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11/16/2020

Business info to be masked in IRS tax transcripts

The IRS has announced that starting December 13 it will begin masking sensitive data on business tax transcripts to protect business taxpayers from identity theft. The following information will be visible on the new tax transcript:

  • Last four digits of any Employer Identification Number listed on the transcript: XX-XXX1234
  • Last four digits of any Social Security number or Individual Tax Identification Number listed on the transcript: XXX-XX-1234
  • Last four digits of any account or telephone number
  • First four characters of the first, and last name for any individual (first three characters if the name has only four letters)
  • First four characters of any name on the business name line
  • First six characters of the street address, including spaces
  • All money amounts, including wage and income, balance due, interest and penalties

For both the individual and business tax transcript, there is space for a Customer File Number. The Customer File Number is an optional 10-digit number (any number other than the taxpayer's SSN or EIN) that can be created, usually by third parties, that allow them to match a transcript to a taxpayer. The Customer File Number field will appear on the transcript when that number is entered on Line 5 of Form 4506-T, Request for Transcript of Tax Return, and Form 4506T-EZ.

11/16/2020

COVID-19-related loan flexibilities extended

The Federal Housing Finance Agency has announced that Fannie Mae and Freddie Mac (the Enterprises) will extend several loan origination flexibilities through December 31, 2020. The changes are to ensure continued support for borrowers during the COVID-19 national emergency. The flexibilities were set to expire on November 30, 2020.

Extended flexibilities include:

  • Alternative appraisals on purchase and rate term refinance loans:
  • Alternative methods for documenting income and verifying employment before loan closing; and
  • Expanding the use of powers of attorney to assist with loan closings

11/16/2020

Virginia man sentenced for PPP fraud

The Justice Department has announced the sentencing of a man from Virginia for defrauding the Paycheck Protection Program (PPP). Court documents indicate that Tarik Jaafar, of Ashburn, Virginia, conspired with his wife, Monika Magdalena Jaworska, to create four shell companies. These companies conducted no legitimate business and existed solely as a means to execute the scheme to defraud. From April 13 to May 6, Jaafar and Jaworska applied for 18 separate PPP loans in the names of the four shell companies valued at approximately $6.6 million, falsely claiming, among other things, that the businesses had employees and they needed the loans to pay their employees’ salaries. Jaafar and Jaworska fraudulently induced banks to distribute approximately $1.4 million in loans which they intended to use for their personal benefit.

On June 20, Jaafar and Jaworska were arrested at John F. Kennedy International Airport as they attempted to flee to Poland. The majority of the funds were recovered by the banks and by law enforcement. On August 25, Jaafar pleaded guilty to conspiracy to defraud the United States.

11/16/2020

Reduced SBA 504 loan debenture rates

The SBA has announced the updated interest rates for the Certified Development Companies 504 Loan Program. The program now allows for 10, 20, and 25-year interest rates at 2.231 percent, 2.364 percent, and 2.399 percent, respectively. Small businesses can now apply for a 504 loan at these low-interest rates.

11/16/2020

Classic FICO validated for Fannie and Freddie

The Federal Housing Finance Agency has announced the validation and approval of the Classic FICO credit score model for use by Fannie Mae and Freddie Mac (the Enterprises). The validation and approval of Classic FICO by the Enterprises allows them to continue supporting the mortgage market while assessing more modern credit score models that were submitted in response to the 2020 Joint Enterprise Credit Score Solicitation.

Enterprise announcements:

11/13/2020

Debt Collector pays $500,000 for reporting violations

The CFPB has announced a settlement with Afni, Inc.to address its violations in providing information to consumer reporting agencies. Afni is a non-bank Illinois-based debt collector that specializes in collecting debt on behalf of telecommunications companies and furnishes information to consumer reporting agencies about consumers’ credit. The consent order requires Afni to take certain steps to prevent future violations and imposes a $500,000 civil money penalty.

Details of Afni's violations and a link to the Bureau's consent order can be found in BankersOnline's penalty page, "Afni, Inc. pays $500K for FCRA violations."

11/13/2020

Bureau reports on accuracy of payment info received by CRAs

The Bureau has released its quarterly consumer trends report regarding the prevalence of actual payment information in consumer credit reporting. Key findings of the report include

  • Across the three most common installment loan types (auto loans, student loans, and mortgages), shares of credit accounts with actual payment amount information furnished have generally trended upward, and by March 2020, contained actual payment information in more than 90 percent of credit accounts.
  • Shares of revolving and credit card accounts with actual payment information furnished significantly declined over the same time period. The share of credit card accounts containing actual payment data peaked in the fourth quarter of 2013 at 88 percent and has since declined by more than half to 40 percent. Compared to actual payment, other data variables in a consumer’s consumer report, such as balance amount and credit limit, are consistently furnished across loan types.
  • Furnishing actual payment information appears to be an either/or proposition for credit card issuers. Issuers either furnish actual payment information for nearly all accounts or not at all
  • In 2013, up to 70 percent of the largest credit card issuers furnished actual payment data for nearly all accounts. As of 2020, only about half of issuers with recent payments furnish these data.

11/13/2020

Enterprises extend purchase of loans in forbearance

The Federal Housing Finance Agency has approved an extension of the current temporary policy that allows for the purchase of certain single-family mortgages in forbearance that meet specific eligibility criteria as set by Fannie Mae and Freddie Mac (the Enterprises). The policy is extended for loans originated through December 31, 2020.

11/12/2020

Bureau reviewing payday lending disclosures

The CFPB has published a notice and request for comment [85 FR 71886] on an information collection plan titled "Generic Information Plan for the Development and Testing of Disclosures and Related Materials" to test Payday Loan disclosures. The results of this testing (estimated to conclude September 2021) may be used, along with other Bureau considerations, to inform the decision-making process around whether to move forward with a rulemaking related to payday loan disclosures.

11/10/2020

OCC: COVID-19 effects on federal banking system

The OCC has posted its Semiannual Risk Perspective for Fall 2020, reporting the key issues facing the federal banking system and the effects of the COVID-19 pandemic on the federal banking industry.

Although banks are still in strong financial condition, profitability is stressed due to low interest rates and increasing levels of problem loans. The OCC reported credit, strategic, operational, and compliance risks, among the key risk themes in the report:

  • Credit risk is increasing as the economic downturn impacts customer ability to service debts.
  • Strategic risk is an emerging issue due to the historically low rate environment, potential credit stress and their effect on bank profitability.
  • Operational risk is elevated as financial institutions respond to altered work environments and an evolving and complex operating environment. Cybersecurity threats contribute as a key driver of the heightened operational risk environment.
  • Compliance risk is elevated due to a combination of altered work environments, and the requirement to quickly implement federal, state, and proprietary programs designed to support businesses and consumers.

The report also highlights emerging trends in payment products and services as a special topic in emerging risks.

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