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NCUA issues rules for PALs II

The NCUA Board published [84 FR 51942] a final rule (referred to as the PALs II rule) to allow federal credit unions to offer additional payday alternative loans (PALs) to their members. The final rule does not replace the NCUA's current PALs rule (referred to as the PALs I rule). Rather, the PALs II rule grants FCUs additional flexibility to offer their members meaningful alternatives to traditional payday loans while maintaining many of the key structural safeguards of the PALs I rule. The PALs II rule will be effective December 2, 2019.


FDIC August enforcement actions

The FDIC has released a list of administrative enforcement actions taken against banks and individuals in August (and one issued in July).

  • A Burnet, Texas, bank was ordered to pay $21,700 for a pattern or practice of flood insurance-related violations
  • A former chief financial officer of The Bank of Oswego, Lake Oswego, Oregon, was issued an adjudicated order to pay a civil money penalty of $175,000 and an order of prohibition for having approved the use of $675,000 in bank funds to pay for a customer's wire transfer and facilitating a $1.7 million loan to cover the transfer, aiding an abetting an improper straw buyer transaction involving bank-foreclosed property and failing to protect the bank's collateral position ion that property, following repeated appeals and delays caused by the former banker
  • The former president and CEO of AztecAmerica Bank, Berwyn, Illinois, consented to an order to cease and desist and and order to pay a civil money penalty of $25,000, for causing the bank to inject money into its holding company by approving payments by the bank to two of its employees for the purpose of enabling them to purchase stock in the holding company, resulting in a loss to the bank.
  • The former chief financial officer of Crown Bank, Edina Minnesota, was issued an order to cease and desist and an order to pay a $10,000 civil money penalty for assisting the former CEO of the bank in conducting and obscuring transactions in violation of Regulation O, and failing to stop or report the CEO's theft of funds from a third party's bank deposit account.
  • The former president and cashier of Commercial Bank of Oak Grove, Oak Grove, Missouri, was issued an adjudicated order to cease and desist and to pay a $15,000 civil money penalty for altering account statements of the bank's correspondent account at another bank, overstating the balance in that account, resulting in losses exceeding $500,000.


Agencies raise residential appraisal threshold

The Federal Reserve Board, FDIC, and OCC issued a joint press release on Friday, announcing the adoption of a final rule that increases the threshold for residential real estate transactions requiring an appraisal from $250,000 to $400,000. For transactions exempted from the appraisal requirement, the final rule requires institutions to obtain an evaluation to provide an estimate of the market value of real estate collateral. Evaluations are generally less burdensome than appraisals and have been required since the 1990s. The rule will be effective the day following publication in the Federal Register.

The final rule incorporates the appraisal exemption for rural residential properties provided by the Economic Growth, Regulatory Relief, and Consumer Protection Act and similarly requires evaluations for these transactions. It also includes a requirement that institutions to review appraisals for compliance with the Uniform Standards of Professional Appraisal Practice. These two provisions of the final rule will be effective January 1, 2020.


FHLBanks instructed to end purchase of LIBOR-tied assets

The Federal Housing Finance Agency reports it has sent a letter to the eleven Federal Home Loan Banks instructing them that, as of December 31, 2019, they should stop purchasing investments in assets tied to LIBOR with a contractual maturity beyond December 31, 2021. As of March 31, 2020, the Federal Home Loan Banks should no longer enter into all other LIBOR-based transactions involving advances, debt, derivatives, or other products with maturities beyond December 31, 2021, with only very limited exceptions granted by FHFA.


HUD to offer incentives for health care in Opportunity Zones

HUD Secretary Carson has announced that the Federal Housing Administration will offer several incentives to encourage greater development of hospitals and health care facilities located in Opportunity Zones. FHA’s Section 242 Program insures mortgages for acute care hospital facilities ranging from large teaching institutions to small rural critical access hospitals. Similarly, FHA’s Section 232 Program provides mortgage insurance on loans that help finance nursing homes, assisted living facilities, and board and care facilities. These programs may be used to finance the purchase, refinance, new construction, or substantial rehabilitation of a project. A combination of these uses is acceptable, for example, refinance of a nursing home coupled with new construction of an assisted living facility.


Fed bans former Virginia banker

The Federal Reserve Board announced yesterday it has issued a consent prohibition order to a former branch manager of Highlands Union Bank, Abingdon, Virginia, for violating lending policies for her own benefit by generating loans for relatives and for her own benefit, and failing to send the loans to the bank's loan operations department for booking.


Bill to extend NFIP funding through 11/21 gets Senate OK

The Senate passed a bill to extend the funding of the National Flood Insurance Program to November 21, 2019, and has sent it to the president for his signature. Funding for the NFIP is currently due to expire Monday, September 30.


NCUA and SBA loan programs webinar

The NCUA and SBA have announced they will co-host on October 1 “The Big Picture of SBA Lending for Credit Unions—Part 1,” a webinar that will discuss:

  • A brief history of the SBA;
  • SBA benefits to a borrower and to a credit union;
  • An overview of SBA programs; and
  • How offering small business loans may align with a credit union’s mission.


House passes SAFE Banking Act bill

The House of Representatives approved its SAFE Banking Act bill in a bipartisan vote yesterday. The bill now goes to the Senate, where its fate is uncertain. As passed by the House, the bill would allow banks to serve cannabis-related businesses in the 33 states where marijuana is legal at some level, and prohibit federal regulators from acting against a bank solely because marijuana is involved.


CFPB sues debt collection firm and subs

The CFPB announced yesterday it had filed suit against Fair Collections & Outsourcing and Michael E. Sobota, the owner and CEO of its holding company. The suit against Soboda, FCO Holding, Inc. and its subsidiaries, Fair Collections & Outsourcing, Inc., Fair Collections & Outsourcing of New England, Inc., and FCO Worldwide, Inc. alleges that FCO violated the Fair Credit Reporting Act, Regulation V and the Consumer Financial Protection Act by:

  • failing to establish or implement reasonable written policies and procedures regarding the accuracy and integrity of the information it furnished to consumer reporting companies, specifically with respect to its handling of indirect disputes;
  • failing to consider or incorporate the appropriate guidelines in developing its policies and procedures regarding the handling of indirect disputes;
  • failing to review its indirect dispute handling policies and procedures and update them as necessary to ensure their continued effectiveness;
  • failing to conduct a reasonable investigation, or any investigation, and review all relevant information in its handling of indirect disputes; and
  • furnishing information about accounts before or without conducting an investigation into the accuracy of the information it was furnishing after receiving identity theft reports from consumers disputing such accounts.

The complaint also alleges that FCO and Sobota violated the Fair Debt Collection Practices Act when FCO represented that consumers owed certain debts when, in fact, FCO did not have a reasonable basis to assert that the consumers owed those debts. The Bureau's action seeks an injunction, as well as damages, redress, disgorgement of ill-gotten gains, and the imposition of a civil money penalty.


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