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Top Story Lending Related

03/19/2024

FHA increases manufactured home loan limits

The Federal Housing Administration has announced new loan limits for its Title I Manufactured Home Loan Program. The increased amounts use new methodologies for calculating and updating the program’s limits, which were announced in a final rule published on February 29, 2024. The increases better align with current market prices and are expected to encourage more lenders to offer the program to homebuyers seeking to purchase manufactured homes and the lots on which they sit. This is the first update to the Title I program loan limits since 2008.

Effective for FHA case numbers assigned on or after March 29, 2024, the new nationwide Title I Manufactured Home Loan Program loan limits are:

  • Combination Loan (Single-section), $148,909
  • Combination Loan (Multi-section), $237,096
  • Manufactured Home Loan (Single-section), $105,532
  • Manufactured Home Loan (Multi-section), $193,719
  • Manufactured Home Lot Loan, $43,377

The FHA will recalculate the program’s loan limits on an annual basis to keep pace with home price changes over time.

03/19/2024

NMLS payments glitch affecting federal users

The NMLS has posted a notice concerning a payment processing issue preventing federal users from submitting payments yesterday. Federal users attempting to make payments received a message indicating NMLS "is currently unavailable" while the processing system was unavailable. Users who received that message yesterday should attempt to complete their payment today.

03/19/2024

ASC hearing addresses appraisal bias

The CFPB yesterday posted a Bureau Blog article, "ASC hearing addresses appraisal bias, highlights deficiencies with The Appraisal Foundation." The article contends that many minority homebuyers and owners "continue to report facing illegal discrimination during the home appraisal process because of their race, national origin, and community demographics."

The Appraisal Foundation sets qualifications for becoming an appraiser and standards for conducting appraisals. CFPB Director Rohit Chopra shared his concerns with fellow financial regulators about whether The Appraisal Foundation can realistically address appraisal bias and other challenges, citing recent developments, including shifting explanations and deficient policies around conflicts of interest. The key issues raised in Director Chopra's comment letter include:

  • Severe deficiencies in The Appraisal Foundation’s conflict of interest policies raise questions about its regulatory decisions
  • The Appraisal Foundation’s insular governance structure favors private interests
  • The Appraisal Foundation’s processes, including the selection of its president, lack transparency

03/19/2024

Two lenders fined $59M; falsely promised fast PPP application processing

The Federal Trade Commission yesterday reported it has taken action against two companies – Biz2Credit and Womply – that made false promises to small businesses seeking to take part in the Paycheck Protection Program (PPP), delaying and sometimes preventing them from obtaining funds they needed to keep their businesses afloat during the COVID-19 pandemic.

The companies have agreed to settle the FTC’s charges against them: Biz2Credit will pay $33 million and Womply will pay $26 million to the FTC for small businesses harmed by their deceptive conduct. These are the largest damages amounts ever secured by the agency under Section 19 of the FTC Act, and include money consumers lost because of the companies’ conduct, even if consumers made no payments directly to the companies.

Biz2Credit, Inc., and its subsidiary, Itria Ventures, have agreed to pay $33 million in damages to settle the Commission’s charges that they deceptively advertised that consumers’ emergency PPP loan applications would be processed in an average of 10-14 business days when, in reality, the average processing took well over a month. The FTC’s complaint alleges that Biz2Credit’s application processing was riddled with delays, and the average processing time was double what the defendants claimed, with tens of thousands of consumers waiting more than two months for a final determination. Even though they were aware of these delays, the defendants continued to make their false timing claims to consumers until nearly the end of the program. The FTC’s complaint also says that Biz2Credit unfairly ignored many consumers’ repeated and urgent pleas to withdraw their loan applications. As a result, the defendants delayed and sometimes even prevented these consumers from obtaining PPP funds elsewhere.

[UPDATE Mar. 26, 2024: A spokesperson for Biz2Credit provided a statement regarding its settlement with the FTC saying, in part, that "Biz2Credit demonstrated to the FTC that its 12-14 business day average processing time estimate for PPP loans was accurate for all bona fide PPP loan applications. Fraudulent and ineligible applications, which took longer to process, were included by the FTC in its calculations. Biz2Credit carefully reviewed and ultimately declined applications that it determined were potentially fraudulent or ineligible under PPP program rules. ... Biz2Credit’s decision to enter into the FTC settlement was a pragmatic business decision given the cost and uncertainty of litigation. There was no admission of wrongdoing by Biz2Credit in the settlement."]

