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Top Story Lending Related

07/29/2021

FHFA announces multifamily tenant protections

The Federal Housing Finance Agency announced yesterday that tenants of multifamily properties with mortgages backed by Fannie Mae or Freddie Mac who are subject to eviction for nonpayment of rent must be given 30 days’ notice to vacate before the tenant can be required to leave the unit. This requirement applies to all Enterprise-backed multifamily properties, regardless of whether the loan is in forbearance.

FHFA is working closely with the Enterprises to communicate the 30-day notice requirement to landlords of and tenants living in Enterprise-backed properties.

FHFA also said that Emergency Rental Assistance funds made available by federal legislation are available to tenants who are behind on rent or continuing to experience hardship due to the COVID-19 pandemic, and tenants can learn more about Emergency Rental Assistance programs by visiting the Consumer Financial Protection Bureau’s online Rental Assistance Finder, described in another Top Story today.

07/28/2021

Credit apps recover from pre-COVID levels

The CFPB yesterday reported it has published an issue brief showing that consumer applications for auto loans, new mortgages and revolving credit cards had mostly returned to pre-pandemic levels by May 2021.

Prime and near-prime consumers are driving this recovery as applications remain down from borrowers with subprime and deep subprime for all types of credit and, for borrowers with superprime credit scores, applications are down for all types of credit but mortgages. The report also provides a state-by-state analysis of the change in credit applications for auto loans, new mortgages, and revolving credit cards and shows wide geographic variability in the demand for auto loans. Key findings in the brief include:

  • Auto loan inquiries saw a drop of 52 percent by the end of March 2020 and returned to their usual pre-pandemic trend by January 2021.
  • New mortgage credit inquiries saw a smaller drop in March 2020 compared to other types of inquiries and then surged. Subsequently, inquiries have exceeded their usual, seasonally adjusted volume by 10 to 30 percent, reflecting the unusually high activity in the mortgage market throughout the pandemic.
  • Revolving credit card inquiries took the longest to recover from the initial March 2020 decline, until March 2021, when the level of these inquiries reached back to their usual levels.
  • Consumers with deep subprime credit scores showed the largest decline in auto loan inquiries compared to prior years, followed by inquiries from consumers with subprime credit scores. These consumers also showed declines in new mortgage and revolving credit card inquiries.
  • Changes in auto loan and new mortgage applications were quite varied across the states while changes in credit card applications were generally uniform.

07/28/2021

House prices up 18 percent from May 2020

House prices rose nationwide in May, up 1.7 percent from the previous month, according to the latest Federal Housing Finance Agency House Price Index. House prices rose 18.0 percent from May 2020 to May 2021. The previously reported 1.8 percent price change for April 2021 was unrevised.

For the nine census divisions, seasonally adjusted monthly house price changes from April 2021 to May 2021 ranged from +1.0 percent in the Middle Atlantic division to +2.4 percent in the Pacific division. The 12-month changes ranged from +15.4 percent in the West South Central division to +23.2 percent in the Mountain division.

07/28/2021

SBA to offer direct PPP forgiveness applications

Politico News reports the Small Business Administration, in an effort to wind down the popular Paycheck Protection Program that has suffered bureaucratic snags and notorious fraud cases, will announce today a new initiative aimed at encouraging borrowers with loans of $150,000 or less (more than 90 percent of the program) to apply for loan forgiveness. The SBA, reports Politico, has notified banks that the agency is setting up its own online, direct-access forgiveness platform.

Applications will be accepted from small borrowers directly via an easy-to-use portal. While lenders will still be involved in deciding whether individual PPP loans should be forgiven, the SBA will take on much of the time and effort that banks currently have to invest in the process. SBA Associate Administrator Patrick Kelley, in a webinar on Tuesday about the agency's plan, urged lenders to opt in to the new platform, saying "give it over to the government and get your life back."

The SBA reportedly plans to launch the program as a pilot today and have it go live in about a week.

07/27/2021

Bureau flowchart on MLA applicability

In observance of Military Consumer Month, the CFPB's Office of Servicemember Affairs has released an updated Military Lending Act—Applicability flow chart to help servicemembers better understand their rights under the MLA.

