive and proactive actions that can manage or mitigate adverse impacts on borrowers, and lead to improved loan performance and reduced credit risk.

The statement reminds institutions that not all modifications of loan terms result in a TDR. Short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. This includes short-term—for example, six months—modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant.

The agencies' examiners will exercise judgment in reviewing loan modifications, including TDRs, and will not automatically adversely risk rate credits that are affected, including those considered TDRs. Regardless of whether modifications are considered TDRs or are adversely classified, agency examiners will not criticize prudent efforts to modify terms on existing loans for affected customers.

03/23/2020

Capital rule modified to accommodate MMLF participation

The OCC, Fed and FDIC have published an interim final rule at 85 FR 16232 in today's Federal Register to allow banking organizations to neutralize the effects of purchasing assets through the Federal Reserve's Money Market Mutual Fund Liquidity Facility (MMLF). This treatment will extend to the community bank leverage ratio. The interim rule is effective today, with comments accepted through May 7, 2020.

03/20/2020

COVID-19 FAQs from FDIC

FDIC FIL-18-2020, issued yesterday, announced the FDIC understands that financial institutions and consumers may have questions about the potential impact of COVID-19. In response, the FDIC is providing two sets of frequently asked questions (FAQs), one for financial institutions and one for consumers. The FAQs address a variety of issues that may arise as financial institutions work with customers and communities affected by COVID-19. The FDIC recognizes that such efforts can be accomplished in a manner that is consistent with safe and sound banking practices, compliant with applicable laws (including consumer protection laws), and in the public interest. The FDIC will continue to add FAQs to the initial list, as needed, to address additional questions and issues that arise.

03/20/2020

Joint statement on CRA and COVID-19

The Federal Reserve Board, the FDIC, and the Office of the Comptroller of the Currency (the agencies) have issued a Joint Statement on CRA Consideration for Activities in Response to COVID-19. The agencies recognize the potential for the Coronavirus Disease (COVID-19) to adversely affect the customers and operations of financial institutions. The agencies encourage financial institutions to work with affected customers and communities, particularly those that are low- and moderate-income. The agencies will provide favorable consideration under the Community Reinvestment Act of certain retail banking services, retail lending activities, and community development activities related to this national emergency.

The FDIC's FIL-19-2020 reports that the statement will be effective through the six-month period after the national emergency declaration is lifted, unless extended by the agencies.

03/20/2020

Discount window borrowing up

The Federal Reserve Board is encouraged by the notable increase in discount window borrowing this week with banks demonstrating a willingness to use the discount window as a source of funding to support the flow of credit to households and businesses. This uptick follows the recent changes to the discount window announced by the Federal Reserve and the federal banking regulators' recent statement encouraging financial institutions to use the discount window.

03/20/2020

NMLS creates COVID-19 Updates webpage

The Nationwide Multistate Licensing System (NMLS) has set up a new web page to list updates on NMLS operations and impacts as the coronavirus pandemic continues.

NMLS Coronavirus/COVID-19 Updates

03/19/2020

Fed adds Money Market Fund Liquidity Facility

The Federal Reserve Board announced late Wednesday evening it has broadened its program of support for the flow of credit to households and businesses by taking steps to enhance the liquidity and functioning of crucial money markets. Through the establishment of a Money Market Mutual Fund Liquidity Facility, or MMLF, the Federal Reserve Bank of Boston will make loans available to eligible financial institutions secured by high-quality assets purchased by the financial institution from money market mutual funds. The MMLF will assist money market funds in meeting demands for redemptions by households and other investors, enhancing overall market functioning and credit provision to the broader economy.

A term sheet was released with the Board's announcement.

To ensure that financial institutions will be able to effectively use the MMLF, the Board, the FDIC and the OCC this morning they have issued an interim final rule to modify the agencies' capital rules so that financial institutions receive credit for the low risk of their MMLF activities, reflecting the fact that institutions would be taking no credit or market risk in association with such activities. The change, effective immediately, only applies to activities with the MMLF. There will be a 45-day comment period following publication in the Federal Register.

03/19/2020

HUD to provide COVID-19 mortgage relief for 60 days

HUD Secretary Carson has authorized the Federal Housing Administration to implement an immediate foreclosure and eviction moratorium for single family homeowners with FHA-insured mortgages for the next 60 days. These moratoriums are part of the continued effort by the administration to address impacts to the financial well-being of America’s individuals, families, and businesses caused by Coronavirus (COVID-19). CFPB Director Kraninger issued a statement supporting the action.

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