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Top Story Lending Related

11/29/2023

FHA posts 2024 loan limits

The Federal Housing Administration has announced new loan limits for calendar year 2024 for its Single Family Title II forward and Home Equity Conversion Mortgage (HECM) insurance programs. Loan limits for most of the country will increase in the coming year due to continued strong home price appreciation over the past year.

For a complete list of FHA loan limits, areas at the FHA ceiling, and areas between the floor and the ceiling, visit the FHA's Loan Limits Page. FHA lenders can refer to Mortgagee Letters 2023-21 and 2023-22 for more details.

11/29/2023

Fed Board releases minutes of discount rate meetings

The Federal Reserve Board has released the minutes of its discount rate meetings from October 23 through November 1, 2023.

11/29/2023

Bank of America fined $12 million for filing bogus HMDA data

The CFPB has announced it has ordered Bank of America, N.A. to pay a $12 million civil money penalty for submitting false mortgage lending information to the federal government under the Home Mortgage Disclosure Act. For at least four years, hundreds of Bank of America loan officers failed to ask mortgage applicants certain demographic questions as required under federal law, and then falsely reported that the applicants had chosen not to respond.

The CFPB’s review of Bank of America’s HMDA data collection practices found that the bank was submitting false data, including falsely reporting that mortgage applicants were declining to answer demographic questions. This conduct violated HMDA and its implementing regulation, Regulation C, as well as the Consumer Financial Protection Act, when the bank:

  • Falsely reported that applicants declined to provide information: Hundreds of Bank of America loan officers reported that 100% of mortgage applicants chose not to provide their demographic data over at least a three month period. In fact, these loan officers were not asking applicants for demographic data, but instead were falsely recording that the applicants chose not to provide the information.
  • Failed to adequately oversee accurate data collection: Bank of America did not ensure that its mortgage loan officers accurately collected and reported the demographic data required under HMDA. For example, the bank identified that many loan officers receiving applications by phone were failing to collect the required data as early as 2013, but the bank turned a blind eye for years despite knowledge of the problem.

For additional information on the Bureau's action against Bank of America and a link to the Consent Order, see “Bank of America pays $12 million for filing false HMDA data” in the BankersOnline Penalty pages.

11/29/2023

FHFA announces conforming loans limits for 2024

The Federal Housing Finance Agency on Tuesday announced the conforming loan limit values (CLLs) for mortgages Fannie Mae and Freddie Mac (the Enterprises) will acquire in 2024. In most of the United States, the 2024 CLL value for one-unit properties will be $766,550, an increase of $40,350 from 2023.

For areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit value, the applicable loan limit will be higher than the baseline loan limit. The Housing and Economic Recovery Act (HERA) establishes the high-cost area limit in those areas as a multiple of the area median home value, while setting the ceiling at 150 percent of the baseline limit. Median home values generally increased in high-cost areas in 2023, which increased their CLL values. The new ceiling loan limit for one-unit properties will be $1,149,825, which is 150 percent of $766,550.

Special statutory provisions establish different loan limits for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limits will be $1,149,825 for one-unit properties.

Due to rising home values, the CLL values will be higher in all but five U.S. counties or county equivalents.

11/29/2023

House prices continue to climb

The Federal Housing Finance Agency has announced that U.S. house prices rose 5.5 percent between the third quarter of 2022 and the third quarter of 2023, according to the FHFA House Price Index. House prices were up 2.1 percent compared to the second quarter of 2023. FHFA’s seasonally adjusted monthly index for September was up 0.6 percent from August.

“U.S. house price growth continued to accelerate in the third quarter, appreciating more than in each of the previous four quarters,” said Dr. Anju Vajja, Principal Associate Director in FHFA’s Division of Research and Statistics. “House prices rose in the third quarter in all census divisions and are higher than one year ago, driven primarily by a low supply of homes for sale.”

11/27/2023

FDIC lists October enforcement actions

The FDIC has released a list of enforcement actions taken in October 2023. Included were three consent orders to pay civil money penalties, three consent orders to cease and desist, and two removal/prohibition orders :

  • Transportation Alliance Bank (DBA TAB Bank), Ogden, Utah, was ordered to pay a civil money penalty of $315,000 for deceptive practices involving a "rebate processing fee" for early payment of certain loans.
  • Paramount Bank, Hazelwood, Missouri, was assessed an $85,000 penalty for reporting inaccurate HMDA data for 2020 and 2021.
  • Range Bank, Marquette, Michigan, was assessed a $4,000 civil money penalty for failing to require escrow of flood insurance premium payments on four loans on which the bank collected escrow payments for taxes and homeowner's insurance premiums.
  • Herring Bank, Amarillo, Texas, was issued a cease and desist order (jointly issued with the Texas Department of Banking) due in part to weaknesses in access controls for IT and in its corporate bond accounting software.
  • Royal Business Bank, Los Angeles, California, was issued a cease and desist order (issued jointly with the California Department of Financial Protection and Innovation) related to the bank's Bank Secrecy Act/Anti Money Laundering Compliance Program.
  • TrustTexas Bank, SSB, Cuero, Texas, received a cease and desist order, issued jointly with the Texas Department of Savings and Mortgage Lending, for allegedly unsafe or unsound banking practices relating to interest rate risk exposure, deterioration in capital protection and earnings, and deficiencies in management and oversight by the Board.
  • Brian Ferris, a former loan officer of Berkshire Bank, Pittsfield, Massachusetts, received a corrected order of prohibition relating to his alleged participation in a conspiracy to defraud the bank by submitting fraudulent loan applications to the bank that were referred to him by two co-conspirators who operated a loan brokerage business.
  • Patricia Westmoreland, a former bank manager for Branch Banking and Trust Company, now known as Truist Bank, Charlotte, North Carolina, received an order of prohibition for allegedly embezzling approximately $201,000 and falsifying bank records.

