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Top Story Lending Related

07/10/2017

Semiannual Risk Perspective issued by OCC

The OCC has reported strategic, credit, operational, and compliance risks remain top concerns for the federal banking system in its Semiannual Risk Perspective for Spring 2017. Highlights from the report include:

  • Strategic risk remains elevated as banks make decisions to expand into new products or services or consider new delivery channels and continue merger and acquisition activity. Banks face competition from nonfinancial firms, including financial technology companies entering the traditional banking industry. This competition is causing changes in the way customers and financial institutions approach banking.
  • Credit underwriting standards and practices across commercial and retail portfolios remain an area of OCC emphasis. Over the past two years, commercial and retail credit underwriting has loosened, showing a transition from a conservative to an increasing risk appetite as banks strive to achieve loan growth and maintain or grow market share.
  • Operational risk continues to challenge banks because of increasing cyber threats, reliance on concentrations in significant third-party service providers, and the need for sound governance over product service and delivery.
  • Compliance risk remains high as banks continue to manage money-laundering risks and implement changes to comply with the amended customer protection requirements under the Military Lending Act and integrated mortgage disclosure rules.

Remarks from Acting Comptroller Noreika were also released.

07/10/2017

Michigan CU settles SCRA suit for illegal repos

The Department of Justice has agreed to a settlement with COPOCO Community Credit Union, Bay City, Michigan. In a July 26, 2016, lawsuit, the Department alleged that COPOCO violated the Servicemembers Civil Relief Act by repossessing cars owned by servicemembers without first obtaining court orders as required by the SCRA. Under the agreement, COPOCO must change its policies and compensate four servicemembers whose cars COPOCO unlawfully repossessed.

The agreement requires COPOCO to provide $10,000 in compensation to each of three of the affected servicemembers, plus any lost equity in the vehicle with interest. One servicemember and his wife had their car returned to them the day after the repossession at the DOJ’s request. They will receive $7,500. COPOCO also must repair the credit of all affected servicemembers and pay a $5,000 civil penalty to the United States. The agreement also contains provisions ensuring that all eligible servicemembers will receive the benefit of the SCRA’s six percent interest rate cap on their auto loans.

For additional information, see our Penalties page.

07/10/2017

CFPB finalizes update to TRID rule

The CFPB announced on Friday a final rule updating its "Know Before You Owe" mortgage disclosure rule (a/k/a the TILA-RESPA Integrated Disclosure or TRID rule) with amendments that are intended to formalize guidance on the rule, and provide greater clarity and certainty. The CFPB is also releasing a limited follow-up proposal to address an additional implementation issue.

In addition to the clarifications and technical corrections, the final rule amendments also address other issues, including:

  • Tolerance provisions for the total of payments that parallel the tolerances for the finance charge and disclosures affected by the finance charge
  • Adjustments to expand the provision granting a partial exemption from disclosure requirements of certain housing assistance loans
  • Extension of the rule's coverage to all cooperative units
  • Provisions allowing the sharing disclosures with real estate brokers and other agents, and clarifying how a creditor may provide separate disclosure forms to the consumer and a seller.

The final rule will be effective 60 days after it is published in the Federal Register, with compliance optional (except for compliance with the amended escrow cancellation notice requirement under § 1026.20(e) and the partial payment policy disclosure requirement under § 1026.39(d)(5)) for any application received before October 1, 2018. Compliance will be mandatory for any application received on or after October 1, 2018, and for all loans with respect to the amended escrow cancellation notice and disclosure of partial payment policy beginning October 1, 2018.

UPDATE: The final rule was published at https://www.federalregister.gov/d/2017-15764 in the 8/11/2107 Federal Register, with an October 10, 2017, effective date. See above for the mandatory compliance date.

