Top Story Lending Related

The U.S. Senate Committee on Banking, Housing, and Urban Affairs yesterday announced that Ranking Member Tim Scott has introduced a measure (Senate Joint Resolution 70) under the Congressional Review Act to overturn the CFPB's rule capping credit card late penalties. The report said that Scott's resolution has the support of Republicans on the Senate Banking Committee and from members across the Republican conference.

The House of Representatives has a similar resolution (House Joint Resolution 122) under consideration.

If the resolutions pass in both houses of Congress and the surviving measure is signed by President Biden (or the president's veto is overturned by both houses), the CFPB's rule will be vacated and the Bureau would not be permitted to issue a similar rule affecting credit card late fees.

The CFPB's rule, which is also being challenged in the courts, carries an effective date of May 14, 2024.

The Department of Veterans Affairs has published [89 FR 25142] a final rule to rename and clarify certain loss-mitigation terms used in the VA's regulations. The VA is making these changes to align the names and definitions with their general use in the housing finance industry and believes that these revisions will help avoid confusion and enable servicers and veterans to address loan defaults more quickly and effectively.

The rule, which amends the VA's “Loan Guaranty” regulation at 38 C.F.R. Part 36, will become effective on May 10, 2024.

The CFPB has released the 32nd edition of its Supervisory Highlights, which covers select examinations in connection with credit reporting and furnishing completed from April 1, 2023, through December 31, 2023.

In its press release announcing the release of this edition, the Bureau said it found consumer reporting companies failed to ensure the accuracy of credit reports, including by failing to exclude information resulting from alleged identity theft or human trafficking. The CFPB also found furnishers – companies that provide information to consumer reporting companies – failed to correct false or fraudulent information sent to consumer reporting companies. Specifically, the CFPB found that—

• Consumer reporting companies failed to block or remove information related to identity theft and human trafficking
• Consumer reporting companies accepted information from unreliable furnishers
• Furnishers provided information to consumer reporting companies they knew was false
• Furnishers did not follow requirements for dispute investigations and identity theft

The CFPB has issued a report, Trends in discount points amid rising interest rates, finding that more borrowers paid “discount points” upfront as overall interest rates rose. The percentage of homebuyers paying discount points roughly doubled from 2021 to 2023. The increase was even greater among borrowers with lower credit scores. In its press release releasing the report, the CFPB said that, “while discount points may provide advantages to some borrowers, the financial tradeoffs are complex.” The CFPB is monitoring these increases and potential risks to consumers.

According to the press release, discount points are a one-time fee paid at closing to a lender in exchange for a lower interest rate. Paying one discount point is the equivalent of paying a fee of one percent of the loan amount, but discount points have no fixed value in terms of the change in interest rate. Most borrowers only benefit from discount points if they keep their mortgage long enough that the cumulative monthly savings from the reduced interest rate outweigh the upfront costs.

The Conference of State Bank Supervisors has posted an NMLS Blog article reporting the results of a November 2023 survey of over 1,400 NMLS users to measure their satisfaction with the system. The survey consisted of two parts: customer satisfaction and system usability. Survey results suggested that, on average, 85% of users are satisfied with their NMLS experience. However, survey comments indicated there are aspects of the system where the user experience can be improved. This feedback is driving upcoming NMLS enhancements, according to the article.

The overall Customer Satisfaction (“CSAT”) score was 85% for the NMLS experience survey. This suggests that, on average, 85% of customers surveyed expressed satisfaction with NMLS. The highest CSAT scores were from mortgage loan originators (MLOs), and the lowest were from company users. This is expected since MLOs generally spend less time completing tasks and activities in NMLS than company users. An analysis of qualitative feedback revealed users feel NMLS is not user friendly or intuitive, difficult to navigate, and the password process is frustrating.

After completing the CSAT survey, respondents were given the option to complete the System Usability Scale (“SUS”) Survey, a 10-question survey for measuring NMLS usability. There were 981 respondents who completed this section. The total SUS score for the surveyed group was 61.64. This score falls within the “OK to Good” range, suggesting that on average, users find the system to be reasonably usable, but there is room for improvement. The highest scores were recorded for federal MLOs, whose score of 71.71 is slightly above the industry average. There were several ratings below a 20, which, along with the average score itself, should be a key metric to improve in the new system.

The Federal Reserve Board has announced the execution of:

• a cease and desist order issued with the consent of Mode Eleven Bancorp, the holding company of Summit National Bank, both located in Hulett, Wyoming, related to Bancorp's previous strategy focused on providing banking-related services to financial technology companies through certain nonbank subsidiaries
• a written agreement with Steele Bancshares, Inc., Tyler, Texas, and American State Bank, Arp, Texas, related to identified safety and soundness deficiencies at the bank.

The OCC has reported that Acting Comptroller of the Currency yesterday discussed the importance of fairness in remarks given at the National Community Reinvestment Coalition Just Economy Conference 2024.

Mr. Hsu highlighted bank progress in overdraft protection program reforms since the OCC issued guidance last April and provided an update on Project REACh accomplishments regarding credit invisibles, minority depository institutions and affordable housing. Additionally, he discussed the importance of ensuring fairness as it relates to artificial intelligence and fraud.

The NCUA has announced that low-income-designated credit unions can apply for 2024 Community Development Revolving Loan Fund grants between May 1 and July 1, 2024.

The 2024 CDRLF grant round is open to credit unions with a low-income designation. Minority depository institution credit unions are not eligible for funding in this year’s grant round if they do not have the low-income designation. Credit unions with questions about the low-income designation should contact the NCUA’s Office of Credit Union Resources and Expansion.

The NCUA will host a webinar in May to explain the grants process. The 2024 Notice of Funding Opportunity has been published in the Federal Register.

The Federal Housing Finance Agency yesterday provided an update on its implementation of the recommendations of the Federal Home Loan Bank (FHLBank) System at 100: Focusing on the Future report​​, which was published in November 2023 and followed the first comprehensive evaluation of the FHLBank System in decades. ​

A significant finding of the report is that the FHLBanks must appropriately support housing and community development in their districts, in addition to providing liquidity to members.

The FHFA has published a regulatory interpretation that clarifies how cooperativas in Puerto Rico can pursue membership in the FHLBank System. Cooperativas are a critical part of the financial system in Puerto Rico, and many are Treasury-certified Community Development Financial Institutions (CDFIs). To date, no cooperativa has become a member of the FHLBank System.

The FDIC has released its April 2024 list of FDIC-supervised banks whose latest CRA evaluations have recently been made public. Of the 50 banks listed, two — in Moulton, Texas, and Parker, Colorado — were rated "Needs to Improve," 45 were rated "Satisfactory," and these three received "Outstanding" ratings:

• The Bank of New Glarus, New Glarus, Wisconsin
• First General Bank, Rowland Heights, California
• Rockland Trust Company, Rockland, Massachusetts