Womply and its CEO, Toby Scammell, have agreed to pay $26 million to settle FTC charges they preyed on small businesses in desperate need of PPP funding. The FTC’s complaint alleges they widely advertised that small businesses – particularly one-person businesses like gig workers – could successfully get PPP funding when they applied through Womply. The complaint charges, however, that more than 60 percent of Womply applications never resulted in funding. Womply and Scammell allegedly also advertised that their automated processes and good customer service would help small businesses secure PPP loans fast. In fact, applicants regularly faced significant issues that slowed down or fully hindered their applications and were often unable to receive customer service assistance they were promised, according to the complaint.

03/11/2024

Regulators to publish temporary exceptions to FIRREA appraisal requirement

The Federal Reserve Board, OCC, FDIC, and NCUA have jointly scheduled Federal Register publication tomorrow (March 12, 2024) of temporary exceptions to FIRREA appraisal requirements for real estate-related financial transactions, provided certain criteria are met, in an area in the State of Hawaii following the major disaster declared by President Biden as a result of wildfires. The expiration date for the exceptions is August 10, 2026, which is three years after the date the President declared the major disaster. The agencies' order will be effective on publication.

The agencies also have determined that the exceptions are consistent with safety and soundness, provided that the depository institution determines the following: (1) the transaction involves real property located in the area designated [Maui County] as adversely affected by the major disaster; (2) there is a binding commitment to fund the transaction that was entered into on or after August 10, 2023, but no later than August 10, 2026; and (3) the value of the real property supports the institution’s decision to enter into the transaction. In addition, the transaction must continue to be subject to review by management and by the agencies in the course of examinations of the institution.

03/11/2024

CFPB shifts 'junk fees' focus to residential mortgage loans

In a March 8, 2024, blog article, the CFPB has signaled a shift of its "junk fees" campaign to residential real estate loans and their closing costs.

According to the article, in 2022, the median amount paid by borrowers for total loan costs (origination fees, appraisal and credit report fees, title insurance, discount points, and other fees) was nearly $6,000. Many of these costs are fixed and do not fluctuate with interest rates or change based on the size of the loan. As a result, they have an outsized impact on borrowers with smaller mortgages, such as lower income borrowers, first-time homebuyers, and borrowers living in Black and Hispanic communities. A 2021 Fannie Mae study found that nearly 15 percent of lower income homebuyers had closing costs that exceeded the amount of their down payment.

The article reports the Bureau is paying particular attention to the recent rise in discount points. A higher percentage of borrowers reported paying discount points in 2022 than any other years since this data point was first reported in 2018. In 2022 about 50.2 percent of home purchase borrowers paid some discount points, up from 32.1 in 2021. Borrowers are also paying more in discount points. The median discount points paid for home purchase loans in 2022 was $2,370 in 2022, up from $1,225 in 2021. Lenders sell discount points to borrowers to reduce interest rates.

The article also said it appears that some closing costs are high and increasing because there is little competition. Borrowers are required to pay for many of the costs associated with closing a home loan but cannot pick the provider and do not benefit from the service. In many cases, the lender simply picks from a very small universe of providers, and the costs are then passed on to the borrower, and cites lender;s title insurance as one example of a fee borrowers face at closing where the borrower has no control over cost. Fees for credit reports are another example cited in the article.

03/08/2024

Trade groups sue CFPB to stop credit card late fees rule

The U.S. Chamber of Commerce announced it has filed a lawsuit in the U.S. District Court for the Northern District of Texas, Fort Worth Division seeking a preliminary injunction to stop the Consumer Financial Protection Bureau (CFPB) from implementing its rule to limit credit card late fees, arguing that the CFPB not only exceeded its statutory authority but did so by relying on the use of secret data collected for an unrelated purpose.

