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Top Story Lending Related

09/17/2020

FOMC maintains course

The Federal Reserve Board has released the Federal Open Market Committee Statement following the September 15–16 meeting of the Committee. The FOMC agreed to continue to "aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent" and "expects to maintain an accommodative stance of monetary policy until these outcomes are achieved." It also intends to keep the target range for the federal funds at 0 to 1/4 percent "until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time."

09/17/2020

FinCEN proposes amending AML program requirements

FinCEN has published [85 FR 58023] an advance notice of proposed rulemaking in today's Federal Register seeking public comment on potential regulatory amendments to establish that all covered financial institutions subject to an anti-money laundering program requirement must maintain an “effective and reasonably designed” anti-money laundering program.

The ANPRM says any such amendments would be expected to further clarify that such a program assesses and manages risk as informed by a financial institution’s risk assessment, including consideration of anti-money laundering priorities to be issued by FinCEN consistent with the proposed amendments; provides for compliance with Bank Secrecy Act requirements; and provides for the reporting of information with a high degree of usefulness to government authorities.

The regulatory amendments under consideration are intended to modernize the regulatory regime to address the evolving threats of illicit finance, and provide financial institutions with greater flexibility in the allocation of resources, resulting in the enhanced effectiveness and efficiency of anti-money laundering programs.

The ANPRM also seeks comment on proposals to impose an explicit requirement for a risk assessment process and for the Director of FinCEN to issue a list of national AML priorities, to be called FinCEN’s Strategic Anti-Money Laundering Priorities, every two years.

Comments on the ANPRM will be accepted for 60 days following publication, through Monday, November 16, 2020.

09/16/2020

$3.7M COVID-19 grants awarded to credit unions

The NCUA has awarded $3.7 million in grants and no-interest loans to 162 low-income credit unions, helping them provide affordable financial services to their members and communities during the COVID-19 pandemic. The grants and loans fell into four categories:

  • Rental, mortgage, and utility payment assistance to members such as entrepreneurs, small business owners, and hospitality and service industry employees;
  • Loan payment relief to affected members;
  • New products or services for affected members; and
  • Covering costs associated with moving credit union operations to remote locations, such as laptops, software, and short-term rentals.

09/16/2020

CFPB and states settle with owner of ITT Private Loans

The Consumer Financial Protection Bureau has filed on Tuesday a proposed stipulated judgment against PEAKS Trust 2009-1, along with Deutsche Bank National Trust Company, Deutsche Bank Trust Company Delaware, and Deutsche Bank Trust Company Americas, in their capacity as trustees to PEAKS Trust 2009-1.

In its complaint, the Bureau alleged that PEAKS provided substantial assistance to ITT Educational Services, Inc. in engaging in unfair acts and practices in violation of the Consumer Financial Protection Act of 2010 (CFPA). PEAKS owned and managed private loans for students at ITT Technical Institute. PEAKS allegedly knew or was reckless in not knowing that many student borrowers did not understand the terms and conditions of those loans, could not afford them, or in some cases did not even know they had them. If entered by the court, the proposed judgment will require PEAKS to forgive all of its outstanding loans—approximately $330 million in debt– for about 35,000 borrowers who currently have outstanding principal balances. Forty-seven states plus the District of Columbia have also settled with PEAKS Tuesday.

The complaint alleges that ITT arranged for the PEAKS loans to be serviced and collected on after ITT had induced its students to take out the loans by a variety of unfair practices, including rushing students through financial aid appointments, using aggressive tactics, and in some cases, gaining unauthorized access to student accounts to sign students up for loans without permission. The Bureau alleged that PEAKS was actively involved in servicing and managing the PEAKS loan program, including the collection of the loans, and that PEAKS’s conduct constituted substantial assistance of ITT’s unfair acts and practices in violation of the CFPA.

If entered by the court, the proposed stipulated judgment would require PEAKS to stop collecting on all outstanding PEAKS loans, discharge all outstanding PEAKS loans, and ask all consumer reporting agencies to which PEAKS furnished information to delete information relating to PEAKS loans. The order would also require PEAKS to provide notice to all consumers with outstanding PEAKS loans that their debt has been discharged and is no longer owed and that PEAKS is seeking to have the relevant consumer reporting information deleted. The total amount of loan forgiveness is currently estimated to be $330 million, for about 35,000 consumers with outstanding balances owed on their PEAKS loans.

