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Top Story Lending Related


Fed to wind down SMCCF

The Federal Reserve Board announced on Wednesday plans to begin winding down the portfolio of the Secondary Market Corporate Credit Facility (SMCCF), a temporary emergency lending facility that closed on December 31st, 2020. The SMCCF proved vital in restoring market functioning last year, supporting the availability of credit for large employers, and bolstering employment through the COVID-19 pandemic.

SMCCF portfolio sales will be gradual and orderly, and will aim to minimize the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions for exchange traded funds and corporate bonds. The Federal Reserve Bank of New York, which manages the operations of the SMCCF, will announce additional details soon and before sales begin.

The SMCCF was established with the approval of the Treasury Secretary and equity provided by the Treasury Department under the CARES Act.


VA COVID-19 partial claim program

The Department of Veterans Affairs has published [86 FR 28692] a final rule to establish the COVID-19 Veterans Assistance Partial Claim Payment program (COVID-VAPCP), a temporary program to help veterans return to making normal loan payments on a VA-guaranteed loan after exiting a forbearance for financial hardship due, directly or indirectly, to the COVID-19 national emergency.

Under the rule, which becomes effective July 27, 2021:

  • The partial claim maximum limit will be 30 percent of the unpaid principal balance of the guaranteed loan as of the date the veteran entered into a COVID-19 forbearance
  • The partial claim subordinate loan from the VA will be interest-free, and repayment will not be required until the veteran transfers title to the property or refinances or pays in full the associated guaranteed loan (payments of the subordinate loan in whole or in part, however, pay be made without penalty or charge)
  • No financial evaluation of the veteran is required and documentation requirements are minimal
  • Servicers must submit a partial claim payment request to the VA within 120 days of the termination of forbearance
  • The program is not an “option of last resort." Servicers may use the partial claim payment option even if other home retention options are feasible, provided that the partial claim payment option is in the veteran’s financial interest.
  • Applications under the program will not be accepted after the date that is 180 days after the date the COVID-19 national emergency ends under the National Emergencies Act, 50 U.S.C.161.


FDIC guidance after severe storm damage in West Virginia

The FDIC has released FIL-38-2021 with guidance concerning regulatory relief to financial institutions and their facilitation of recovery in areas of West Virginia affected by severe weather from February 27–March 4, 2021.


FDIC CRA exam schedule released

The FDIC has issued the lists of institutions scheduled for a Community Reinvestment Act (CRA) examination during the third quarter and fourth quarter of 2021 .


Bureau proposes settlement in Driver Loan case

The Bureau has filed a proposed settlement with Driver Loan, LLC, and its CEO, Angelo Jose Sarjeant. If entered by the court, the settlement would require the defendants to refund about $1 million in deposits plus advertised interest to harmed consumers, stop deceptive practices, and pay a $100,000 civil penalty. A complaint filed by the CFPB alleges that Driver Loan and Sarjeant violated federal law by misrepresenting the risks associated with their deposit product and the annual percentage rate (APR) associated with the consumer loans they make.


CFPB report on manufactured housing financing

The Bureau has published a report that provides new insights into manufactured housing financing. Manufactured housing is a small segment of the overall housing supply, but it is one of the most affordable types of housing available to low-income consumers and makes up 13% of the housing stock in small towns and rural America. Those low acquisition costs, however, often come coupled with higher interest rates and limited opportunity to refinance.

Consumers who do not own the underlying land are more likely to see their homes depreciate and have fewer protections if they fall behind on payments. These factors combined can make this affordable housing a potentially risky avenue for homeownership. The CFPB’s report uses new information collected under the Home Mortgage Disclosure Act to shed light on the experiences of these borrowers and their families..


2021 CFPB Research Conference summary

The CFPB has posted a Bureau Blog summary of the CFPB's 2021 Research Conference held on May 6. The presentations included research by academics and policymakers covering various topics in household and consumer finance. The keynote address was given by Dr. Raphael Bostic, President and CEO of the Federal Reserve Bank of Atlanta, who discussed a number of pressing research areas, including disparities in homeownership and access to mortgage credit, improving our understanding of the Community Reinvestment Act, and the evolution of credit scores across economic cycles.

The conference covered timely issues related to the effects of the COVID-19 pandemic on consumer finances and credit markets in its opening session. Other topics included - racial disparities in consumer and household finance and how refinancing patterns vary across borrower race. Video recordings of the conference are available.


Agencies extend period for CRA credit for Hurricane Maria-related efforts

The federal bank regulatory agencies yesterday issued a joint statement that they are extending the period for giving favorable consideration under Community Reinvestment Act regulations to institutions located outside of Puerto Rico and the U.S. Virgin Islands, for bank activities that continue to help revitalize or stabilize these areas devastated by Hurricane Maria. The agencies have determined that a 36-month extension through September 20, 2023, is appropriate given the continuing economic impact of Maria in Puerto Rico and the U.S. Virgin Islands.


Yellen asks Congress for project funding

In testimony before the House Subcommittee on Financial Services and General Government Committee on Appropriations, Treasury Secretary Yellen pointed to sections of the administration's formal budget where funding is needed.

  • FinCEN has been tasked with building a database that collects and secures beneficial ownership information, but Congress has not yet provided any funding to do it.
  • Congress has dramatically expanded funding for Community Development Financial Institutions with supplemental appropriations. However, it is challenging for the CDFI Fund to distribute greater resources and scale these programs without additional administrative funding.
  • The IRS needs additional resources to augment its auditing staff to ensure taxpayer compliance.


FDIC-insured institutions' income increases

The FDIC released its latest Quarterly Banking Profile, which indicates that the commercial banks and savings institutions insured by the FDIC reflect aggregate net income of $76.8 billion in first quarter 2021, an increase of $$17.3 billion (29.1 percent) from fourth quarter 2020. Aggregate negative provision expense, reflecting improvements in the economy and asset quality, drove the increase in quarterly net income. Three-fourths of all banks (74.8 percent) reported annual improvements in quarterly net income, and the share of unprofitable institutions dropped from 7.4 percent a year ago to 3.9 percent.

However, the average net interest margin contracted 57 basis points from a year ago to 2.56 percent—the lowest level on record for the Quarterly Banking Profile. Net interest income fell by $7.6 billion (5.6 percent) from a year ago. The year-over-year reduction in yields on earning assets outpaced the decline in average funding costs, both of which are at record lows.


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