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Top Story Lending Related

06/25/2020

Warning for misleading marketing of coronavirus relief loans

The FTC and the SBA have sent warning letters to six companies that may be misleading small businesses seeking SBA loans as a result of the coronavirus 2019 pandemic. The letters warn the recipients to take immediate action to ensure all deceptive claims are removed and to remediate any harm to small business consumers as a result of the claims. The letters also instruct the recipients to notify the FTC within 48 hours about the specific actions they have taken to address the agency’s concerns.

06/25/2020

2019 mortgage lending data

The Federal Financial Institutions Examination Council (FFIEC) announced yesterday the availability of data on 2019 mortgage lending transactions at 5,508 U.S. financial institutions covered by the Home Mortgage Disclosure Act (HMDA). Covered institutions include banks, savings associations, credit unions, and mortgage companies.

06/25/2020

Distressed or underserved nonmetro mid-income geographies

The federal financial institution regulators announced yesterday the availability of the 2020 list of distressed or underserved nonmetropolitan middle-income geographies, which are geographic areas where revitalization or stabilization activities are eligible to receive Community Reinvestment Act consideration under the community development definition.

06/25/2020

House prices rose in April

The Federal Housing Finance Agency has reported that U.S. house prices rose in April, up 0.2 percent from the previous month, according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). House prices rose 5.5 percent from April 2019 to April 2020. The previously reported 0.1 percent increase for March 2020 remains unchanged. For the nine census divisions, seasonally adjusted monthly house price changes from March 2020 to April 2020 ranged from -0.5 percent in the South Atlantic division to +0.8 percent in the West South Central division. The 12-month changes were all positive, ranging from +5.0 percent in the Middle Atlantic division to +6.8 percent in the Mountain division.

06/24/2020

Bureau interpretive rule on underserved areas

The CFPB has issued an interpretive rule to provide guidance to creditors and other persons involved in the mortgage origination process about the way in which the Bureau determines which counties qualify as “underserved” for a given calendar year. The Bureau’s annual list of rural and underserved counties and areas is used in applying various provisions under Regulation Z, which implements the Truth in Lending Act. These provisions include the exemption from the requirement to establish an escrow account for a higher-priced mortgage loan and the ability to originate balloon-payment qualified mortgages and balloon-payment high cost mortgages.

The Bureau previously interpreted how HMDA data would be used to determine which areas meet this standard using a method set forth in the commentary to Regulation Z. However, portions of this method have become obsolete because they rely on data elements that were modified or eliminated by certain 2015 amendments to the Bureau’s HMDA regulations, which became effective in 2018. The new interpretive rule describes the HMDA data that will instead be used in determining that an area is “underserved” for purposes of the standard described in Regulation Z. This interpretation supersedes the outdated methodology set forth in the commentary to Regulation Z.

The list of rural and underserved counties, using the HMDA data described in the interpretive rule, can be found on the Bureau’s website.

06/24/2020

CFPB rule provides loss mitigation options

The CFPB announced yesterday it has issued an interim final rule that will make it easier for consumers to transition out of financial hardship caused by the COVID-19 pandemic and easier for mortgage servicers to assist those consumers.

The rule makes it clear that servicers do not violate Regulation X by offering certain COVID-19-related loss mitigation options based on an evaluation of limited application information collected from the borrower. Normally, with certain exceptions, Regulation X would require servicers to collect a complete loss mitigation application before making an offer.

The loss mitigation option must meet certain criteria to qualify for an exception from the typical requirement to collect a complete application. Among other things, the option must allow the borrower to delay paying all principal and interest payments that were forborne or became delinquent as a result of a financial hardship due, directly or indirectly, to the COVID-19 emergency. Servicers may not charge any fees to borrowers in connection with the option, and the borrower’s acceptance ends any preexisting delinquency. The exception is not limited to payments forborne under the CARES Act.

Once the borrower accepts an offer for an eligible program under the interim final rule, the servicer need not exercise reasonable diligence to obtain a complete application and need not provide the acknowledgment notice that is generally required under Regulation X when a borrower submits a loss mitigation application.

The rule is effective beginning July 1, 2020. Comments on the rule will be accepted for 45 days following Federal Register publication.

Editor's note: The amendments have been posted to § 1024.41(c)(2) of Regulation X in BankersOnline's Regulations pages.

06/24/2020

FHFA Foreclosure Prevention and Refinance Report

The Federal Housing Finance Agency (FHFA) has released its First Quarter 2020 Foreclosure Prevention and Refinance Report. The report shows that Fannie Mae and Freddie Mac completed 26,910 foreclosure prevention actions in the first quarter of 2020, bringing to 4.4 million the number of troubled homeowners who have been helped during the conservatorships of the Enterprises. Of these actions, 3.7 million of the foreclosure prevention actions have helped troubled homeowners stay in their homes.

Other report highlights include:

  • Forbearance: newly initiated forbearance plans rose to 170,533 in the first quarter of 2020, up from 6,975 in the fourth quarter of 2019. A majority of the forbearance actions occurred as a result of the Enterprises' response COVID-19 impacts.
  • Loan modifications: of the 16,773 loan modifications completed, 38 percent reduced borrowers' monthly payments by more than 20 percent; 64 percent were extend-term only; and 23 percent were modifications with principal forbearance.
  • Foreclose starts and sales: 7,704 third-party and foreclosure sales were completed, down 9 percent compared with the fourth quarter of 2019.
  • Foreclosure starts decreased 3 percent from 30,010 in the fourth quarter of 2019 to 28,978 in the first quarter of 2020.
  • Refinances increased to 747,464 in the first quarter, from 728,842 in the fourth quarter of 2019

    06/23/2020

    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.

    06/23/2020

    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 [published July 10, 2020, at 85 FR 41716], 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 [published July 10, 2020, at 85 FR 41448], 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 [ending 9/8/2020] and those on the second NPRM for 31 days [ending 8/10/2020] following publication in the Federal Register.

    UPDATE: Updated to include publication and comment deadline information.

    06/22/2020

    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.

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