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Top Story Lending Related

10/28/2020

9th mortgage company settles with CFPB over deceptive ads

The CFPB has issued a consent order against Low VA Rates LLC, a Utah-based mortgage lender and broker incorporated in Colorado and licensed in 48 states and the District of Columbia. The order addresses the Bureau’s finding that Low VA Rates sent consumers mailers for mortgage loans guaranteed by the U.S. Department of Veterans Affairs (VA) that contained false, misleading, and inaccurate statements, which violated the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts and practices, the Mortgage Acts and Practices – Advertising Rule (MAP Rule, Regulation N), and Regulation Z. The order requires Low VA Rates to pay a civil money penalty of $1,800,000 to the Bureau and imposes requirements to prevent future violations.

This CFPB action is the ninth and last case stemming from a Bureau sweep of investigations of multiple mortgage companies that used deceptive mailers to advertise VA-guaranteed mortgages. The Bureau began the sweep in response to concerns raised by the VA about potentially unlawful advertising in the mortgage lending market. The Bureau has obtained more than $4.4 million in civil money penalties as a result of this sweep.

To prevent future violations, the consent order requires Low VA Rates to designate an advertising compliance official who must review its mortgage advertisements for compliance with mortgage advertising laws prior to use. Low VA Rates must also refrain from making misrepresentations like those identified by the Bureau through its investigation, and comply with certain enhanced disclosure requirements.

For additional information, see "Low VA Rates LLC settles with Bureau over deceptive VA loan ads," in BankersOnline's Penalty Pages.

10/27/2020

HUD awards $10M in sweat equity grants

HUD has announced the award of $10 million in "sweat equity" grants to four non-profit self-help housing organizations which will create at least 536 affordable homes for hard-working, low-income families and individuals. The organizations receiving the grants are:

  • Habitat for Humanity International, Inc. - $5,341,907
  • Tierra Del Housing Corporation - $2,043,781
  • Community Frameworks - $1,320,232
  • Housing Assistance Council - $1,294,080

10/27/2020

Revised pamphlet for Comptroller's Handbook

The OCC has posted Bulletin 2020-90 to announce the revision of the “Concentrations of Credit” booklet of the Comptroller’s Handbook, which is used by OCC examiners in their examination and supervision of national banks, federal savings associations, and federal branches and agencies of foreign banking organizations. The revised booklet—

  • changes the supervisory calculation for credit concentration ratios for banks that have implemented the current expected credit loss (CECL) transition rule to avoid double counting the allowance for credit losses in the denominator
  • replaces the term “criticized” with “special mention” for consistency with Banking Bulletin (BB) 1993-35, “Interagency Definition of Special Mention Assets”
  • reflects relevant OCC issuances published since this booklet was last issued
  • reflects changes to laws and regulations that occurred since this booklet was last issued
  • clarifies applicability of references to covered savings associations
  • includes clarifying edits regarding supervisory guidance, sound risk management practices, or legal language
  • revises certain content for general clarity
  • removes the NAICS code listing, as this information is readily available at www.census.gov

10/22/2020

October 2020 Beige Book

The Federal Reserve Board has released the October 21, 2020 issue of the Beige Book.

Economic activity continued to increase across all Districts, with the pace of growth characterized as slight to modest in most Districts. Changes in activity varied greatly by sector. Manufacturing activity generally increased at a moderate pace. Residential housing markets continued to experience steady demand for new and existing homes, with activity constrained by low inventories. Banking contacts also cited increased demand for mortgages as the key driver of overall loan demand. Conversely, commercial real estate conditions continued to deteriorate in many Districts, with the exception being warehouse and industrial space where construction and leasing activity remained steady. Consumer spending growth remained positive, but some Districts reported a leveling off of retail sales and a slight uptick in tourism activity. Demand for autos remained steady, but low inventories have constrained sales to varying degrees. Reports on agriculture conditions were mixed, as some Districts are experiencing drought conditions. Districts characterized the outlooks of contacts as generally optimistic or positive, but with a considerable degree of uncertainty. Restaurateurs in many Districts expressed concern that cooler weather would slow sales, as they have relied on outdoor dining. Banking contacts in many Districts expressed concern that delinquency rates may rise in coming months, citing various reasons; however, delinquency rates have remained stable.

