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Top Story Lending Related

12/31/2020

CFPB issues approval order for earned wage access product

The Consumer Financial Protection Bureau has issued a compliance assistance sandbox (CAS) approval order to PayActiv, Inc. covering specific aspects of some of its earned wage access (EWA) products, which allow employees access to their earned but unpaid wages prior to payday. A CAS approval offers an entity confronting regulatory uncertainty a “safe harbor” from liability under specified legal provisions. Entities are offered safe harbor for specified conduct that the Bureau finds compliant with those legal provisions, subject to good faith compliance with the terms of the approval. In this case, the CAS approval order implements the existing safe harbor approval mechanisms provided under the Truth in Lending Act, and is valid for two years.

12/30/2020

Main Street Lending Program extension

In order to allow more time to process and fund loans that were submitted to the Main Street lender portal on or before December 14, 2020, the Federal Reserve Board has extended the termination date of the Main Street Lending Program facilities to January 8, 2021. The Federal Reserve System's press release includes updated frequently asked questions and program term sheets.

12/29/2020

FDIC lists November enforcement actions

The FDIC has released a list of orders of administrative enforcement actions taken against banks and individuals in November. Among those actions were two civil money penalties and one removal order.

  • Park Bank, Homen, Wisconsin, was ordered to pay a $12,841.50 civil money penalty for engaging in a pattern or practice of violations of the Flood Disaster Protection Act of 1973 and Part 339 of FDIC Rules and Regulations.
  • A former first vice president and BSA officer of Pacific City Bank, Los Angeles, California, was assessed a $10,000 civil money penalty, for having misrepresented to bank management and the FDIC the status of the bank's enhanced due diligence reviews, which resulted in a backlog us such reviews and failure to timely file SARs, backdating some of the EDD reviews, and deleting a bank analyst's SAR filing recommendation.
  • A removal and prohibition order was issued to a former cashier, vice president and director of Enloe State Bank, Cooper, Texas (in receivership), for originating 11 fictitious loans from which she or her family benefited.

12/29/2020

FHFA requests input on appraisal-related policies

The Federal Housing Finance Agency yesterday issued a Request for Input (RFI) on appraisal-related policies, practices, and processes. The input received in response to the RFI will be used by FHFA to determine the necessary modifications needed to ensure Fannie Mae and Freddie Mac (the Enterprises) operate in a safe and sound manner. The RFI covers four areas related to appraisals:

  • Appraisal modernization;
  • The Uniform Appraisal Dataset (UAD) and the design of appraisal forms;
  • Automated Valuation Models (AVMs) and appraisal waivers; and
  • Valuation differences by borrower and neighborhood ethnic makeup.

The FHFA invites feedback on all the questions in the RFI within 60 days of the publication of this document, but no later than February 26, 2021.

12/29/2020

OCC issues interpretation of preemption standards

The OCC has issued an interpretation of 12 U.S.C. 25b, which codifies preemption standards and established procedural requirements for certain preemption actions by the agency. Federal preemption permits national banks and federal savings associations, many of which operate across state lines, to operate under a uniform set of rules to support nationwide banking. The OCC concluded that the federal banking system, and its customers, would benefit from a comprehensive interpretation of these provisions, which sets out a consistent framework for compliance.

The OCC's Interpretive Letter 1173, issued on December 18, 2020, discusses, among other topics:

  • Standards for preemption of state consumer financial laws
  • State law preemption no requiring a statutory "preemption determination"
  • Preemption determinations under the Barnett standard
  • Preservation of powers related to charging interest
  • Deference
  • The OCC Framework for Compliance

12/24/2020

OCC issues final Activities and Operations rule

The Office of the Comptroller of the Currency has issued a final rule to amend its regulations in 12 CFR 7, “Activities and Operations of National Banks and Federal Savings Associations.” The final rule updates or eliminates outdated regulatory requirements that no longer reflect the modern financial system, clarifies and codifies recent OCC interpretations, integrates certain regulations for national banks and federal savings associations, and makes other technical and conforming changes. The amendments are effective April 1, 2021.

12/24/2020

House prices continue to rise

The Federal Housing Finance Agency's House Price Index for October 2020 has been released and reports house prices rose 10.2 percent from October 2019 to October 2020. The previously reported 1.7 percent price change for September 2020 remained unchanged. For the nine census divisions, seasonally adjusted monthly house price changes from September 2020 to October 2020 ranged from +0.9 percent in the West North Central and East South Central divisions to +2.1 percent in the New England division. The 12-month changes ranged from +8.4 percent in the West South Central division to +12.5 percent in the Mountain and New England divisions.

12/24/2020

COVID-19 forbearance extended

The Federal Housing Finance Agency has announced that Fannie Mae and Freddie Mac (the Enterprises) will continue to offer COVID-19 forbearance to qualifying multifamily property owners through March 31, 2021. The Enterprise forbearance programs were set to expire December 31, 2020.

Property owners with Enterprise-backed multifamily mortgages can enter a new or, if qualified, modified forbearance if they experience a financial hardship due to the COVID-19 emergency. Property owners who enter into a new or modified forbearance agreement must:

  • Inform tenants in writing about tenant protections available during the property owner's forbearance and repayment periods; and
  • Agree not to evict tenants solely for the nonpayment of rent while the property is in forbearance.

Additional tenant protections apply during the repayment periods. These protections include:

  • Giving tenants at least a 30-day notice to vacate;
  • Not charging tenants late fees or penalties for nonpayment of rent; and
  • Allowing tenant flexibility in the repayment of back rent over time, and not necessarily in a lump sum.

12/24/2020

FEMA to suspend communities from flood insurance program

The Federal Emergency Management Agency will publish a notice in the December 28, 2020, Federal Register identifying communities in Iowa, Michigan, South Dakota, Texas, and Wisconsin that have been scheduled from suspension from the National Flood Insurance Program for noncompliance with the floodplain management requirements of the Program on December 30, 2020.

  • IA: Aurora, Brandon, Buchanan County (unincorporated areas), Fairbank, Hazleton, Independence, Jesup, Lamont, and Quasqueton
  • MI: Clinton, Harrison, and New Baltimore
  • SD: Clay County (unincorporated areas)
  • TX: Angleton, Brazoria, Clute, Freeport, Jones Creek, Manvel, and West Columbia
  • WI: Pierce County (unincorporated areas) and Spring Valley

12/23/2020

Agencies revise statement on status of certain investment funds

The OCC, FRB, and FDIC yesterday issued a revised statement to supersede the "Statement Regarding Status of Certain Investment Funds and Their Portfolio Investments for Purposes of Regulation O and Reporting Requirements under Part 363 of FDIC Regulations" issued on December 27, 2019, and set to expire on January 1, 2021.

The revised interagency statement explains that the agencies will continue to exercise discretion not to take action against banks, or against certain asset managers that become principal shareholders of banks (principal shareholder fund complexes), with respect to certain extensions of credit by banks to portfolio companies of the principal shareholder fund complex (fund complex-controlled portfolio companies) that otherwise would violate Regulation O, 12 CFR 215, provided certain eligibility criteria are satisfied. The agencies are providing this temporary relief while the Board, in consultation with the other agencies, considers whether to amend Regulation O to address this issue. This temporary relief will apply until January 1, 2022, unless amended, extended, or superseded in writing before that time.

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