Top Story Lending Related

The Federal Reserve has released the March 2016 G.17 Industrial Production and Capacity Utilization Report. Industrial production decreased 0.6 percent in March for a second month in a row. For the first quarter as a whole, industrial production fell at an annual rate of 2.2 percent. A substantial portion of the overall decrease in March resulted from declines in the indexes for mining and utilities, which fell 2.9 percent and 1.2 percent, respectively; in addition, manufacturing output fell 0.3 percent. The sizable decrease in mining production continued the industry's recent downward trajectory; the index has fallen in each of the past seven months, at an average pace of 1.6 percent per month. At 103.4 percent of its 2012 average, total industrial production in March was 2.0 percent below its year-earlier level. Capacity utilization for the industrial sector decreased 0.5 percentage point in March to 74.8 percent, a rate that is 5.2 percentage points below its long-run (1972–2015) average.

The Department of Housing and Urban Development has announced that existing agreements under HUD’s Moving to Work (MTW) Demonstration Program for 39 public housing authorities will now continue in effect until 2028.

The Federal Housing Finance Agency (FHFA) has announced that Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac will offer principal reduction modifications to certain seriously delinquent, underwater borrowers who are still struggling in the aftermath of the financial crisis to help them avoid foreclosure and stay in their homes. The new Principal Reduction Modification program is a one-time offering for borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac and who meet specific eligibility criteria. The modification will be available to owner-occupant borrowers who are 90 days or more delinquent as of March 1, 2016, whose mortgages have an outstanding unpaid principal balance of $250,000 or less, and whose mark-to-market loan-to-value (MTMLTV) ratios exceed 115 percent. See a Fact Sheet for eligibility criteria.

The April 13, 2016, issue of the Beige Book has been published by the Federal Reserve Bank of Chicago in HTML and PDF formats. The report is compiled eight times a year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector. An overall summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis.

The Federal Reserve Board has released the minutes of its February 8 and March 14, 2016, discount rate meetings.

"Serving the Credit-Invisible," a new report posted by the NCUA, explains how credit unions can build loan programs based on sound underwriting, appropriate risk management, loan monitoring and staff training that can help them reach this underserved population. The report details how to evaluate a loan applicant who is “credit-invisible” and describes best practices for serving those members within the normal boundaries of safety and soundness. Credit-invisible consumers may lack credit scores because they have limited or incomplete credit histories. They are not necessarily subprime borrowers, but their credit activity may not be reported to a credit bureau. Nonetheless, these consumers may have a good history of making timely payments for expenses like rent, insurance and utilities. The CFPB reported in 2015 that as many as 26 million Americans may fall into this category.

The OCC will host two workshops in Corpus Christi, Texas, at the Omni Corpus Christi Hotel, May 17-18, including its first workshop on operational risk. The Credit Risk workshop on May 17 focuses on credit risk within the loan portfolio, such as identifying trends and recognizing problems. The workshop also covers the roles of the board and management, how to stay informed of changes in credit risk, and how to effect change. The Operational Risk workshop on May 18 focuses on the key components of operational risk—people, processes and systems. The session also covers governance, third-party risk, vendor management, and cybersecurity.

The U.S. Government Accountability Office (GAO) has issued a report to Congress on the effects of the growth of nonbank servicers in the mortgage market. This report examines, among other things, recent trends in mortgage servicing and the oversight framework in which nonbank servicers operate. The GAO analyzed mortgage industry data from January 2006 through June 2015; reviewed relevant laws and documents from regulatory and housing agencies and an industry group; conducted a literature review; and interviewed consumer groups, regulators and other agency officials, and market participants. The GAO recommends that Congress consider granting the FHFA authority to examine third parties that do business with Fannie Mae and Freddie Mac. In addition, the GAO said the CFPB should take steps to collect more data on the identity and number of nonbank servicers. The 102-page report was also released in a single-page summary format and a larger-print accessible version.

The Federal Reserve has released the February 1-5, 2016, E.2 survey of terms of business lending.

The Department of Justice (DOJ) has announced that the United States has settled civil mortgage fraud claims against Wells Fargo Bank, N.A. (Wells Fargo) and Wells Fargo executive Kurt Lofrano, stemming from Wells Fargo’s participation in the Federal Housing Administration (FHA) Direct Endorsement Lender Program. In the settlement, Wells Fargo agreed to pay $1.2 billion and admitted, acknowledged and accepted responsibility for, among other things, certifying to the Department of Housing and Urban Development (HUD), during the period from May 2001 through December 2008, that certain residential home mortgage loans were eligible for FHA insurance when in fact they were not. See "Wells Fargo settles with DOJ for mortgage lending practices" in our Penalties pages for additional information.