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01/29/2020

FDIC FIL on ag lending management

The FDIC has issued FIL-5-2020 concerning prudent management of agricultural lending during economic cycles. The advisory reminds financial institutions engaged in agricultural lending to maintain sound underwriting standards, strong credit administration practices, effective risk management strategies, and appropriate allowances for losses and capital levels through the credit cycle. When agricultural borrowers experience financial difficulties, the FDIC encourages financial institutions to work constructively with borrowers to strengthen the credit and mitigate loss.

This Financial Institution Letter rescinds and replaces FIL-39-2014, "Prudent Management of Agricultural Credits Through Economic Cycles," dated July 16, 2014.

01/29/2020

HUD issues FHA guidance on assistance animals

HUD has announced the publication of guidance [Notice FHEO-2020-01] clarifying how housing providers can comply with the Fair Housing Act when assessing a person’s request to have an animal in housing to provide assistance because of a disability. The Act requires housing providers to permit a change or exception to a rule, policy, practice, or service that may be necessary to provide people with disabilities that affect a major life activity an equal opportunity to use and enjoy their home.

01/29/2020

OCC workshops in DC

The OCC reports it will host two workshops at OCC Headquarters in Washington, D.C., March 17 and 18, for directors of national community banks and federal savings associations.

  • The Risk Governance workshop on March 17 provides practical information for directors to effectively measure and manage risks. The workshop also focuses on the OCC’s approach to risk-based supervision and major risks in the financial industry.
  • The Compliance Risk workshop on March 18 focuses on the critical elements of an effective compliance risk management program, and on major compliance risks and critical regulations. Topics of discussion include the Bank Secrecy Act, Flood Disaster Protection Act, Fair Lending, Home Mortgage Disclosure Act, Community Reinvestment Act, and other compliance hot topics.

Each workshop is limited to the first 35 registrants, and there is a $99 fee. Online registration is available.

01/28/2020

IRS guidance on reporting mortgage insurance on Form 1098

The Internal Revenue Service has issued new guidance involving the deductibility of mortgage insurance premiums (MIP) for tax years 2018 through 2020. Recipients of mortgage payments who report mortgage interest payments on Form 1098 should also report MIP aggregating $600 or more received during the calendar year.

Lenders are not required to file or furnish corrected Forms 1098 for 2018 to report MIP for that year. However, the IRS encourages them to make that information available to borrowers so that they can decide whether to amend their 2018 income tax returns to claim the additional deduction. The IRS strongly recommends that lenders file corrected Forms 1098 for 2018 to report the MIP, as this will help substantiate the deductions and avoid IRS inquiries about any deduction that does not match the information return filed with the IRS.

For tax year 2019, Forms 1098 should be filed and furnished according to the usual due dates and include MIP in box 5. If a lender has already furnished the borrower statement without reporting MIP, it should send a corrected statement. Requests for extensions to file or furnish Forms 1098 should be submitted according to the specifications in the General Instructions for Certain Information Returns.

For tax year 2020, lenders should report MIP in box 5 and file and furnish Forms 1098 according to the specifications in the Instructions for Form 1098 and the General Instructions for Certain Information Returns

01/28/2020

OCC workshops in New Orleans

The OCC has announced it will host two workshops at the Embassy Suites by Hilton in New Orleans, March 3-4, for directors of national community banks and federal savings associations.

  • The Credit Risk workshop on March 3 focuses on credit risk within the loan portfolio, such as identifying trends and recognizing problems. The workshop also covers the roles of the board and management, how to stay informed of changes in credit risk, and how to effect change.
  • The Operational Risk workshop on March 4 focuses on the key components of operational risk—people, processes, and systems. The workshop also covers governance, third-party risk, vendor management, and cybersecurity.

The fee for each workshop is $99, and each session is limited to 35 registrants. Online registration is available.

