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Federal Open Market Committee June minutes

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the minutes of the Committee meeting held on June 15–16, 2021.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's based solely on the information that was available to the Committee at the time of the meeting.

A majority of members revised up their projections for real gross domestic product growth this year compared with projections from March on stronger consumer demand and improvements in vaccination rates. Members also commented that difficulty in hiring workers likely reflects factors such as early retirements, concerns about the virus, child care responsibilities and expanded unemployment insurance benefits. Inflation has increased more than the committee expected as supply constraints were more widespread and consumer demand larger than expected as the economy reopened.‌

Over the next year, the FOMC expects inflation caused by bottlenecks and supply constraints are expected to largely reverse and the demand growth is likely to slow. Inflation is projected to fall to slightly below 2% in 2022 before moving back up to a bit above 2% in 2023.


Pennsylvania credit union chartered

The National Credit Union Administration has granted a federal charter and National Credit Union Share Insurance Fund coverage to Community First Fund Federal Credit Union in Lancaster, Pennsylvania. According to its mission statement, Community First Fund Federal Credit Union intends to create financial equity through wealth-building opportunities for individuals and families, especially African Americans, Latinos, immigrants, and women. The credit union will serve the community of approximately 550,000 in Lancaster County.

Credit Union Times reports that the new credit union got part of its start-up funding from Community First Fund, which used part of a $10 million gift from MacKenzie Scott, ex-wife of former Amazon CEO Jeff Bezos.


FDIC issues three Outstanding CRA evaluations

The FDIC has released its July 2021 list of state non-member banks examined for CRA compliance. Of the 53 institutions listed, 50 received Satisfactory ratings. We congratulate the three banks that received a rating of Outstanding:


OCC issues five Outstanding CRA ratings

The Office of the Comptroller of the Currency has released a list of sixteen Community Reinvestment Act (CRA) performance evaluations that became public in June.

Eleven of the national banks, federal savings associations, and insured federal branches of foreign banks received ratings of Satisfactory.

We congratulate the five institutions that received Outstanding ratings:


FHFA issues fair lending policy statement

Yesterday, the Federal Housing Finance Agency issued a Policy Statement on Fair Lending, which communicates FHFA's commitment to comprehensive fair lending oversight of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks and provides a foundation for building out FHFA's fair lending program. The Federal Housing Enterprises Financial Safety and Soundness Act empowers FHFA to help effectuate the Fair Housing Act and the Equal Credit Opportunity Act through monitoring and information-gathering, conducting supervisory examinations, and engaging in administrative enforcement activities.

The FHFA invites comments on the application of the Policy Statement within 60 days of its publication in the Federal Register.

The FHFA has also issued Orders on Fair Lending Reporting to Fannie Mae and Freddie Mac, that require them to submit quarterly reports to FHFA with fair lending information and data to improve the Agency's fair lending supervision and monitoring capabilities.

7/8/2021 Publication and comment period update: The Policy Statement is scheduled for publication in the Federal Register for 7/9/2021, with a comment period ending 9/7/2021.


New CECL tool to be released by Federal Reserve

The Federal Reserve Board announced yesterday it will soon release a new tool to help community banks implement the Current Expected Credit Losses (CECL) accounting standard. Known as the Scaled CECL Allowance for Losses Estimator or "SCALE," the spreadsheet-based tool draws on publicly available regulatory and industry data to aid community banks with assets of less than $1 billion in calculating their CECL allowances.


Tennessee bank pays for Flood Act violations

The Federal Reserve Board, on June 30, 2021, ordered a Tullahoma, Tennessee, bank to pay an $8,000 civil money penalty for its pattern or practice of unspecified violations of section 208.25 of Federal Reserve Board Regulation H, which implements the requirements of the National Flood Insurance Act.


Bureau message to consumers with mortgages

Yesterday, the CFPB sent out an email blast with the subject line "As foreclosure protections end, it's time to work with your mortgage servicer."

