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Top Story Lending Related

11/25/2020

OCC issues proposed CRA General Performance Standards

The OCC is inviting comment on a notice of proposed rulemaking regarding the Community Reinvestment Act’s (CRA) general performance standards. The OCC published a final rule in June 2020 to strengthen and modernize the agency’s regulations under the CRA to encourage banks to engage in more activities to serve the needs of their communities, particularly low- and moderate-income and other historically underserved communities.

The proposal released yesterday provides the OCC’s proposed approach to determine the CRA evaluation measure benchmarks, retail lending distribution test thresholds, and community development minimums under the general performance standards set forth in the 2020 final rule. The proposal also explains how the OCC would assess significant declines in CRA activities levels in connection with performance context following the initial establishment of the benchmarks, minimums, and thresholds. Finally, the proposed rule would make clarifying and technical amendments to the 2020 final rule.

Comments on the proposal will be accepted for 60 days following publication in the Federal Register.

11/25/2020

FHFA announces conforming loan limits

The Federal Housing Finance Agency has announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2021. In most of the U.S., the 2021 maximum conforming loan limit (CLL) for one-unit properties will be $548,250, an increase from $510,400 in 2020.

For areas in which 115 percent of the local median home value exceeds the baseline CLL, the maximum loan limit will be higher than the baseline loan limit. The Housing and Economic Recovery Act establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a “ceiling" on that limit of 150 percent of the baseline loan limit. Median home values generally increased in high-cost areas in 2020, driving up the maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $822,375 — or 150 percent of $548,250.

Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $822,375 for one-unit properties.

As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum CLL will be higher in 2021 in all but 18 counties or county equivalents in the U.S.

11/25/2020

House prices climbing

The Federal Housing Finance Agency (FHFA) has announced U.S. house prices rose 3.1 percent in the third quarter of 2020, up 7.8 percent from the third quarter of 2019—the fastest year-over-year rate of appreciation since 2006. FHFA's seasonally adjusted monthly index for September was up 1.7 percent from August.

11/24/2020

OCC updates Activities and Operations rules

The Office of the Comptroller of the Currency has announced a final rule that updates the agency's rules for national bank and federal savings association activities and operations, with amendments affecting 12 CFR parts 4, 5, 7, 145, and 160. The rule, which takes effect April 1, 2021, is part of the OCC’s continuous effort to modernize its rules and remove unnecessary requirements to relieve banks of unnecessary burdens, encourage economic opportunity, and promote the safe, sound, and fair operation of the federal banking system. The final rule changes 12 CFR part 7 to update or eliminate outdated regulatory requirements that no longer reflect the modern financial system and to clarify and codify recent OCC interpretations. The Rule includes changes:

  • incorporating and streamlining interpretations addressing permissible derivatives activities for national banks;
  • codifying interpretations to permit national banks and federal savings associations to engage in certain tax equity finance transactions;
  • codifying interpretations regarding national bank membership in payment systems and clarifying that federal savings associations are subject to the same requirements as national banks;
  • expanding the ability of national banks and federal savings associations to choose corporate governance provisions under state law;
  • clarifying the extent to which national banks may adopt anti-takeover provisions permissible under state corporate governance law;
  • clarifying when national bank participation in a financial literacy program on the premises of, or a facility used by, a school or other organization would not be a branch;
  • codifying interpretations of the National Bank Act relating to capital stock issuances and repurchases; and
  • applying rules relating to finder activities, indemnification, equity kickers, postal services, independent undertakings, and hours and closings to federal savings associations.

11/24/2020

HUD proposes to allow private flood insurance on FHA-insured loans

HUD has published [85 FR 74630] a proposed rule that would amend Federal Housing Administration (FHA) regulations to allow mortgagors the option to purchase private flood insurance on FHA-insured mortgages for properties located in Special Flood Hazard Areas (SFHAs), in satisfaction of the mandatory purchase requirement of the Flood Disaster Protection Act of 1973 (the FDPA), and in harmony with private flood insurance requirements under the Biggert-Waters Act.. Comments on the proposal are due by January 22, 2021.

11/24/2020

CFPB updates 2021 HMDA FIG

The Bureau has made an update to the HMDA Filing Instructions Guide (FIG) for data collected in 2021 (for submission in 2022). Edits Q656 and Q657 in Table 8 (Macro Quality Edits for Loan/Application Register) have been reclassified and moved to Table 7 (Quality Edits for Loan/Application Register).

