Top Story Lending Related

In remarks at the FDIC's sixth annual Consumer Research Symposium in Arlington, Virginia, Chairman Gruenberg reviewed the recently released 2015 FDIC National Survey of Unbanked and Underbanked Households (see earlier Top Story). He discussed the main findings, reasons for being unbanked, effects of variable income, financial services use, and continued growth in mobile and online banking. Gruenberg concluded, “We are keenly aware that we have more to learn in this area. For example, if changing economic conditions explain only some of the increased participation in our nation’s banking system, what other factors are playing a role? Conversely, what factors may be constraining participation in the banking system? And, more broadly, are there opportunities for banks to better address the financial services needs of consumers, particularly low- and moderate-income consumers?”

The Federal Reserve Board has released several reports:

• Financial holding companies as of October 26, 2016
• Updated communications equipment price indexes
• August 2016 G.20 finance companies owned and managed receivables outstanding – auto loans: terms of credit
• Credit and liquidity programs and the balance sheet as of October 12, 2016

On Friday, October 28, the FDIC released a list of 14 administrative enforcement actions taken against banks and individuals in September. The list consisted of three consent orders; one combined civil money penalty and removal and prohibition order; five Section 19 orders; one voluntary termination of deposit insurance order; and four terminations of consent orders or cease and desist orders.

The Order of Prohibition from Further Participation and to Pay a $5,000 Civil Money Penalty was imposed on a former institution-affiliated party of a Utah bank who "has engaged or participated in violations of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2607, and its implementing regulation, Regulation X, 12 C.F.R. Part 1024, and/or has engaged or participated in, unsafe or unsound banking practices, and/or breaches of fiduciary duty as an institution-affiliated party of [the bank] by agreeing to pay fees for the referral of mortgage loan business."

The Order of Termination of Insurance was issued in the Matter of Mid America Bank, Janesville, Wisconsin, which the FDIC determined "is not engaged in the business of receiving deposits, other than trust funds."

The Office of the Comptroller of the Currency has released a new list of enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations. There were three Cease and Desist (C&D) Orders, seven Civil Money Penalty (CMP) Orders, one Formal Agreement, four Removal/Prohibition Orders, and two Orders for Restitution, including:

• The $20 million CMP and C&D Orders relating to violations of the Servicemembers Civil Relief Act issued to Wells Fargo Bank, announced earlier
• A $2 million CMP issued to First Niagara Bank, for deceptive disclosures relating to overdraft fees
• A consent order banning a former Minnesota bank director from the industry and assessing a $20,000 CMP
• An order banning a former California banker from the industry, and assessing a CMP of $25,000
• Orders banning two former New Mexico bankers and ordering a total of $17,500 in CMPs
• An Order that a former Texas bank director pay a $5,000 CMP for Regulation O violations

The CFPB has issued warning letters to 44 mortgage lenders and mortgage brokers. The Bureau has information that appears to show the lenders and brokers may be required to collect, record, and report data about their housing-related lending activity, and that they may be in violation of those requirements. The CFPB identified the 44 companies by reviewing available bank and nonbank mortgage data. The warning letters warned that entities that meet certain requirements are required to collect, record, and report mortgage lending data, and suggested that recipients review their practices to ensure they comply with all relevant laws. The companies are encouraged to respond to the Bureau to advise if they have taken, or will take, steps to ensure compliance with the law. They can also tell the Bureau if they think the law does not apply to them. The CFPB, in sending these letters, made no determination that a legal violation did, in fact, occur.

The NCUA Board met on October 27, 2016, and announced that it unanimously approved five items:

• A proposed rule to provide further field-of-membership community charter options for federal credit unions.
• A final rule modernizing existing field-of-membership definitions for federal credit unions to improve consumer access to affordable credit.
• A final rule re-naming NCUA’s consumer office as the Office of Consumer Financial Protection and Access to clarify its function and role in promoting consumer access to affordable financial services.
• A final rule adjusting civil monetary penalties for inflation, as required by Congress.
• An interagency proposed rule to implement the private flood insurance requirements for loans in special flood hazard areas contained in a 2012 statute.

The OCC will host two workshops in Philadelphia at the Sheraton Suites Philadelphia Airport, December 6-7, for directors of national community banks and federal savings associations supervised by the OCC. The Risk Governance workshop on December 6 combines lectures, discussion, and exercises to provide 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 December 7 combines lectures, discussion, and exercises on the critical elements of an effective compliance risk management program. The workshop also focuses on major compliance risks and critical regulations. Topics of discussion include the Bank Secrecy Act, Community Reinvestment Act, and the Truth-in-Lending (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA) Integrated Disclosures Rule, also known as TRID.

The Federal Housing Finance Agency (FHFA) has announced that nationally, interest rates on conventional purchase-money mortgages were nearly flat from August to September, 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 3.61 percent for loans closed in late September, up 3 basis points from 3.58 percent in August.
• The average interest rate on all mortgage loans was 3.60 percent, up 1 basis point from 3.59 in August.
• The average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 3.73 percent, down 1 basis point from 3.74 in August.
• The effective interest rate on all mortgage loans was 3.73 percent in September, up 1 basis point from 3.72 in August.
• 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 $302,900 in September, down $19,800 from $322,700 in August.

The Department of Housing and Urban Development has published at 81 FR 74967 in today's Federal Register a proposal to revise HUD’s regulations governing floodplain management to require, as part of the decision making process established to ensure compliance with Executive orders on Floodplain Management and Federal Flood Risk Management, that a HUD assisted or financed (including mortgage insurance) project involving new construction or substantial improvement that is situated in an area subject to floods be elevated or floodproofed between 2 and 3 feet above the base flood elevation as determined by best available information.The proposal would also revise HUD’s Minimum Property Standards for one-to-four unit housing under HUD mortgage insurance and low-rent public housing programs. Comments on the proposal are due by December 27, 2016.

The OCC will establish an office dedicated to responsible innovation and implement a formal framework to improve the agency’s ability to identify, understand, and respond to financial innovation affecting the federal banking system. The Office of Innovation will be headed by a Chief Innovation Officer assigned to OCC Headquarters with a small staff located in Washington, New York, and San Francisco. The office will be the central point of contact and a clearinghouse for requests and information related to innovation. It will also implement other aspects of the OCC’s framework for responsible innovation, which include

• establishing an outreach and technical assistance program for banks and nonbanks,
• conducting awareness and training activities for OCC staff,
• encouraging coordination and facilitation,
• establishing an innovation research function, and
• promoting interagency collaboration.

The OCC expects the office to begin operations in the first quarter of 2017.

• OCC press release