Top Story Lending Related

The CFPB announced on Wednesday it has taken action against two American Express banking subsidiaries for discriminating against consumers in Puerto Rico, the U.S. Virgin Islands, and other U.S. territories by providing them with credit and charge card terms that were inferior to those available in the 50 states and for discriminating against certain consumers with Spanish-language preferences. American Express has paid about $95 million in redress to approximately 222,000 consumers during the reviews undertaken by the Bureau and American Express, and the Bureau is now ordering the company to pay at least another $1 million to complete the compensation of harmed consumers.

American Express self-reported differences between its cards issued to consumers in Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa and Northern Mariana Islands, and its cards offered in the 50 U.S. states, as well as differences with respect to certain consumers with a Spanish language preference. The Bureau did not find that American Express intentionally discriminated against its customers, but rather found that the differences resulted from the company's card management structure, which involved different business units overseeing the U.S. cards and cards issued in Puerto Rico and the Virgin Islands.

No civil money penalties were imposed in the Bureau's order because American Express self-reported the violations, self-initiated remediation for harmed consumers, and fully cooperated with the Bureau's review and investigation.

• Consent order in the Matter of American Express Centurion Bank and American Express Bank, FSB.

The CFPB has posted an article announcing the release of new FFIEC Home Mortgage Disclosure Act (HMDA) Examiner Transaction Testing Guidelines for institutions that report HMDA data. The Guidelines will apply to the examination of HMDA data collected beginning in 2018 and reported beginning in 2019. According to the Bureau's article, the Guidelines "represent a joint effort by the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation, the Federal Reserve Board, the National Credit Union Administration, and the Office of the Comptroller of the Currency to provide—for the first time—uniform guidelines across all federal HMDA supervisory agencies."

The FFIEC has posted release 2 of its 2017 data entry software on its software page.

The Federal Housing Finance Agency has released its House Price Index (HPI), which indicates U.S. house prices rose 1.6 percent in the second quarter of 2017. House prices rose 6.6 percent from the second quarter of 2016 to the second quarter of 2017. FHFA's seasonally adjusted monthly index for June was up 0.1 percent from May. Significant statistics include:

• Home prices rose in 48 states and the District of Columbia between the second quarter of 2016 and the second quarter of 2017. The top five states in annual appreciation were: Washington, at 12.4 percent; Colorado at 10.4 percent; Idaho at 10.3 percent; Florida at 9.4 percent; and Utah at 9.2 percent.
• Among the 100 largest metropolitan areas in the U.S., annual price increases were greatest in the Seattle-Bellevue-Everett, WA (MSAD), where prices increased by 15.7 percent. Prices were weakest in New Haven-Milford, CT, where they rose by 0.1 percent.
• Of the nine census divisions, the Pacific division experienced the strongest increase in the second quarter, posting a 2.6 percent quarterly increase and a 8.9 percent increase since the second quarter of last year. House price appreciation was weakest in the Middle Atlantic division, where prices rose 0.8 percent from the last quarter.

Treasury's Office of Foreign Assets Control announced on Tuesday it has designated ten entities and six individuals in response to North Korea’s ongoing development of weapons of mass destruction (WMD), violations of United Nations (UN) Security Council Resolutions, and attempted evasion of U.S. sanctions. The new designations target third-country companies and individuals that assist already-designated persons who support North Korea’s nuclear and ballistic missile programs; deal in the North Korean energy trade; facilitate its exportation of workers; and enable sanctioned North Korean entities to access the U.S. and international financial systems.

As a result of Tuesday’s action, any property or interests in property of the designated persons in the possession or control of U.S. persons or within the United States must be blocked, and U.S. persons are generally prohibited from dealing with them. For identification of the new designations, along with a number of removals from and updates to the OFAC SDN lists, see our OFAC Update.

The OCC has issued Bulletin 2017-28 with guidance for managing risks to banks and borrowers associated with programs in which residential mortgage loans are originated when the loan-to-value ratio (LTV) at origination exceeds 100 percent (referred to in the bulletin as higher-LTV loans). The guidance applies to any OCC-supervised banks wishing to establish a program for originating higher-LTV loans in communities targeted for revitalization, including collaborative relationships with one another. The bulletin explains the circumstances under which banks may establish a program to originate certain higher-LTV loans, and the agency's supervisory considerations regarding any such programs.

• Related press release

The CFPB has posted an update of its January 2017 report on the scope and growth of student debt among older borrowers (ages 60 and older) in each of the 50 states, Puerto Rico, and the District of Columbia. The new data further demonstrates the significant growth of student debt among the older population, and the proportion of older borrowers struggling to make their payments.

Responding to a letter from Representative Bob Goodlatte, Chairman of the House Committee on the Judiciary, an assistant attorney general has responded to report that "the initiative is no longer in effect, and it will not be undertaken again." Operation Chokepoint was an effort by the Justice Department under the previous administration to curtail legal but disfavored business by working through bank regulators to pressure financial institutions to close customer relationships, often by referring to "reputation risk."

The Federal Reserve System has posted its G.17 Industrial Production and Capacity Utilization report for the month of July. Industrial production rose 0.2 percent following an increase of 0.4 percent in June.Manufacturing output edged down 0.1 percent; the production of motor vehicles and parts fell substantially, but that decrease was mostly offset by a net gain of 0.2 percent for other manufacturing industries. Following a six-month string of increases beginning in September 2016, factory output was little changed, on net, between February and July. The indexes for mining and utilities rose 0.5 percent and 1.6 percent, respectively. At 105.5 percent of its 2012 average, total industrial production was 2.2 percent above its year-earlier level. Capacity utilization for the industrial sector was unchanged at 76.7 percent, a rate that is 3.2 percentage points below its long-run (1972–2016) average.

The Federal Housing Finance Agency (FHFA) has announced modifications to the streamlined refinance program for borrowers with high loan-to-value (LTV) ratios. The program now has an eligibility date which makes the program available for loans originated on or after October 1, 2017.

The agency also announced that its Home Affordable Refinance Program (HARP) has been extended through December 31, 2018.