07/27/2021

Bureau advisory on SCRA rights

The CFPB has posted a Consumer Advisory, "Know Your Rights Under the Servicemember Civil Relief Act (SCRA)," with an explanation of the protections afforded servicemembers under the Act. The Advisory notes that the SCRA was amended this year to allow qualified individuals the ability to terminate residential and vehicle lease agreements electronically by sending a notice of termination along with a copy of their orders – or a letter from their commanding officer via email or through a communications portal designated by the lender or agent.

The Advisory advises servicemembers to check with a military legal assistance attorney or private legal counsel before signing any waiver of SCRA rights, and suggests options available to servicemembers who believe their SCRA rights have been violated. There are also links to several resources that can help servicemembers better understand the full range of legal protections available under the SCRA.

07/27/2021

Call Report revisions proposed

FDIC FIL-53-2021, issued yesterday, reports that the FDIC, FRB, and OCC are requesting comment on a proposal to revise and extend the Consolidated Reports of Condition and Income (Call Reports). The proposed changes would clarify instructions for reporting of deferred tax assets (DTAs) consistent with a proposed rule on tax allocation agreements (see FIL-29-2021) and a new item related to the final rule on the standardized approach for counterparty credit risk (see FIL-74-2019).

Comments must be submitted on or before September 20, 2021. The proposed changes would be effective with the December 31, 2021, Call Report.

07/26/2021

Weather damage relief for areas of Michigan

FDIC FIL-52-2021, issued Friday, announced steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Michigan affected by severe storms, flooding, and tornadoes June 25–26, 2021. The FDIC is encouraging banks to work constructively with borrowers experiencing difficulties beyond their control because of damage caused by the severe weather. Banks that extend repayment terms, restructure existing loans, or ease terms for new loans in a manner consistent with sound banking practices can contribute to the health of the local community and serve the long-term interests of the lending institution. Banks may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery.

07/26/2021

Additional COVID recovery options for homeowners

The Federal Housing Authority on Friday announced additional streamlined COVID-19 recovery options to help homeowners with FHA-insured mortgages who have been financially impacted by the COVID-19 pandemic bring their mortgage current and remain in their homes. The simplified COVID-19 Recovery waterfall allows mortgage servicers to offer eligible homeowners who cannot resume making their mortgage payments a reduction in the principal and interest portion of their monthly payments. The simple two-step waterfall options intended for properties that are occupied as the homeowner’s primary residence are:

  • COVID-19 Recovery Standalone Partial Claim: for homeowners who can resume making their current mortgage payments, the COVID-19 Recovery Standalone Partial Claim allows mortgage payment arrearages to be placed in a zero-interest subordinate lien against the property that is repaid when the mortgage terminates, usually when the homeowner refinances or sells the home.
  • COVID-19 Recovery Modification: for homeowners who cannot resume making their current monthly mortgage payments, the COVID-19 Recovery Modification extends the term of the mortgage to 360 months at a fixed rate and targets reducing the borrower’s monthly principal and interest portion of their monthly mortgage payment. The COVID-19 Recovery Modification must include a Partial Claim if the homeowner has Partial Claim funds available.

The changes announced on Friday work in tandem with the pre-waterfall FHA COVID-19 Advance Loan Modification (COVID-19 ALM) announced on June 25, 2021. The COVID-19 ALM requires mortgage servicers to review their FHA mortgage servicing portfolio and offer the COVID-19 ALM to eligible homeowners. Homeowners who choose to accept the COVID-19 ALM need to only review and sign and return the mortgage modification documents sent to them by their mortgage servicer.

07/22/2021

Treasury: Significant increase in Emergency Rental Assistance

Treasury reports the grantee performance data for June on the Emergency Rental Assistance (ERA) program shows a significant increase in the number of households served and the amount of funds provided to households as state and local programs continued to ramp up their efforts. More than $1.5 billion in assistance was delivered to eligible households in the month of June, more than the assistance provided all three previous reporting periods combined. The number of households served in June grew by about 85% over the previous month and nearly tripled since April. This represents significant progress, but there is still much further work to go to ensure tenants and landlords take advantage of the historic funding available to help cover rent, utilities, and other housing costs and keep people in their homes.

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