The Chamber and co-plaintiffs Fort Worth Chamber of Commerce, Longview Chamber of Commerce, American Bankers Association, Consumer Bankers Association, and Texas Association of Business, allege that the CFPB—

  • Violated the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) by preventing issuers from collecting reasonable and proportional late fees when cardholders do not pay their bills on time;
  • Violated the Administrative Procedures Act (APA) by promulgating a final rule that is arbitrary and capricious, relying on secret data collected from only the largest banks for a different purpose and by a different agency; and
  • Issued the rulemaking with funds drawn in violation of the U.S. Constitution's Appropriations Clause.

The plaintiffs also filed a motion for a preliminary injunction that would bar the CFPB from enforcing, applying, or implementing the final rule, and a brief in support of that motion.

03/06/2024

Reserve Banks released 15 CRA evaluations in February

Our monthly check of the Federal Reserve Board's archive of CRA evaluation ratings reveals that the Reserve Banks made public 15 evaluations of member banks in February 2024. Thirteen of those evaluations were rated "Satisfactory." We congratulate Charles Schwab Bank, SSB, and Charles Schwab Premier Bank, SSB, both of Westlake, Texas, for receiving ratings of "Outstanding."

03/05/2024

SBA updates Lender Match tool for small businesses

Yesterday, SBA Administrator Isabel Casillas Guzman announced the next generation of the SBA’s Lender Match tool for businesses to connect to capital through SBA’s network of approved banks and private lenders. The enhanced Lender Match will provide Americans seeking funding to start and grow their businesses with a simple, online tool that will more effectively match them with the SBA’s competitive lending products and additional offerings from a trusted network of banks and private lenders.

On the enhanced Lender Match platform, small business owners benefit from an improved, mobile-first user interface that ensures better access and usability. Borrowers will now be able to easily view all of their matched lenders in one place, allowing the borrower to find and compare lenders to help them decide where to apply for a loan. The enhanced tool will also verify borrowers and screen for fraud to streamline the process for both lenders and borrowers. Importantly, with Lender Match, small businesses that are not matched to lenders will be connected to the SBA’s local network of free advisors to help them get capital-ready.

03/05/2024

CFPB finalizes rule reducing credit card late fees to $8 for larger issuers

This morning, the CFPB announced it has finalized a rule to cut excessive credit card late fees. The rule will curb fees that cost American families more than $14 billion a year. The CFPB estimates that American families will save more than $10 billion in late fees annually once the final rule goes into effect by reducing the typical fee from $32 to $8 for card issuers that together with their affiliates have one million or more open credit card accounts.

The final rule reduces the current maximum late fees from $30 for the first late payment and $41 for subsequent late payments to $8 and ends automatic inflation adjustments for that amount for issuers that have one million or more open accounts. Specifically, the final rule:

  • Lowers the immunity provision dollar amount for late fees to $8
  • Ends the automatic annual inflation adjustment. The CFPB will instead monitor market conditions and adjust the $8 late fee immunity threshold as necessary.
  • Requires credit card issuers to show their math. Larger card issuers will be able to charge fees above the threshold so long as they can prove the higher fee is necessary to cover their actual collection costs.

The rule does not change the credit card issuer’s ability to raise interest rates, reduce credit lines, and take other actions to deter consumers from paying late.

The final rule does not adopt these revisions for “Smaller Card Issuers” (i.e., card issuers that together with their affiliates had fewer than one million open credit card accounts for the entire preceding calendar year). For Smaller Card Issuers, the final rule revises the safe harbor threshold amounts for late fees to $32 for the initial violation and $43 for each subsequent violation that occurs in one of the next six billing cycles.

The effective date of the final rule will be 60 days after publication of the rule in the Federal Register.

  • Statement of CFPB Director Rohit Chopra
  • Executive summary
  • Key changes chart
  • Unofficial redline of the final rule
  • UPDATE:Updated 3/5/2024 to clarify that the reduced fee cap applies only to larger card issuers
  • PUBLICATION AND EFFECTIVE DATE UPDATE: Published at 89 FR 19128 on 3/15/2024, with an effective date of 5/14/2024. However, the U.S. Chamber of Commerce has filed a suit in the Northern District of Texas seeing a preliminary injunction to stop the CFPB from implementing the rule.

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