11/22/2023

CFPB approves pilot disclosure for construction loans

The CFPB has posted a blog article announcing the agency has approved an application from the Independent Community Bankers of America (ICBA) that marks the first step for piloting disclosures for construction loans. Under this program, the CFPB authorizes parameters for in-market testing of alternatives to required disclosures.

The ICBA applied under the program for a template covering the CFPB’s Know Before You Owe Disclosures. In particular, the ICBA asked to test certain adjustments to the existing mortgage disclosures in the unique context of construction loans, for which the CFPB’s disclosures were not primarily designed. The application noted that, in particular, many first-time homebuyers in rural areas build their homes instead of buying existing homes, and consequently, the challenges of using the current disclosures in the construction loan context may impact rural areas more acutely. The CFPB solicited comments on the ICBA’s application in February and made a decision to approve the template after reviewing the public feedback.

The CFPB waiver template issued to the ICBA indicates that the ICBA application aims to increase the availability of affordable single-close construction-to-permanent loans, i.e., a loan transaction that combines a construction phase loan with a permanent mortgage loan once the home is built, and employs a single closing and single set of closing costs. ICBA believes that consumer understanding of construction loans would be improved by disclosures that ICBA views as more specifically tailored to such loans, and that more community banks would offer such loans if they could use such disclosures. ICBA further believes its proposed alternative LE and the CD will more fully disclose all the various components of a single-close construction-to-permanent loan. In an attachment to the Application, ICBA described in detail its proposed changes to the LE and CD for construction loans.

Individual lenders can apply for approval to test the alternative disclosures for construction loans. In deciding whether to approve individual lender applications, the CFPB will carefully evaluate a lender’s plan to test the effectiveness of these disclosures. The CFPB looks forward to reviewing any lender applications.

11/22/2023

FHFA modifies provisions of Enterprise Regulatory Capital Framework

The Federal Housing Finance Agency has announced the publishing of a final rule that amends several provisions of the Enterprise Regulatory Capital Framework (ERCF) for Fannie Mae and Freddie Mac (the Enterprises).

The final rule includes modifications of certain provisions of the ERCF related to guarantees on commingled securities, multifamily mortgage exposures secured by properties with government subsidies, and derivatives and cleared transactions, among other modifications. These amendments clarify certain aspects of the ERCF and help to further align the ERCF with the risks faced by the Enterprises. It becomes effective April 1, 2024, with selected provisions effective January 1, 2026.

11/21/2023

MLA temporary file upload issue reported

There is a notice on the Department of Defense’s Military Lending Act website that some multiple record request files that were uploaded to the MLA website between 4 p.m. EST on November 14 and 2 p.m. EST on November 15 did not get processed. Senders will need to re-upload their files if they were not processed.

11/21/2023

Prehired LLC ordered to shut down, provide over $30M in relief to borrowers

The CFPB and eleven states on Monday announced that Prehired, LLC will provide more than $30 million in relief to student borrowers for making false promises of job placement, trapping students with “income share” loans that violated the law, and resorting to abusive debt collection practices when borrowers could not pay. The CFPB partnered with Washington, Delaware, California, Oregon, Minnesota, Illinois, South Carolina, North Carolina, Massachusetts, Virginia, and Wisconsin to bring the enforcement action against Prehired and two affiliated companies (Prehired Recruiting, LLC and Prehired Accelerator, LLC). The order approved by the U.S. Bankruptcy Court for the District of Delaware requires Prehired to cease all operations, pay $4.2 million in redress to consumers that were affected by its illegal practices, and voids all of its outstanding income share loans, valued by Prehired at nearly $27 million.

Prehired was a Delaware-based company that operated a 12-week online training program claiming to prepare students for entry-level positions as software sales development representatives with “six-figure salaries” and a “job guarantee.” Prehired offered students income share loans to help finance their costs of the program. Today’s order also names two affiliated companies, Prehired Recruiting and Prehired Accelerator, that pursued collection on defaulted income share loans.

In July 2023, the states and the CFPB sued Prehired to void the illegal loans and facilitate consumer redress. The states and the CFPB alleged that Prehired:

  • Deceived borrowers by claiming its loans were not loans: Prehired’s marketing falsely claimed that its loans did not create a debt because the loan was contingent on job placement with a yearly salary over $60,000. But the company also deceptively buried terms in the loan that required graduates to pay even if they never got a job.
  • Kept borrowers in the dark about key loan information: Prehired hid important loan terms from borrowers, including the amount financed, finance charges, and the loans’ annual percentage rate.
  • Tricked consumers with deceptive debt collection practices: Prehired Recruiting and Prehired Accelerator pushed borrowers into converting their income share loan into a revised “settlement agreement” that required them to make payments even if they had not found a job, and which contained more burdensome dispute resolution and collection terms. Prehired Recruiting and Prehired Accelerator also falsely represented the amount of debt owed by consumers and stated Prehired could collect more than the consumer legally owed.
  • Sued students in a faraway location: Prehired Recruiting filed debt collection lawsuits in a jurisdiction far away from where the consumers lived and were not able to be physically present when they executed the financing contract. Many consumers were unaware that Prehired Recruiting could file an action in Delaware because Prehired’s income share loans did not provide for venue in Delaware or the consumers had little or no opportunity to review or negotiate that provision.

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