The CFPB is also issuing a proposal addressing when a creditor may use a Closing Disclosure or corrected Closing Disclosure, instead of a Loan Estimate, to determine if an estimated closing cost was disclosed in good faith and within tolerance. Apparently, the changes in this area included in its 2016 proposal were interpreted in two very different ways. Comments on the revised proposal will be due 60 days after its publication in the Federal Register.

UPDATE: The proposal was published at https://www.federalregister.gov/d/2017-15763 in the 8/11/2017 Federal Register, with a comment period ending October 10, 2017.

07/07/2017

HUD awards $50M in housing counseling grants

The U.S. Department of Housing and Urban Development (HUD) has announced the awarding of more than $50 million in housing counseling grants to hundreds of national, regional and local organizations to help families and individuals with their housing needs and to prevent future foreclosures. The agency's press release stated that the grants and the additional funding they leverage will assist more than 1.4 million households find housing, make more informed housing choices, or keep their current homes.

07/07/2017

FHFA publishes proposed housing goals for Enterprises

The Federal Housing Finance Agency (FHFA) has published [82 FR 31514] a proposed rule with request for comments on the housing goals for Fannie Mae and Freddie Mac (the Enterprises) for 2018 through 2020. The housing goals include separate categories for single-family and multifamily mortgages on housing that is affordable to low-income and very low-income families, among other categories. Comments on the proposal are due by September 5, 2017.

07/07/2017

Credit card profitability report

The Federal Reserve Board has issued a report to Congress on the profitability of depository institutions' credit card operations. The report analyzes the profitability over time of depository institutions' credit card activities by examining the performance of larger institutions that specialize in such activities and of a sample of smaller commercial banks that offer a range of credit services. The report also reviews trends in credit card pricing, including changes in interest rates.

07/07/2017

A case for housing finance reform

Speaking at the American Enterprise Institute in Washington yesterday, Federal Reserve Governor Jerome H. Powell made a case for basic reform of the U.S. system of housing finance. Asserting that a "robust, well-capitalized, well-regulated housing finance system is vital to achieving" the goals of safe and sound banking institutions and a stable financial system, Powell argued that it is time to move from the status quo in which the federal government, via Fannie Mae, Freddie Mac, the FHA and the VA hold a combined 80 percent of the purchase mortgage market toward a market in which private capital takes a broader role.

07/06/2017

OCC and FDIC CRA ratings released

The OCC has released the list of Community Reinvestment Act (CRA) performance evaluations that became public during the month of June. Five were rated outstanding and 20 rated satisfactory. The FDIC has issued its list of state nonmember banks recently evaluated for compliance with the CRA and the ratings that the FDIC assigned to institutions in April 2017. Four were rated outstanding, 52 rated satisfactory, two needs to improve, and 1 was found to be in substantial noncompliance.

07/06/2017

FOMC statement, minutes, and projections released

The Federal Reserve Board has released the statement and minutes of the June 13-14, 2017, meeting of the Federal Open Market Committee (FOMC). A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the meeting is also included as an addendum to the minutes. Included in the minutes is a statement of the FOMC's plan to gradually trim the size of the Federal Reserve's balance sheet by systematically shrinking the approximately $4.5 trillion in securities holdings amassed early in the recent economic recession to help stabilize the economy.

06/30/2017

May mortgage rates decrease reported

The Federal Housing Finance Agency (FHFA) index for May 2017 shows that, nationally, interest rates on conventional purchase-money mortgages decreased from April to May, according to several indices of new mortgage contracts.The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders Index was 3.87 percent for loans closed in late May, down 10 basis points from 3.97 percent in April. The average interest rate on all mortgage loans was 3.90 percent, down 8 basis points from 3.98 in April. The average interest rate on conventional, 30-year, fixed-rate mortgages of $424,100 or less was 3.97 percent, down 7 basis points from 4.04 in April. The effective interest rate on all mortgage loans was 4.02 percent in May, down 8 basis points from 4.10 in April. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage. The average loan amount for all loans was $315,500 in May, up $3,900 from $311,600 in April.

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