10/22/2020

Automated underwriting system for mortgages launched

The Federal Housing Administration has announced the launch of its new automated underwriting system (AUS) for use by lenders originating mortgages for FHA insurance. Built on the FHA Catalyst technology platform, the new FHA Catalyst: Single Family Origination Module - AUS allows lenders to electronically submit loan application data for single family forward mortgages from their loan origination systems directly to the module and receive mortgage insurance eligibility scoring decisions generated from FHA’s TOTAL Mortgage Scorecard. The new AUS accepts the Mortgage Industry Standards Maintenance Organization (MISMO) 3.4 dataset used in the new, industry-wide Uniform Residential Loan Application. Other features include:

  • Detailed feedback certificates that provide specific and actionable information for lenders that corresponds with FHA policies in the Single Family Housing Policy Handbook 4000.1;
  • Integrated submission of credit report data reissuances, which eliminates the need for lenders to use a third-party routing system; and
  • Enhanced data synchronization between loan origination systems and FHA Catalyst through state-of-the-art Application Programming Interface (API) technology.

The AUS will be available in FHA Catalyst for single family forward mortgage programs on or after October 30, 2020.

10/22/2020

CFPB extends the 'GSE Patch'

The Consumer Financial Protection Bureau has issued a final rule to extend the Government-Sponsored Enterprise (GSE) Patch until the (yet to be established) mandatory compliance date of a final rule amending the General Qualified Mortgage (QM) loan definition in Regulation Z. The GSE Patch was scheduled to expire on January 10, 2021. The Bureau is not amending the provision in Regulation Z stating that the GSE Patch will expire if the GSEs (Fannie Mae and Freddie Mac) exit conservatorship.

The GSE Patch provides QM status to certain mortgage loans eligible for purchase or guarantee by either of the GSEs. GSE Patch loans are eligible for QM status even if the borrower's debt-to-income ratio exceeds 43 percent. The rule extending the GSE Patch will be effective 60 days after it is published in the Federal Register.

PUBLICATION AND EFFECTIVE DATE UPDATE: This final rule was published at 85 FR 67938 on October 26, 2020. It will become effective December 28, 2020.

10/21/2020

FHA extends COVID-19 forbearance request time

The FHA has announced it is extending the date for single family homeowners with FHA-insured mortgages to request an initial forbearance from their mortgage servicer to forbear their mortgage payments for up to six months. Homeowners experiencing a financial hardship as a result of the COVID-19 pandemic may now request an initial forbearance through December 31, 2020 (the deadline was previously October 30). The FHA requires mortgage servicers to:

  • Offer homeowners with FHA-insured mortgages mortgage payment forbearance when the homeowner requests it, with the option to extend the forbearance for up to a year in total. FHA does not require a lump sum payment at the end of the forbearance period.
  • Assess homeowners who receive COVID-19 forbearance for FHA's special COVID-19 National Emergency Standalone Partial Claim before the end of the forbearance period. This program puts all suspended mortgage payment amounts owed into a junior lien, which is only repaid when the homeowner sells the home, refinances the mortgage, or the mortgage is otherwise extinguished.
  • Assess homeowners who are not eligible for the COVID-19 National Emergency Standalone Partial Claim for one of FHA’s COVID-19 expanded home retention solutions announced on July 8, 2020.

10/21/2020

HUD awards $12.5M in housing counseling grants

HUD has announced it has awarded more than $12.5 million in supplemental housing counseling grants. These grants will support quality housing counseling services, including the foreclosure avoidance and rental counseling services used by many families as they work to recover from the COVID-19 pandemic. The grants awarded will directly support the housing counseling services provided by 219 HUD-approved local housing counseling agencies, national and regional organizations, and state housing finance agencies that competed under HUD’s FY 2020 Supplemental Comprehensive Housing Counseling Grant Notice of Funds Availability (NOFA) or HUD’s FY 2019/2020 Comprehensive Housing Counseling NOFA.

10/20/2020

ACCESS initiative launched by NCUA

NCUA Chairman Hood has announced the launch of the agency’s new Advancing Communities through Credit, Education, Stability, and Support (ACCESS) initiative, which will bring together leaders across the NCUA to refresh and modernize regulations, policies, and programs in support of greater financial inclusion within the agency and the credit union system. Efforts under this program include increasing access to credit and loan products, dedicating resources to help people make smart financial decisions, enhancing existing programs that encourage credit union membership and access to financial services, and fostering inclusive policies and outreach efforts in the community.

10/20/2020

CFPB posts HMDA data reference chart for 2021

The CFPB has posted the "Reportable HMDA Data: A Regulatory and Reporting Overview Reference Chart for HMDA Data Collected in 2021," which can be used as a reference tool for data points required to be collected, recorded, and reported under Regulation C, as amended by the HMDA Rules. Relevant regulation and commentary sections are provided for ease of reference. The chart also incorporates the information found in Section 4.2.2 of the 2021 Filing Instructions Guide and provides when to report not applicable or exempt, including the codes used for reporting not applicable or exempt from section 4 of the 2021 Filing Instructions Guide for ease of reference.

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