Top Story Lending Related

The FDIC has issued a list of nine enforcement decisions and orders issued in April 2024.

• An order to pay a $13,000 civil money penalty for flood insurance rules violations was issued to CNB Bank, Carlsbad, New Mexico
• Consent orders were issued to —
  • Spring Valley Bank, Wyoming, Ohio
  • Tioga-Franklin Savings Bank, Philadelphia, Pennsylvania
  • Commodore Bank, Somerset, Ohio
  • The First Bank and Trust Company of Murphysboro, Murphysboro, Illinois (Corrected order)
• A notice of intention to prohibit and notice of charges for an order of restitution and assessment of a civil money penalty was issued to Derrick Alan Smith, formerly a community banking branch banker at Branch Banking and Trust Company (now known as Truist Bank), Charlotte, North Carolina
• An order of prohibition assessing a $7,000 civil money penalty was issued to Cody Kietzman formerly employed by The Frederick Community Bank, Paxton, Illinois
• An order of prohibition was issued to David P. Ritter formerly employed by Summit Community Bank, Inc., Moorefield, West Virginia
• An order approving the termination of FDIC insurance was issued to Interstate Federal Savings and Loan Association of McGregor, McGregor, Iowa

The OCC has released its schedule of Community Reinvestment Act (CRA) evaluations to be conducted in the third (July–September) and fourth (October–December) quarters of 2024.

The FDIC has issued Financial Institution Letters with guidance to provide regulatory relief to financial institutions and facilitate recovery in areas of—

• Boyd, Carter, Fayette, Greenup, Henry, Jefferson, Jessamine, Mason, Oldham, Union, and Whitley Counties in Kentucky (FIL-28-2024) affected by severe storms, straight-line winds, tornadoes, landslides, and mudslides on April 2, 2024.
• Adair, Montgomery, Polk, and Story Counties in Iowa (FIL-29-2024) affected by severe storms causing significant property damage May 20–21, 2024.
• Boone, Cabell, Fayette, Kanawha, Lincoln, Marshall, Nicholas, Ohio, Putnam, Wayne, and Wetzel Counties in West Virginia (FIL-30-2024) affected by severe storms, straight-line winds, tornadoes, flooding, landslides, and mudslides caused significant property damage April 2–6, 2024.

The CFPB on Thursday morning announced it is launching a public inquiry into fees that are increasing mortgage closing costs. The CFPB wants to understand why closing costs are increasing, who is benefiting, and how costs for borrowers and lenders could be lowered. According to a CFPB analysis, the closing costs borrowers pay in connection with a mortgage have risen steeply in recent years. From 2021 to 2023, median total loan costs for home mortgages increased by over 36%. The unavoidable fees borrowers must pay at closing can strain household budgets and families’ ability to afford a down payment. The fees may also limit the ability of lenders to offer competitive mortgages because they have to absorb the higher costs or pass them on to borrowers.

The CFPB noted that, in 2022, median closing costs were $6,000, including substantial increases in the cost of credit reports.

The CFPB’s request for information seeks input from the public, including borrowers and lenders, about how mortgage closing costs may be inflated and constraining the mortgage lending market. Specifically, the CFPB asks for information about:

• Which fees are subject to competition: The CFPB is interested in the extent to which consumers or lenders currently apply competitive pressure on third-party closing costs. The CFPB also wants to learn about market barriers that limit competition.
• How fees are set and who profits from them: The CFPB wants to learn about who benefits from required services and whether lenders have oversight or leverage over third-party costs that are passed onto consumers.
• How fees are changing and how they affect consumers: The CFPB wants information about which costs have increased most in recent years and the reasons for such increases, including the rise in cost for credit reports and credit scores. The CFPB is also interested in data on the impact of closing costs on housing affordability, access to homeownership, or home equity.

Comments must be received within 60 days of the request for information being published in the Federal Register.

The Federal Housing Finance Agency yesterday announced that Fannie Mae and Freddie Mac (the Enterprises) will enhance their Flex Modification policies to allow more borrowers facing longer-term hardships to achieve meaningful payment reductions. The updated Flex Modification policies will promote sustainable homeownership and the safety and soundness of the Enterprises.

Flex Modification is the Enterprises’ loan modification offering that provides a home retention solution for eligible borrowers facing a permanent hardship who can no longer afford to make their regular monthly mortgage payments. ​The enhanced Flex Modification policies lower a borrower’s monthly payment by incrementally applying the steps below to achieve a 20 percent Principal and Interest payment reduction:

• Reducing the borrower’s interest rate (if eligible); 
• ​Extending the mortgage term; and
• Forbearing principal for borrowers with mark-to-market loan-to-value ratios greater than 50 percent.

Borrowers facing financial hardship should contact their servicer to discuss their unique circumstances to determine their eligibility. Servicers may offer borrowers one of several solutions to resolve a delinquency, including the updated Flex Modification, payment deferral, or a repayment plan depending on borrowers’ individual circumstances. The enhanced Flex Modification policies will become effective on December 1, 2024. ​

• ​Fannie Mae's Flex Mod Announcement
• Freddie Mac​'s Flex Mod Announcement

The staff of the Federal Trade Commission has provided its annual report to the Consumer Financial Protection Bureau on its enforcement and related activities in 2023 on the Truth in Lending Act (TILA), Consumer Leasing Act (CLA), and Electronic Fund Transfer Act (EFTA).

The report highlights the FTC’s enforcement actions and initiatives under these laws and their implementing regulations, including in the areas of automobile financing and leasing, payday lending, other credit and leasing, and electronic fund transfers.

• Press release

Acting Comptroller of the Currency Michael J. Hsu discussed recovery planning via livestream in remarks May 27 at the Entrepreneurship, Markets and Technology: Regulation's Challenges in a Changing World Conference in Zurich, Switzerland.

In his remarks, Mr. Hsu discussed the importance of recovery planning and how it can mitigate the too-big-to-fail problem. He highlighted the importance of recovery planning at large banks in the context of the bank failures in March 2023 and offered thoughts on expanding recovery planning guidelines to apply to banks with at least $100 billion in assets.

The Federal Reserve Board on Tuesday released the minutes from its recent meetings to review and determine the discount rates provided to depository institutions through the discount window. Today's minutes cover the Board meetings that occurred on April 8 through May 1, 2024.

The FDIC on Friday issued FIL-27-2024 with steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Texas affected by severe storms, straight-line winds, tornadoes, and flooding on April 26, 2024, and continuing.

The affected areas are Harris, Liberty, Montgomery, Polk, San Jacinto, Trinity, and Walker Counties.

The Federal Housing Administration's Mortgagee Letter 2024-10, issued yesterday, requires FHA-approved mortgagees to notify HUD when a cyber incident occurs. The letter, effective immediately, applies to all FHA insurance programs.

The mortgagee letter adds a new section, Significant Cybersecurity Incident, which requires FHA-approved mortgagees to report cyber incidents to HUD within 12 hours of detection. Reports will be made to HUD's FHA Resource Center and to HUDs Security Operations Center.