09/16/2020

CFPB outlines proposals for small business lending data

The Consumer Financial Protection Bureau has released its Outline of Proposals Under Consideration and Alternatives Considered for Section 1071 of the Dodd-Frank Act governing small business lending data collection and reporting. The Bureau plans to convene a Small Business Advocacy Review panel in October 2020, to prepare a report that examines the impact of the potential rule on small businesses. The report, along with feedback received from small businesses, will be considered by the Bureau in its rulemaking to implement Section 1071.

Section 1071 requires financial institutions to collect certain data regarding applications for credit for women-owned, minority-owned, and small businesses, and to report that data to the Bureau on an annual basis. The Outline describes proposals that the Bureau is considering to implement Section 1071 along with the relevant law, the regulatory process, and an economic analysis of the potential impacts of the proposals on directly affected small entities.

Comments on the proposals under consideration should be received by the Bureau by December 14, 2020.

09/15/2020

NCUA CDFI certification applications - second round

The National Credit Union Administration (NCUA) has opened its second application round for eligible credit unions that want to qualify to use the agency’s streamlined process for Community Development Financial Institution certification. The Office of Credit Union Resources and Expansion will analyze each applicant credit union’s products, services, and other indicators to determine whether it qualifies for the streamlined application process. The NCUA will provide qualified credit unions with the necessary information to complete and submit the streamlined certification application to the CDFI Fund, which will make the final determination on certification. This application round will close October 17.

09/15/2020

FDIC guidance on Tropical Storm Isaias regulatory relief

The FDIC has issued guidance with FIL-89-2020 that includes steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Puerto Rico affected by Tropical Storm Isaias.

09/15/2020

Eighth company settles with CFPB over VA loan advertising

On Monday, the CFPB issued a consent order against ClearPath Lending, Inc., an Irvine, California, corporation that is licensed as a mortgage broker or lender in about 22 states. ClearPath offers and provides mortgage loans guaranteed by the U.S. Department of Veterans Affairs. The Bureau announcement said ClearPath’s principal means of advertising VA-guaranteed loans is through direct-mail advertisements sent primarily to U.S. military servicemembers and veterans.

The Bureau found that ClearPath sent consumers mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or that lacked required disclosures, in violation of the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts and practices, the Mortgage Acts and Practices – Advertising Rule (MAP Rule), and Regulation Z. The consent order requires ClearPath to pay a civil money penalty of $625,000 and imposes requirements to prevent future violations.

Yesterday’s action is the eighth case stemming from a Bureau sweep of investigations of multiple mortgage companies that use deceptive mailers to advertise VA-guaranteed mortgages. The Bureau commenced this sweep in response to concerns about potentially unlawful advertising in the market that the VA identified.

For additional information and a link to the Bureau's consent order, see "ClearPath Lending, Inc., is eighth company to settle with CFPB over deceptive VA loan ads," in BankersOnline's Penalty pages.

09/15/2020

FTC publishes proposal and comments request on address discrepancies

The Federal Trade Commission has published in today's Federal Register [85 FR 57172] its previously announced notice of proposed rulemaking and request for public comment regarding its "Duties of Users of Consumer Reports Regarding Address Discrepancies Rule." The comment period will end on November 30, 2020.

09/11/2020

OCC - Credit risk of loan purchase activities

The OCC has issued Bulletin 2020-81 to remind banks it supervises of sound risk management principles regarding loan purchase activities. Commercial and retail loan purchase activities include purchasing whole loans, loan pools, loan portfolios, loan participations, or participations in syndicated loans from other banks or nonbank lenders.Lending activities, including loan purchase activities, are subject to certain regulatory standards and long-standing risk management guidelines. The OCC expects banks to engage in loan purchase activities in a safe and sound manner and in compliance with applicable accounting standards, laws, and regulations. Loan purchase activities should align with banks' strategic plans and be supported by sound risk management systems.

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