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FTC files complaint against NY small business lenders

The Federal Trade Commission has reported it has filed a complaint against RCG Advances, LLC (formerly known as Richmond Capital Group, LLC) also doing business as Victory Capital Funding, and Ram Capital Funding, two New York-based companies engaged in small-business financing, along with several of their owners and officers, for allegedly using deception and threats to seize personal and business assets from small businesses, non-profits, religious organizations, and medical offices. The complaint alleges that, since at least 2015, the defendants have deceived small businesses and other organizations by misrepresenting the terms of merchant cash advances they provided, and then used unfair collection practices, including sometimes threatening physical violence, to compel consumers to pay. The Commission also has alleged that defendants have made unauthorized withdrawals from consumers’ accounts.


NCUA/EXIM partnership launched

A three-year collaborative effort was launched yesterday by the NCUA and the Export-Import Bank of the United States (EXIM). to bring small businesses and credit unions together and expand awareness about EXIM programs. The NCUA and EXIM signed a memorandum of understanding to undertake a series of initiatives that will help credit unions better understand and make use of EXIM guaranteed loans and resources. These joint initiatives may include webinars and training events.


Calabria testimony before Senate Banking Committee

Yesterday, FHFA Director Calabria responded to an invitation to appear before the Senate Committee on Banking, Housing, and Urban Affairs, and discussed the FHFA’s actions responding to COVID-19. In his presentation, Calabria discussed:

  • FHFA’s actions to protect the agency's workforce and maintain mission focus
  • The state of the markets before and during the crisis
  • The FHFA’s policy response to support borrowers and renters
  • Ensuring the proper function of the mortgage market
  • The state of the mortgage market today
  • The urgent need to build capital at the Enterprises and advance housing finance reform


CFPB issues TRID Fact Sheet and FAQs

The CFPB has published a Factsheet on TRID Title Insurance Disclosures Compliance Aid and four new FAQs on—

  • disclosing seller-paid loan costs on a separate closing disclosure for the consumers/borrowers;
  • lender credits,
  • the total of payments (yes, you subtract any negative prepaid interest), and
  • using the optional signature line on the closing disclosure (are you providing a copy for the consumer to retain?)

These two documents can be found on the CFPB's TILA-RESPA integrated disclosures (TRID) resources page.


California bank pays flood insurance penalty

On Monday, the Federal Reserve Board ordered East West Bank, Pasadena, California, to pay a civil money penalty of $129,108 for unspecified violations of Regulation H § 208.25, which implements the National Flood Insurance Act.


CFPB notice of revised CHARM booklet

The CFPB has published a notice at 85 FR 35292 in today's Federal Register to announce the availability of an updated version of the "Consumer Handbook on Adjustable Rate Mortgages" booklet, also known as the CHARM booklet, required under the Real Estate Settlement Procedures Act (RESPA) implemented by Regulation X and the Truth in Lending Act (TILA) implemented by Regulation Z. This version of the CHARM booklet is updated to align with the Bureau's educational efforts, to be more concise, and to improve readability and usability.

New features include a comparison table that describes adjustable rate mortgages and their differences in relation to fixed-rate loan products; an explanation of how an adjustable rate mortgage works; a tutorial on how to review an ARM Loan Estimate and a lender's ARM program disclosure; a comparison table for the various adjustable and fixed-rate loan offers that reader has received or will receive; and a description of the risks that come with different types of adjustable rate mortgages. This update of the CHARM booklet eliminates references to LIBOR.

Creditors may begin using the updated version of the CHARM booklet at once, or first exhaust their current supply. When reprinting the booklet, the most recent version should be used.


Fed expands Main Street Lending Program

The Federal Reserve Board announced Monday it has expanded its Main Street Lending Program to allow more small and medium-sized businesses to be able to receive support. The Board lowered the minimum loan amount, raised the maximum loan limit, adjusted the principal repayment schedule to begin after two years, and extended the term to five years, providing borrowers with greater flexibility in repaying the loans. The Board expects the Main Street program to be open for lender registration soon and to be actively buying loans shortly afterwards. The changes include:

  • Lowering the minimum loan size for certain loans to $250,000 from $500,000;
  • Increasing the maximum loan size for all facilities;
  • Increasing the term of each loan option to five years, from four years;
  • Extending the repayment period for all loans by delaying principal payments for two years, rather than one; and
  • Raising the Reserve Bank's participation to 95% for all loans.

Term sheets:


June is National Homeownership Month

This week HUD marks the beginning of Homeownership Month 2020 – a time of year when HUD, the Federal Housing Administration (FHA) and others recognize the importance of homeownership and its impact upon the lives of American families, local neighborhoods, and the national economy. During the coronavirus pandemic, millions of Americans are seeking assistance to achieve or sustain homeownership as the foundation to the health and well-being of their families.


Treasury and SBA to amend PPP regulations

In a joint statement issued Monday morning Treasury Secretary Mnuchin and SBA Administrator Carranza said that, following Friday's enactment of the Paycheck Protection Program Flexibility Act, the SBA, in consultation with Treasury, will promptly issue rules and guidance, a modified borrower application form, and a modified loan forgiveness application implementing the amendments made to the PPP to:

  • Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement Borrowers who have already received PPP loans will retain the option to use an eight-week covered period.
  • Lower the requirements that 75 percent of a borrower’s loan proceeds must be used for payroll costs and that 75 percent of the loan forgiveness amount must have been spent on payroll costs during the 24-week loan forgiveness covered period to 60 percent for each of these requirements.
  • Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before February 15, 2020, due to compliance with requirements or guidance issued by federal agencies related to worker or customer safety requirements related to COVID–19.
  • Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on February 15, 2020, and unable to hire similarly qualified employees for unfilled positions by December 31, 2020.
  • Increase to five years the maturity of PPP loans that are approved by SBA (based on the date SBA assigns a loan number) on or after June 5, 2020.
    Extend the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period).

In addition, the new rules will confirm that June 30, 2020, remains the last date on which a PPP loan application can be approved.


El Paso bank earns Outstanding CRA rating

WestStar Bank, El Paso, Texas, has received a Community Reinvestment Act (CRA) evaluation rating of Outstanding from the Federal Reserve Bank of Dallas.

The Federal Reserve Board released 18 CRA evaluation ratings in May, 17 of which were Satisfactory. WestStar Bank was the only state-chartered Federal Reserve member bank to receive an Outstanding during the month.


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