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Top Story Lending Related


OCC will adjust assessments for COVID-19-related assets

The OCC yesterday approved an interim final rule to reduce assessments in response to the national emergency declared in connection with the coronavirus disease (COVID-19). Under the interim final rule, assessments due on September 30, 2020, for OCC-regulated banks will be calculated using the December 31, 2019, "Consolidated Reports of Condition and Income" (Call Report) for each institution, rather than the June 30, 2020, Call Report. This change will result in lower assessments for most OCC-supervised banks.

If a bank's assets as reported on the June 30, 2020, Call Report are lower than on the December 31, 2019, Call Report, the OCC will calculate the assessment due on September 30, 2020 for the bank using the June 30, 2020, Call Report.

The rule was issued to ensure that OCC-regulated banks don't incur heavier assessments resulting from abnormal deposit growth stemming from the deposit of COVID-19-related loan proceeds from credit extended under the CARES Act.


CFPB proposes QM revision and GSE Patch extension

The Consumer Financial Protection Bureau has issued two Notices of Proposed Rulemaking to address the impending expiration of the Government-Sponsored Enterprises Patch (GSE Patch). The GSE Patch, which was a temporary definition in Regulation Z § 1026.43(e)(4)(ii)(A) that provides qualified mortgage status to certain mortgage loans eligible for purchase or guarantee by either Freddie Mac or Fannie Mae (the Government Sponsored Enterprises or GSEs) is scheduled to expire in January 2021 or when the GSEs exit conservatorship, whichever comes first.

In the first NRPM, the Bureau proposes to amend the general QM definition in Regulation Z to replace the 43% DTI limit with a price-based approach. The Bureau is proposing a price-based approach because it preliminarily concludes that a loan’s price, as measured by comparing a loan’s annual percentage rate to the average prime offer rate for a comparable transaction, is a strong indicator and more holistic and flexible measure of a consumer’s ability to repay than DTI alone. For eligibility for QM status under the General QM definition, the Bureau is proposing a price threshold for most loans as well as higher price thresholds for smaller loans, which can be important for manufactured housing and for minority consumers. The proposal would also require that lenders take into account a consumer’s income, debt, and DTI ratio or residual income and verify the consumer’s income and debts.

In addition, although the Bureau is proposing to remove the 43 percent DTI limit and adopt a price-based approach for the General QM loan definition, the first NPRM also requests comment on certain alternative approaches that would retain a DTI limit but would raise it above the current limit of 43 percent and provide a more flexible set of standards for verifying debt and income in place of appendix Q. The proposal suggests a final rule would not be effective before April 1, 2021, and (perhaps mindful of adjustments of effective dates of past amendments) asks for comment on whether there is a day of the week or time of month that would most facilitate implementation of the proposed changes.

In the second NPRM, the Bureau proposes to amend Regulation Z to extend the GSE Patch to expire upon the effective date of a final rule regarding the first notice’s proposed amendments to the General QM loan definition in Regulation Z. The Bureau is proposing to take this action to ensure that responsible, affordable credit remains available to consumers who may be affected if the GSE Patch expires before the amendments take effect as defined in the first NPRM (which is almost certainly to be the case, given the suggested April 1 effective date for the changes in the first proposal).

Comments on the first NPRM will be open for 60 days and those on the second NPRM for 30 days following publication in the Federal Register.


Additional PPP data made available

The SBA and Treasury have announced they are making public additional data regarding the Paycheck Protection Program (PPP). SBA will disclose the business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, jobs supported, and loan amount ranges for loans of $150,000 or more (which accounts for nearly 75 percent of the loan dollars approved. For loans below $150,000, totals will be released, aggregated by zip code, by industry, by business type, and by various demographic categories.


New tool for small businesses from SBA

On Friday the SBA announced the launch of a free dedicated online tool for small businesses and non-profits to be matched with Community Development Financial Institutions, Minority Depository Institutions, Certified Development Companies, Farm Credit System lenders, Microlenders, as well as traditional smaller asset size lenders in the Paycheck Protection Program (PPP).

The SBA Lender Match tool is an additional resource for pandemic-affected small businesses who have not applied for or received an approved PPP loan to connect with lenders. Within two business days after entering their information into the Lender Match platform, a borrower receives an email from lenders who have been matched with them. The borrower can see lenders’ requests for them to begin an application. Borrowers are then able to begin the application process directly from the email they receive. Lender Match does not accept Economic Injury Disaster Loan applications.