The message announced the Bureau's recent Regulation X amendments designed to ensure homeowners have an opportunity to pursue foreclosure avoidance options while they recover from the economic effects of the COVID-10 pandemic. It continued—

"Effective August 31, 2021, most mortgage servicers must tell you about your repayment or other options when they reach out to you. So long as you are working with your servicer, in general, the mortgage servicer cannot start the foreclosure process before January 1, 2022 without first either reaching out to you or evaluating your complete application for options to help you avoid foreclosure. We also made it easier for servicers to offer certain options without collecting a complete application from you. With this flexibility, your servicer can get you into affordable mortgage payment plans faster, with less paperwork for both you and your servicer. But if you don’t respond to your servicer when they reach out to you, the servicer can start foreclosure."


GSEs expand use of rate reductions in loan modifications

On Wednesday, the Federal Housing Finance Agency announced changes to loan modification terms for COVID-19-impacted borrowers with mortgages backed by Fannie Mae or Freddie Mac (the Enterprises) needing payment reduction for successful home retention. The updated terms are specifically for borrowers with permanent COVID-19 hardships and respond to the unprecedented nature of the pandemic.

​Flex Modification terms will be adjusted for COVID-19 hardships making interest rate reduction possible for eligible borrowers, regardless of the borrower's loan-to-value ratio. Previously, only borrowers with mark-to-market loan-to-value (MTMLTV) ratios greater than or equal to 80 percent were eligible for a possible interest rate reduction. MTMLTV is a ratio that compares the balance remaining on the mortgage to the current market value of a home.​

Acting FHFA Director Sandra L. Thompson said in the agency's press release, “Allowing more families to qualify for an interest rate reduction will prevent unnecessary foreclosures, help strengthen the Enterprises' books of business, and make sustainable homeownership a reality for more families currently living with the uncertainty of forbearance."


CFPB files action against Burlington Financial Group

The CFPB has announced it has filed a proposed order in federal district court against Burlington Financial Group and its owners and executives, Richard Burnham, Katherine Burnham, and Sang Yi, for allegedly deceiving consumers into hiring the company to lower or eliminate credit-card debts and improve consumers’ credit scores.

The CFPB also filed a joint complaint against the company and its owners and executives with the Attorney General for the State of Georgia.

The CFPB alleges that Burlington Financial violated the Telemarketing Sales Rule and the Consumer Financial Protection Act through deceptive marketing and operation of its debt-relief credit-repair services. The company advertised to potential customers, through direct mailers and third-party lead generators, that its so-called “debt validation” program used a legally vetted process to eliminate debt. The company’s marketing materials stated that their debt-reduction program takes between 8 to 12 months, but the CFPB’s investigation found that the company failed to produce any evidence showing that it had invalidated, eliminated, or lowered any of its customers debt.

The CFPB’s investigation also found that the company encouraged its customers to stop paying their debts, thereby causing customers to suffer additional consequences, such as collection lawsuits and damaged credit scores. Meanwhile, for its services, the company charged its customers upfront fees of 40% of the debt amount owed, with an average cost of $21,000 per customer or $552 in monthly payments.

The CFPB also alleges that Burlington Financial Group violated the TSR and CFPA by telling customers that it could restore their credit scores and that it had a “credit restoration team.” The CFPB’s investigation found that these claims are false or unsubstantiated. For example, the company did not obtain its customers’ original credit scores prior to enrollment into their program – nor did the company track its customers credit scores during or after their departure from the program. In contrast to the company’s marketing materials, the CFPB found that many of its customers showed their actual credit scores worsened as a result of using the company’s services.

The proposed order would:

  • Permanently ban Burlington Financial and its owners and executives from telemarketing any consumer financial product or service and from offering, marketing, selling, or providing any financial-advisory, debt-relief, or credit-repair service;
  • Require Burlington Financial and its owners and executives to pay a total civil money penalty of $150,001, of which $15,000 will be remitted to the State of Georgia; and
  • Impose a judgment for redress of at least $30 million to be suspended upon payment of the $150,001 civil money penalty.


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