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Top Story Lending Related

02/03/2020

FDIC lists enforcement actions

The FDIC has released a a list of orders of administrative enforcement actions taken against banks and individuals in December.

  • The Bancorp Bank, Wilmington, Delaware, was ordered to pay a $7.5 million civil money penalty for BSA/AML violations
  • A former market president and director of Frontier Bank, Omaha, Nebraska, was assessed a civil money penalty of $25,000 and issued a prohibition order for making loans to uncreditworthy borrowers, diverting funds loaned to one customer to the use of another bank customer, and extending credit in excess of his authority.
  • a former branch president and loan officer of People's Bank and Trust Company, McPherson, Kansas, was issued a cease and desist order after the FDIC determined she manipulated payment due dates on loans and overdraft lines to herself and immediate family members, concealing delinquencies from senior management of the bank.

02/03/2020

SNC review - leveraged loan risk remains elevated

The federal bank regulatory agencies (Fed, FDIC, and OCC) have released the results of their Shared National Credit (SNC) program review. The report reflects reviews primarily covering SNC loans originated on or before June 30, 2019. It finds that credit risk associated with leveraged lending remains elevated. Lenders have fewer protections and risks have increased in leveraged loan terms through the current long period of economic expansion since the last recession. Most banks have adopted credit risk-management practices to monitor and control this evolving risk. However, some of these controls have not been tested in an economic downturn. The agencies require banks to have risk-management processes that can identify and adapt to changing market conditions.

02/03/2020

FHFA proposes changes to Seller/Servicer requirements

The Federal Housing Finance Agency (FHFA) has announced proposed updated minimum financial eligibility requirements for Fannie Mae and Freddie Mac seller/servicers. The updated requirements will further strengthen the Enterprises' seller/servicer requirements and provide transparency and consistency of capital and liquidity required for seller/servicers with different business models. A key improvement from the minimum financial requirements established in 2015 is that the new Enterprise standards establish financial requirements for the servicing of Ginnie Mae mortgages.

The FHFA will receive input on these requirements for 60 days at ServicerEligibility@fhfa.gov. An FAQ with 15 questions and answers plus definitions was also released.

01/31/2020

Bureau sues Citizens Bank, N.A.

The CFPB has announced it has filed a complaint against Citizens Bank, N.A. (Citizens), headquartered in Providence, Rhode Island. The Bureau’s complaint alleges violations of the Truth in Lending Act and its implementing Regulation Z, including violations of amendments to TILA contained in the Fair Credit Billing Act and the Credit Card Accountability Responsibility and Disclosure (CARD) Act.

The complaint alleges that Citizens automatically denied consumers’ billing error notices and claims of unauthorized use in certain circumstances. The complaint further alleges that Citizens failed to fully refund finance charges and fees when consumers asserted meritorious disputes or fraud claims, and failed to send consumers required acknowledgment letters and denial notices in response to billing error notices. It also alleges that Citizens failed to provide credit counseling referrals to consumers who called Citizens’ toll-free number designated for that purpose.

The complaint is not a finding or ruling that the defendant has violated the law.

01/31/2020

CFPB updates list of credit reporting companies

The CFPB has updated its list of consumer reporting companies. It includes the three nationwide consumer reporting companies as well as other companies that focus on certain market areas and consumer segments.

01/31/2020

New York bank pays for flood insurance violations

The Federal Reserve Board has announced it has imposed a $36,500 civil money penalty on Alden State Bank, Alden, New York, for a pattern or practice of unspecified violations of the National Flood Insurance Act and section 208.25 of Federal Reserve Regulation H.

01/30/2020

Otting testifies at House hearing

Comptroller of the Currency Joseph M. Otting testified yesterday during a hearing held by the House Financial Services Committee. He made an oral statement and presented written testimony discussing efforts to strengthen and modernize Community Reinvestment Act regulations, the condition of the federal banking system, the agency’s diversity and inclusion programs, and work to implement regulatory reform that encourages economic opportunity while ensuring banks operate in a safe, sound, and fair manner.

01/30/2020

Fed released 17 CRA evaluations in December

Our check of the Federal Reserve Board's website for new CRA evaluations reveals that 17 evaluations were made public in December. Fifteen of the institutions received evaluation ratings of "Satisfactory." Congratulations to these two institutions, whose evaluations were rated "Outstanding" (links are to their evaluations):

01/29/2020

FDIC FIL on ag lending management

The FDIC has issued FIL-5-2020 concerning prudent management of agricultural lending during economic cycles. The advisory reminds financial institutions engaged in agricultural lending to maintain sound underwriting standards, strong credit administration practices, effective risk management strategies, and appropriate allowances for losses and capital levels through the credit cycle. When agricultural borrowers experience financial difficulties, the FDIC encourages financial institutions to work constructively with borrowers to strengthen the credit and mitigate loss.

This Financial Institution Letter rescinds and replaces FIL-39-2014, "Prudent Management of Agricultural Credits Through Economic Cycles," dated July 16, 2014.

01/29/2020

HUD issues FHA guidance on assistance animals

HUD has announced the publication of guidance [Notice FHEO-2020-01] clarifying how housing providers can comply with the Fair Housing Act when assessing a person’s request to have an animal in housing to provide assistance because of a disability. The Act requires housing providers to permit a change or exception to a rule, policy, practice, or service that may be necessary to provide people with disabilities that affect a major life activity an equal opportunity to use and enjoy their home.

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