FDIC Enforcement Actions Manual updated

The FDIC has issued FIL-61-2020 announcing the update of its Formal and Informal Enforcement Actions Manual for the assessment of mandatory civil money penalties (CMPs) for certain pattern and practice violations of the National Flood Insurance Act of 1968. The manual provides direction for FDIC staff related to the work needed to pursue formal and informal enforcement actions. It is also intended to support the work of field office, regional office, and Washington office staff involved in processing and monitoring enforcement actions.


June 2020 SCOOS

The Federal Reserve has posted the June 2020 Senior Credit Officer Opinion Survey on Dealer Financing Terms (SCOOS), a quarterly survey providing information about the availability and terms of credit in securities financing and over-the counter derivatives markets. The SCOOS is modeled after the long-established Senior Loan Officer Opinion Survey on Bank Lending Practices, which provides qualitative information about changes in supply and demand for loans to households and businesses at commercial banks.


OFAC targets sanctions evasion network

Yesterday, OFAC designated three individuals and eight foreign entities, and identified two vessels as blocked property for their activities in or associated with a network attempting to evade United States sanctions on Venezuela’s oil sector.

For identification of those targeted by OFAC, see BankersOnline's OFAC Update.


FEMA suspending communities from flood program today

In what appears to be another "catch-up" on required publication of community suspensions from the National Flood Insurance Program, FEMA has published at 85 FR 37019 in today's Federal Register a notice it has scheduled suspensions of communities in Idaho, Iowa, Michigan, North Carolina, Texas, Utah, and Washington today, June 19, 2020, for noncompliance with the floodplain management requirements of the program:

  • Idaho: Garden City, Meridian, and unincorporated areas of Ada County
  • Iowa: Charles City, Floyd, Leland, Nora Springs, Rockford, Russ, Scarville, Thompson, and unincorporated areas of Floyd and Winnebago Counties
  • Michigan: Bedford, Berlin, Erie, Estral Beach, Frenchtown, LaSalle, Luna Pier, and Monroe
  • North Carolina: Alliance, Bath, Bayboro, Bridgeton, Chocowinity, Emerald Isle, Greenville, Grimesland, Havelock, Kill Devil Hills, Mesic, Minnesott Beach, Nags Head, New Bern, North Topsail Beach, Oriental, River Bend, Southern Shores, Stonewall, Swansboro, Washington, and unincorporated areas of Carteret, Craven, Currituck, Hyde, Pamlico, and Washington Counties
  • Texas: Unincorporated areas of Denton County
  • Utah: Alpine, American Fork, Bluffdale, Genola, Lehi, Orem, Payson, Salem, Saratoga Springs, Spanish Fork, Springville, and unincorporated areas of Utah County
  • Washington: Bothell, Brier, Bucoda, Darrington, Edmonds, Everett, Gold Bar, Index, Lake Stevens, Lynwood, Marysville, Mill Creek, Monroe, Mountlake Terrace, Mukilteo, Stanwood, Sultan, Tenino, and unincorporated areas of Snohomish and Thurston Counties

If a designated community completed the steps to return to compliance with the floodplain requirements before today, it will not be suspended. Lenders should verify the status of any of the listed communities in which they may be taking real estate as security for a loan before proceeding with the transaction.


OCC: Banks' response to COVID-19 governed by federal standards

OCC Bulletin 2020-62 reminds national banks, federal savings associations, and federal branches and agencies of foreign banks that, even though federal, state, and local governments have taken many actions to respond to the economic disruption caused by the spread of COVID-19, OCC-supervised institutions are governed primarily by uniform federal standards that preempt state law. The Bulletin lists types of state laws and regulations that do not apply to OCC-supervised institutions:

  • State law limitations on terms of credit, disbursements and repayments; and processing, origination, and servicing mortgages
  • State law and regulations on interest and non-interest fees
  • State actions limiting banks' ability to foreclose on defaulted loans and take possession of collateral beyond what is provided for in the CARES Act
  • Attempts to require banks to report to state and local officials

The OCC recommends that banks it supervises should consult with legal counsel to determine the applicability of any particular state or local law. Banks and their counsel may also contact the OCC with questions.


OCC explains how to use LTD ratios

The OCC has issued Bulletin 2020-61 to inform national banks about how the host loan-to-deposit (LTD) ratios issued by the OCC, Fed, and the FDIC on June 2, 2020, are used to determine compliance with section 109 of the Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994 (IBBEA).


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