11/23/2020

CFPB settles deceptive sales practice case

The Bureau has announced it has issued a consent order against U.S. Equity Advantage, Inc. (“USEA”), a nonbank located in Orlando, Florida, and its owner, Robert M. Steenbergh. The Bureau found that the company’s disclosures and advertisements of its auto loan payment program contained misleading statements in violation of the Consumer Financial Protection Act of 2010’s prohibition against deceptive acts or practices.

The consent order imposes a judgment against them requiring them to pay $9,300,000 in consumer redress and contains requirements to prevent future violations. The ordered redress amount was suspended upon payment of $900,000 and a $1 civil money penalty to the Bureau. The suspension of the full payment for redress, as well as the $1 civil penalty, is based on USEA’s and Steenbergh’s demonstrated inability to pay more based on sworn financial statements.

11/23/2020

CFPB sues debt settlement company and owners

The CFPB has filed a lawsuit against FDATR, Inc., and its owners, Dean Tucci and Kenneth Wayne Halverson. The Bureau alleges that FDATR, Tucci, and Halverson violated the Telemarketing Sales Rule (TSR) by engaging in deceptive and abusive telemarketing acts or practices and the Consumer Financial Protection Act of 2010 (CFPA) through deceptive acts or practices.

FDATR was a corporation headquartered in Wood Dale, Illinois, that promised to provide student-loan debt-relief and credit-repair services to consumers nationwide. Tucci and Halverson both owned and managed FDATR, which was involuntarily dissolved in September 2020. The Bureau’s complaint, filed in the United States District Court for the Northern District of Illinois, seeks injunctions against FDATR, Tucci, and Halverson, as well as damages, redress to consumers, disgorgement of ill-gotten gains, and the imposition of civil money penalties.

  • CFPB press release
  • 11/23/2020

    OCC proposes Fair Access to Financial Services Rule

    The OCC has issued a proposed rule that would ensure fair access to banking services provided by national banks, federal savings associations, and federal branches and agencies of foreign bank organizations.The proposal would codify more than a decade of OCC guidance stating that banks should provide access to services, capital, and credit based on the risk assessment of individual customers, rather than broad-based decisions affecting whole categories or classes of customers.

    The proposal would apply to the largest banks in the country that may exert significant pricing power or influence over sectors of the national economy and would require a covered bank to ensure it makes its products and services available to all customers in the community it serves, based on consideration of quantitative, impartial, risk-based standards established by the bank. Under the proposal, a covered bank’s decision to deny services based on an objective assessment of the person’s creditworthiness, ability to pay, or other quantitative, impartial, risk-based reasons would not violate the bank’s obligation to provide fair access. However, under the proposal, the bank may not deny a customer service to disadvantage, limit, or prevent the customer from entering or competing in a market or business segment, or to benefit another person or business activity.

    A bank would be presumed not to meet the definition of a bank covered by the proposed rule if it has less than $100 billion in total assets.

    Comments on the proposal will be accepted through January 4, 2021.

    11/23/2020

    Temporary reporting relief for community banks

    The Federal Reserve Board, FDIC, and OCC have announced an interim final rule that provides temporary relief for certain community banking organizations related to certain regulations and reporting requirements as a result, in large part, of their growth in size from the coronavirus response.

    Community banking organizations are subject to different rules and requirements based on their risk profile and asset size. Due to participating in federal coronavirus response programs—such as the Paycheck Protection Program—and other lending that supports the U.S. economy, many community banking organizations have experienced rapid and unexpected increases in their sizes, which are generally expected to be temporary. The temporary increase in size could subject community banking organizations to new regulations or reporting requirements. Community banking organizations with under $10 billion in assets may have fewer resources available to prepare and comply with previously unanticipated regulatory requirements, especially during a time of economic disruption.

    With regard to the requirements covered by the interim final rule, community banking organizations that have crossed a relevant threshold generally will have until 2022 to either reduce their size, or prepare for new regulatory and reporting standards. The rule applies to community banking organizations and financial institutions with less than $10 billion in total assets as of December 31, 2019. The rule will be effective immediately upon publication in the Federal Register. Comments on the interim final rule will be accepted for 60 days following publication.

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