Top Story Lending Related

The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have released their schedules of Community Reinvestment Act (CRA) evaluations to be conducted in the second quarter of 2016.

The Department of Housing and Urban Development has announced an agreement with First Federal Bank, FSB, of Kansas City to resolve allegations of redlining against African-American mortgage applicants. HUD and two fair housing organizations claimed the lender’s designated service area effectively excluded African-American neighborhoods, limiting residential mortgage lending to persons based upon their race. As part of the HUD-mediated conciliation agreement, First Federal Bank agreed to provide $75,000 in discounts or subsidies on home purchase loans on owner-occupied properties in majority African-American census tracts in the Kansas City metropolitan area over a three year period. In addition, the bank agreed to originate $2.5 million in mortgage loans in majority African-American neighborhoods over the same period. The bank also agreed to a series of fair lending directed financial commitments:

• $105,000 to support a loan pool that finances the rehabilitation of vacant, blighted homes in distressed areas of Kansas City;
• $50,000 at the rate of at least $15,000 per year for three consecutive years for affirmative marketing and outreach to African-American communities in the Kansas City metropolitan area;
• $30,000 to support financial education specifically targeting majority African-American communities;
• $50,000 directly to the named complainants to support their fair lending and community reinvestment work.

The Consumer Financial Protection Bureau posted an article, "Our priorities to ensure a fair marketplace," outlining the four types of problems that it tends to focus on that consumers face in the marketplace:

• Deception, or situations where the costs and risks of a financial decision are hidden or unclear;
• Debt traps, or practices that trigger a cycle of debt where consumers rack up substantial costs over time;
• Dead ends, or situations where people cannot simply walk away when they are treated unfairly; and
• Discrimination, or unequal treatment based on characteristics such as race, gender or other factors that the law prohibits.

The article also referred to a fact sheet on the agency's nine priority goals and the plan for achieving them, and its rulemaking agenda and five-year strategic plan.

The Federal Housing Finance Agency (FHFA) has released its fourth quarter 2015 House Price Index (HPI), which reports U.S. house prices rose 1.4 percent. This is the eighteenth consecutive quarterly price increase in the purchase-only, seasonally adjusted index. House prices rose 5.8 percent from the fourth quarter of 2014 to the fourth quarter of 2015. FHFA's seasonally adjusted monthly index for December was up 0.4 percent from November. The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.

The January FHFA Index indicates that nationally, interest rates on conventional purchase-money mortgages increased from December to January, 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 3.98 percent for loans closed in late January, up 1 basis point. The average interest rate on all mortgage loans was 3.97 percent, also up 1 basis point. The average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 4.23 percent, up 3 basis points. The effective interest rate on all mortgage loans was 4.10 percent in January, unchanged from December. 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 $310,400 in January, down $7,600 from $318,000 in December.

The Federal Trade Commission has filed a complaint charging a debt relief operation with falsely representing to financially distressed homeowners and student loan borrowers that it would help get their loans modified. At the FTC’s request, a federal court has issued a temporary restraining order (TRO) halting the operation. The agency seeks to permanently stop the alleged illegal practices and obtain refunds for affected consumers. The complaint alleges that Good EBusiness LLC, using the name The AAP Firm, and Tobias West deceptively marketed home loan modification services and illegally charged an advance fee of between $1,000 and $5,000. The agency alleges that the defendants, operating from a Los Angeles business office, falsely claim that they can lower consumers’ monthly mortgage payments, often quoting a specific amount, and reduce their mortgage interest rates, usually within a few months, and falsely promise full refunds if they fail. They told consumers, many of whom were current on their mortgage payments, to stop making payments to, and communicating with, their lenders during the purported loan restructure process, without providing disclosures required by the Mortgage Assistance Relief Services Rule (MARS Rule) and CFPB Regulation O, according to the complaint.

HUD and the Census Bureau have released the January 2016 new residential sales report. Sales of new single-family houses in January 2016 were at a seasonally adjusted annual rate of 494,000; 9.2 percent below the revised December rate of 544,000 and 5.2 percent below the January 2015 estimate of 521,000. The median sales price of new houses sold in January 2016 was $278,800; the average sales price was $365,700. The seasonally adjusted estimate of new houses for sale at the end of January was 238,000. This represents a supply of 5.8 months at the current sales rate.

The Federal Housing Finance Agency has published [81 FR 9196] a Notice in the Federal Register that it has adjusted the cap on average total assets that defines a “Community Financial Institution” to $1,128,000,000, based on the annual percentage increase in the Consumer Price Index for all urban consumers (CPI-U) as published by the Department of Labor (DOL). These changes took effect on January 1, 2016.

The Federal Home Loan Bank Act confers upon insured depository institutions that meet the statutory definition of a “Community Financial Institution” (CFI) certain advantages over non-CFI insured depository institutions in qualifying for Federal Home Loan Bank membership, and in the purposes for which they may receive long-term advances and the collateral they may pledge to secure advances

The Federal Reserve Board has released the minutes of its January 25, 2016, discount rate meeting. The Governors recommended that the current primary credit rate be maintained.

CFPB Director Richard Cordray spoke at the Credit Union National Association meeting yesterday, offering congratulations to the CU industry for its pro-consumer efforts. He also spoke at length on the Bureau's efforts to implement consumer protection legislation and proactively pursue regulatory changes to further protect consumers. During the presentation, Cordray said that the Bureau is finalizing a rule that would ensure prepaid accounts have error correction and dispute resolution rights, and developing a rulemaking proposal for small-dollar loans that would include ability-to-repay requirements and other protections.