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06/30/2020

Fed releases new terms sheet and FAQ for PMCCF

The Federal Reserve Board has released a new term sheet and FAQ for the Primary Market Corporate Credit Facility, adding pricing and other information. As detailed in the FAQ, pricing will be issuer-specific and informed by market conditions. Prices will also be subject to minimum and maximum spreads over comparable maturity Treasury securities.

06/30/2020

SCOTUS rules on CFPB constitutionality

The Supreme Court, in a 5-4 decision delivered by Chief Justice John G. Roberts, Jr., has ruled that the CFPB's leadership by a sole director removable only for cause violates the separation of powers rule under the U.S. Constitution.

The Court ruled that the Bureau can continue operating, because the provision of the law providing for removal only for cause is severable, but the director must be removable by the president "at will." The earlier judgment of the Ninth Circuit Court of Appeals (in Seila Law LLC v. Consumer Financial Protection Bureau) that the CFPB's structure did not violate the separation of powers was vacated and remanded. The Ninth Circuit must now revisit the case but analyze it in light of the Supreme Court's decision.

Justice Kagan filed an opinion concurring in the judgment with respect to severability and dissenting in part, in which Justices Ginsburg, Breyer and Sotomayor joined.

06/30/2020

Enterprises allow forbearance extensions for multifamily loans

The Federal Housing Finance Agency has announced that Fannie Mae and Freddie Mac are allowing servicers to extend forbearance agreements for multifamily property owners with existing forbearance agreements for up to three months, for a total forbearance of up to six months. While the properties are in forbearance, the landlord must suspend all evictions for renters unable to pay rent. The forbearance extension is available for qualified properties with an Enterprise-backed multifamily mortgage experiencing a financial hardship due to the coronavirus national emergency.

According to the FHFA, If a forbearance is extended, once the forbearance period concludes the borrower may qualify for up to 24 months to repay the missed payments. Additionally, if the forbearance is extended, the repayment schedule is modified, or a new forbearance agreement is executed, the borrower is required to provide the following tenant protections during the repayment period:

  • Give the tenant at least a 30-day notice to vacate;
  • Not charge the tenant late fees or penalties for nonpayment of rent; and
  • Allow the tenant flexibility to repay back rent over time and not in a lump sum.

06/29/2020

Proposed updates to flood insurance Q&As

The federal regulators on Friday requested public comment on new and revised Interagency Questions and Answers Regarding Flood Insurance. The Q&As, which provide information addressing technical flood insurance-related compliance issues, were last updated in 2011. The proposed revision of the Q&As incorporates new questions and answers in several areas, including:

  • The escrow of flood insurance premiums;
  • The detached structure exemption to the mandatory purchase of flood insurance requirement; and
  • Force-placement procedures.

The proposal also revises existing questions and answers to improve clarity and reorganizes questions and answers by topic to make it easier for users to find and review information related to technical flood insurance topics. The proposal is intended to help reduce the compliance burden for lenders related to the federal flood insurance laws. Comments will be accepted for 60 days after publication in the Federal Register.

PUBLICATION UPDATE: Published at 85 FR 40442 on July 6, 2020, with a comment period ending September 4, 2020.

06/26/2020

FDIC approves 'valid when made' interest rate rule

The FDIC Board of Directors has approved a final rule to clarify the law governing the interest rates that state-chartered banks and insured branches of foreign banks may charge.

  • The final rule codifies certain guidance contained in FDIC General Counsel"s Opinion No. 11, which was adopted by the FDIC"s Board of Directors in 1998, and addresses legal uncertainty that followed the decision of the U.S. Court of Appeals for the Second Circuit in Madden v. Midland Funding, LLC.
  • Consistent with section 27 of the Federal Deposit Insurance Act, the final rule allows a state-chartered bank or insured branch of a foreign bank to charge interest of up to the greater of 1 percent more than the rate on 90-day commercial paper rate or the rate allowed by the law of the State where the bank is located.
  • Under the final rule, whether interest on a loan is permissible under section 27 will be determined as of the date the loan was made.
  • Interest on a loan permissible under section 27 would not be affected by changes in state law, changes in the commercial paper rate after the loan was made, or the sale, assignment, or other transfer of the loan, in whole or in part.

The final rule will take effect 30 days after publication in the Federal Register.

PUBLICATION UPDATE: Published 7/22/2020 at 85 FR 44146, with effective date of 8/21/2020.

06/25/2020

Warning for misleading marketing of coronavirus relief loans

The FTC and the SBA have sent warning letters to six companies that may be misleading small businesses seeking SBA loans as a result of the coronavirus 2019 pandemic. The letters warn the recipients to take immediate action to ensure all deceptive claims are removed and to remediate any harm to small business consumers as a result of the claims. The letters also instruct the recipients to notify the FTC within 48 hours about the specific actions they have taken to address the agency’s concerns.

06/25/2020

2019 mortgage lending data

The Federal Financial Institutions Examination Council (FFIEC) announced yesterday the availability of data on 2019 mortgage lending transactions at 5,508 U.S. financial institutions covered by the Home Mortgage Disclosure Act (HMDA). Covered institutions include banks, savings associations, credit unions, and mortgage companies.

06/25/2020

Distressed or underserved nonmetro mid-income geographies

The federal financial institution regulators announced yesterday the availability of the 2020 list of distressed or underserved nonmetropolitan middle-income geographies, which are geographic areas where revitalization or stabilization activities are eligible to receive Community Reinvestment Act consideration under the community development definition.

06/25/2020

House prices rose in April

The Federal Housing Finance Agency has reported that U.S. house prices rose in April, up 0.2 percent from the previous month, according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). House prices rose 5.5 percent from April 2019 to April 2020. The previously reported 0.1 percent increase for March 2020 remains unchanged. For the nine census divisions, seasonally adjusted monthly house price changes from March 2020 to April 2020 ranged from -0.5 percent in the South Atlantic division to +0.8 percent in the West South Central division. The 12-month changes were all positive, ranging from +5.0 percent in the Middle Atlantic division to +6.8 percent in the Mountain division.

06/24/2020

Bureau interpretive rule on underserved areas

The CFPB has issued an interpretive rule to provide guidance to creditors and other persons involved in the mortgage origination process about the way in which the Bureau determines which counties qualify as “underserved” for a given calendar year. The Bureau’s annual list of rural and underserved counties and areas is used in applying various provisions under Regulation Z, which implements the Truth in Lending Act. These provisions include the exemption from the requirement to establish an escrow account for a higher-priced mortgage loan and the ability to originate balloon-payment qualified mortgages and balloon-payment high cost mortgages.

The Bureau previously interpreted how HMDA data would be used to determine which areas meet this standard using a method set forth in the commentary to Regulation Z. However, portions of this method have become obsolete because they rely on data elements that were modified or eliminated by certain 2015 amendments to the Bureau’s HMDA regulations, which became effective in 2018. The new interpretive rule describes the HMDA data that will instead be used in determining that an area is “underserved” for purposes of the standard described in Regulation Z. This interpretation supersedes the outdated methodology set forth in the commentary to Regulation Z.

The list of rural and underserved counties, using the HMDA data described in the interpretive rule, can be found on the Bureau’s website.

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