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Top Story Lending Related

02/06/2020

CFPB proposing settlement with Think Finance

The CFPB has announced a proposed settlement with Think Finance, LLC, formerly known as Think Finance, Inc., and six subsidiaries, to resolve the lawsuit the Bureau filed on November 15, 2017 (see our 11/16/2017 Top Story). The Bureau alleged that the Think Finance Entities engaged in unfair, deceptive, and abusive acts and practices in violation of the Consumer Financial Protection Act in connection with the illegal collection of loans that were void in whole or in part under state laws governing interest rate caps, the licensing of lenders, or both.

In 2018, the Bureau filed its first amended complaint, alleging that the Think Finance Entities operated as a common enterprise that affiliated with tribal lenders in the offering and collection of online installment loans and online lines of credit to consumers nationwide. The Think Finance Entities, the Bureau alleged, made deceptive demands and illegally took money from consumers’ bank accounts for debts that consumers did not actually owe because the loans were either partially or completely void under the law of 17 states. The Bureau also alleged that the Think Finance Entities provided substantial assistance to two debt collection companies that were also engaged in the illegal collection of loans.

If the proposed stipulated final consent order is entered by the court, it would, among other things, prohibit the Think Finance Entities from offering or collecting on loans to consumers in any of the 17 states if the loan violates state lending laws and from assisting others in engaging in that conduct. The proposed order would also impose a $1 civil money penalty for each of the seven Think Finance Entities.

The proposed settlement is part of a global resolution of the Think Finance Entities' bankruptcy proceeding, which includes settlements with the Pennsylvania Attorney General's Office and private parties in a class action suit. Consumer redress will come from a fund created as part of the global resolution, which is anticipated to have over $39 million available for distribution and may increase.

02/05/2020

NMLS industry reports

The Nationwide Multistate Licensing System and Registry (NMLS) has released its Mortgage Industry Report for the Third Quarter 2019. Updates to the Money Services Business Fact Sheet and Debt Collection Fact Sheet were also posted.

02/05/2020

Fed CRA evaluation ratings

Our monthly check of the Federal Reserve Board's CRA evaluation ratings reveals that the Board made public 20 ratings in January, including one "Substantial Non-Compliance" rating for a bank in West Memphis, Arkansas, and 17 ratings of "Satisfactory." Our congratulations to the following two banks, which received "Outstanding" ratings (links are to their evaluations):

02/05/2020

FDIC lists banks examined for CRA compliance

The FDIC has released a list of 74 banks examined for compliance with the Community Reinvestment Act whose evaluation ratings were assigned in November 2019. Sixty-nine of the banks received ratings of "Satisfactory." Two were rated "Needs to Improve." Our congratulations to the following three banks, which received a rating of "Outstanding" (links are to their evaluation reports):

02/04/2020

CFPB and ED ink MOU to better serve student loan borrowers

The CFPB has announced that the Bureau and the U.S. Department of Education have announced a new coordination agreement in order to better serve student loan borrowers. Under the newly signed Memorandum of Understanding, the agencies will share complaint information from borrowers and meet quarterly to discuss observations about the nature of complaints received, characteristics of borrowers, and available information about resolution of complaints. The MOU also provides for the sharing of complaint data analysis, recommendations, and analytical tools.

02/04/2020

Leveraged loans risk remains elevated

A joint release by the FDIC, Federal Reserve, and OCC reports the share and amount of loan commitments with the lowest supervisory ratings rose slightly between 2018 and 2019, according to the Shared National Credit (SNC) Program Review. Total commitments with low ratings remain elevated compared to lows reached during prior periods of strong economic performance. The agencies conduct SNC reviews in the first and third calendar quarters with some banks receiving two reviews and others receiving a single review each year.

02/04/2020

January SLOOS

The Rederal Reserve Board's January 2020 Senior Loan Officer Opinion Survey (SLOOS) on Bank Lending Practices addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally corresponds to the fourth quarter of 2019.

Banks in the January survey indicated that, on balance over the fourth quarter, they left standards on commercial and industrial loans basically unchanged, while demand weakened from firms of all sizes. Also, banks reported that lending standards and demand were unchanged for all commercial real estate loan categories except construction and land development loans, for which standards tightened and demand weakened over the fourth quarter of 2019.

For loans to households, banks reportedly left their lending standards unchanged for all types of residential real estate loans over the fourth quarter, while demand strengthened for most categories of closed-end mortgage loans and weakened for home equity lines of credit. However, banks reportedly tightened their lending standards on credit card and auto loans, while demand remained unchanged for credit cards and weakened for auto loans

02/04/2020

FHFA engages financial advisor

Houlihan Lokey Capital, Inc. (Houlihan Lokey) has been selected as a financial advisor by the Federal Housing Finance Agency to assist in the development and implementation of a roadmap to responsibly end the conservatorships of Fannie Mae and Freddie Mac. While developing the roadmap, Houlihan Lokey will consider business and capital structures, market impacts and timing, and available capital raising alternatives, among other items.

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.

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