01/28/2020

Updated HMDA compliance guide posted

The CFPB has posted version 4.0 of its HMDA Small Entity Compliance Guide to incorporate the provisions of the final rule issued on October 10, 2019. The Bureau also eliminated outdated content.

01/27/2020

Innovative Housing Showcase announced

HUD Secretary Carson has announced the agency will co-host with the National Association of Home Builders an “Innovative Housing Showcase“ September 12-14, 2020, in Washington, to educate policy makers and the broader public on the new housing innovations and building technologies that are helping to address U.S. affordable housing challenges.

01/24/2020

Small business lending and the Great Recession

The CFPB has posted an article announcing the Bureau's release of a data point report on the evolution of small business lending before, during, and following the Great Recession (2004-2017) that shows how small businesses' access to credit from traditional sources has declined during the Great Recession and has recovered somewhat and unevenly since the end of the Great Recession.

The report utilizes data from the Community Reinvestment Act on small business lending at the county level from 2004-2017 and Census data on the number of employer and non-employer firms.Some of the primary findings from the report are:

  • Following the Great Recession period, small business lending has increased, but lenders in the median county still made only one-half the number of small business loans per business in 2017 that they had made in 2004.
  • After the Great Recession, there was an increase in small business lending but there has been substantial variation by county and state, unlike the uniform decrease in such lending during the Great Recession.
  • Following the Great Recession, there were regional differences in increases in small business lending—states on the East Coast and in the South recovered at a faster rate than states in the Great Plains and West.
  • From before the Great Recession through 2017, the total number of thrifts, community banks, and large banks engaged in small business lending has declined. However, the number of credit unions offering small business lending products has increased since the beginning of the Great Recession.

01/24/2020

NCUA Board announces approvals

The National Credit Union Administration Board has announced it has unanimously approved:

  • a proposed rule to permit low-income-designated credit unions, complex credit unions, and newly chartered federal credit unions to issue subordinated debt.
  • a proposed rule that provides greater clarity on the regulations governing transactions where a federally insured credit union proposes to assume liabilities from or merge with another institution that is not a credit union.
  • the 2020 Annual Performance Plan, which outlines the strategies and initiatives the NCUA will use to achieve the performance measures and outcomes described in the 2018–2022 Strategic Plan.
  • an extension of the current 18-percent interest ceiling on most federal credit union loans until September 2021.

01/24/2020

OCC acts against former Wells Fargo Bank management

The OCC announced Thursday it has issued a notice of charges against five former senior executives of Wells Fargo Bank, N.A., Sioux Falls, South Dakota, and announced settlements with the bank’s former Chief Executive Officer (CEO) and other members of the bank’s operating committee. These actions stem from the executive's role in the bank's systemic sale practices misconduct (see "Incentive program costs Wells Fargo $185 M in CMPs," 9/9/2016).

The current or former executives charged and the relief sought by the notice of charges include:

  • Carrie Tolstedt, head of Wells Fargo's Community Bank -- Prohibition order and $25 million civil money penalty (CMP)
  • Claudia Russ Anderson, Community Bank group risk officer -- Prohibition order and $5 million CMP
  • James Strother, general counsel, Cease & Desist (C&D) order and $5 million CMP
  • David Julian, chief auditor -- C&D order and $2 million CMP
  • Paul McLinko, executive audit director -- C&D order and $500,000 CMP

The OCC stated the notice of charges alleges those executives failed to adequately perform their duties and responsibilities, which contributed to the bank’s systemic problems with sales practices misconduct from 2002 until October 2016, and the misconduct of those individuals allowed the practices to continue for years, affecting millions of bank customers and thousands of lower level bank employees. Additionally, the notice states that Ms. Russ Anderson also made false and misleading statements to the OCC and actively obstructed the OCC’s examinations of the bank’s sales practices. Under federal law, each of those individuals may request a hearing challenging the allegations and relief sought.

The OCC's press release also announced it had issued consent orders against three former Wells Fargo executives for their roles in the bank's sales practices misconduct:

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