Top Story Lending Related

The FDIC, OCC and Federal Reserve have jointly announced a Notice of Proposed Rulemaking to raise the threshold for commercial real estate transactions requiring an appraisal to $400,000. Instead of an appraisal, the proposal would require that commercial real estate transactions at or below the threshold receive an evaluation. Comments on the proposal will be accepted for 60 days following Federal Register publication.

UPDATE: Published at 82 FR 35478 on July 31, 2017. Comment period expires September 29, 2017.

The CFPB published its previously announced final rule banning mandatory arbitration in the Wednesday, July 19, 2017, Federal Register, with an effective date of September 18, 2017, and compliance required in contracts entered into on or after March 19, 2018. Congress is reported to be under heavy lobbying pressure to use the Congressional Review Act (CRA) to block the rule from becoming effective. Under the CRA, Congress has a limited "window" during which it can reject significant new federal regulations after they have been published in the Federal Register.

The Treasury Department has announced OFAC's designation of 16 entities and individuals for engaging in support of illicit Iranian actors or transnational criminal activity. These designations include seven entities and five individuals for engaging in activities in support of Iran’s military or Iran’s Islamic Revolutionary Guard Corps (IRGC), as well as an Iran-based transnational criminal organization and three associated persons. Treasury's announcement reported that the State Department also designated today two Iranian organizations involved in Iran’s ballistic missile program. As a result of these actions, all property and interests in property of those designated subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. For identification of those designated, see our OFAC Update.

The Bureau has posted an article announcing a report recently published by the CFPB on ways people without a credit history -- the "credit invisible" -- start building one. Credit profiles on states and cities across the country were also released.

The Federal Reserve Board has released the June 2017 G.17 industrial production and capacity utilization report. Industrial production rose 0.4 percent in June for its fifth consecutive monthly increase. Manufacturing output moved up 0.2 percent; although factory output has gone up and down in recent months, its level in June was little different from February. The index for mining posted a gain of 1.6 percent in June, just slightly below its pace in May. The index for utilities, however, remained unchanged. For the second quarter as a whole, industrial production advanced at an annual rate of 4.7 percent, primarily as a result of strong increases for mining and utilities. Manufacturing output rose at an annual rate of 1.4 percent, a slightly slower increase than in the first quarter. At 105.2 percent of its 2012 average, total industrial production in June was 2.0 percent above its year-earlier level. Capacity utilization for the industrial sector increased 0.2 percentage point in June to 76.6 percent, a rate that is 3.3 percentage points below its long-run (1972–2016) average. A summary of the report was also released.

HUD has announced that, in an effort to prevent and effectively end homelessness, it is making $2 billion available to support thousands of local homeless assistance programs nationwide. Funded through its Continuum of Care (CoC) Homeless Assistance Program, HUD’s funding notice encourages local applicants to use a Housing First approach to help individuals and families move quickly into permanent housing.

The Consumer Financial Protection Bureau (CFPB) announced Friday afternoon a proposal on HMDA reporting requirements for banks and credit unions that issue home-equity lines of credit. Under rules that are scheduled to take effect in January 2018, financial institutions are generally required under the Home Mortgage Disclosure Act (HMDA) to report home-equity lines of credit if they made 100 such loans in each of the last two years. The new proposal would increase that threshold to 500 loans through calendar years 2018 and 2019 so that the Bureau can consider whether to make a permanent adjustment.

The Bureau said that it has heard increasing concerns from community banks and credit unions that the challenges and costs of reporting open-end lending may be greater than the Bureau had estimated when adopting the 100-loan threshold. The CFPB estimates that the temporary 500-loan threshold would still capture about three-quarters of the home-equity lending market, down from about 88 percent at the 100-loan threshold. Comments will be accepted through July 31, 2017.

UPDATE: Published in the July 20, 2017, Federal Register.

The OCC has published its First Quarter 2017 Mortgage Metrics Report, which showed 95.6 percent of mortgages included in the report were current and performing at the end of the quarter, compared with 94.9 percent a year earlier. The report also showed that foreclosure activity has increased from the previous quarter. This is the first quarter-over-quarter increase in two years. Reporting servicers initiated 47,546 new foreclosures during the first quarter of 2017, a 4.5 percent increase from the previous quarter but a decrease of 19.3 percent from a year earlier. Servicers implemented 35,137 mortgage modifications in the first quarter of 2017. Eighty-eight percent of the reported modifications reduced borrowers’ monthly payments.

The Federal Reserve Board has published the July 2017 summary of commentary on current economic conditions by Federal Reserve district (commonly know as the Beige Book). Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector.

In testimony before the House Committee on Financial Services, Federal Reserve Board Chair Yellen presented the Federal Reserve’s semiannual Monetary Policy Report to the Congress. Yellen briefly discussed the current economic situation and outlook before turning to monetary policy. She reviewed actions of the Federal Open Market Committee (FOMC) in raising the target range for the federal funds rate by ¼ percentage point at both its March and June meetings, bringing the target to a range of 1 to 1¼ percent. Yellen concluded, "the Committee would be prepared to use its full range of tools, including altering the size and composition of its balance sheet, if future economic conditions were to warrant a more accommodative monetary policy than can be achieved solely by reducing the federal funds rate."