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Top Story Lending Related


OCC proposes True Lender Rule

The OCC has proposed a rule that would determine when a national bank or federal savings association (bank) makes a loan and is the “true lender” in the context of a partnership between a bank and a third party.

Banks’ lending relationships with third parties can facilitate access to affordable credit. However, the relationships have been subject to increasing uncertainty about the legal framework that applies to loans made as part of these relationships. This uncertainty may discourage banks and third parties from entering into relationships, limit competition, and chill the innovation that results from these partnerships—all of which may restrict access to affordable credit.

The proposed rule would resolve this uncertainty by amending 12 CFR Part 7 to specify that a national bank or federal savings association makes a loan and is the “true lender” if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan. Comments on the proposal will be accepted through September 3, 2020.

PUBLICATION UPDATE: Published at 85 FR 44223 on 7/22/2020.


Executive Order 'normalizing' treatment of Hong Kong

Treasury has posted a notice concerning Executive Order 13936, "The President's Executive Order on Hong Kong Normalization." The order — issued on July 14 following China's imposition of national security legislation on Hong Kong, effectively eliminating its former autonomous status — states that U.S. policy will be to suspend or eliminate different and preferential treatment for Hong Kong to the extent permitted by law.


FHFA proposes 2021 targets for Fannie and Freddie

The Federal Housing Finance Agency has proposed its 2021 housing goals for Fannie Mae and Freddie Mac. Due to the economic uncertainty related to the COVID-19 national pandemic, FHFA is proposing benchmarks for calendar year 2021 only, and those levels will remain the same as they were for 2018-2020. Once finalized, the proposed benchmark levels would extend those benchmarks that are currently set to expire on December 31, 2020.

The FHFA's Proposed Rule will be open for comments for 60 days following publication in the Federal Register.


Court rules for FTC in student-loan debt-relief scam case

The Federal Trade Commission has announced that the U.S. District Court for the Central District of California has ruled in favor of the Commission in a case against the operators of a student loan debt relief scheme. The defendants are banned from telemarketing or providing debt relief services.

The court found that the operators, doing business as Federal Direct Group, Mission Hills Federal, The Student Loan Group, and National Secure Processing, falsely claimed that consumers’ loans would be forgiven or their payments reduced to a specific amount, and that defendants would take over servicing of consumers’ loans and apply most or all of consumers’ monthly payments to pay down their student loans. The defendants then charged consumers hundreds to thousands of dollars in illegal upfront fees. The defendants also obtained consumers’ student loan credentials to log in and change consumers’ contact information, effectively hindering or entirely preventing consumers’ loan servicers from communicating with consumers. The defendants' actions violated the Federal Trade Commission Act and the Telemarketing Sales Rule.

In addition to permanently banning the defendants from telemarketing, and debt relief businesses, the court's ruling also imposes a $27.6 million judgment from which the FTC may provide redress to affected consumers.

The defendants subject to the order are Elegant Solutions, Inc. (also doing business as Federal Direct Group); Trend Capital Ltd. (also doing business as Mission Hills Federal); Dark Island Industries, Inc. (also doing business as Federal Direct Group and formerly known as Cosmopolitan Funding, Inc.); Heritage Asset Management, Inc. (also doing business as National Secure Processing); Tribune Management, Inc. (also doing business as The Student Loan Group); and four individual defendants, Mazen Radwan, Rima Radwan, Dean Robbins, and Labiba Velazquez (née Radwan).


CFPB issues annual Reg Z inflation adjustments

The CFPB has issued a final rule revising certain dollar amounts in Regulation Z, based on the annual percentage change reflected in the Consumer Price Index (CPI) in effect on June 1, 2020.

  • For open-end consumer credit plans under the CARD Act amendments to TILA, the adjusted dollar amount in 2021 for the safe harbor for a first violation penalty fee will remain unchanged at $29 and the adjusted dollar amount for the safe harbor for a subsequent violation penalty fee will also remain unchanged at $40.
  • For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2021 will be $22,052.
  • The adjusted points-and-fees dollar trigger for high-cost mortgages in 2021 will be $1,103.
  • For qualified mortgages, the maximum thresholds for total points and fees in 2021 will be
    • 3 percent of the total loan amount for a loan greater than or equal to $110,260;
    • $3,308 for a loan amount greater than or equal to $66,156 but less than $110,260;
    • 5 percent of the total loan amount for a loan greater than or equal to $22,052 but less than $66,156;
    • $1,103 for a loan amount greater than or equal to $13,783 but less than $22,052; and
    • 8 percent of the total loan amount for a loan amount less than $13,783.

The rule will be effective January 1, 2021. The amendments have been added to BankersOnline's Regulations pages for Regulation Z §§ 1026.32, 1026.43, and 1026.52.

PUBLICATION UPDATE: This rule will be published in the Federal Register on August 19, 2020.


ADA 30th anniversary webinar

The National Credit Union Administration has posted a reminder that federally insured credit unions can join a meaningful conversation on the importance of financial inclusion for persons with disabilities and the 30th Anniversary of the Americans with Disabilities Act (ADA) during a webinar hosted by the NCUA on Thursday, July 23, beginning at 2 p.m. EDT.

During the webinar, Chairman Hood will discuss how organizations can expand their efforts to ensure the disabled have equal access to opportunities and resources with Michael Morris, director of the National Disability Institute, and Jennifer Laszlo Mizrahi, a disabilities rights advocate and president of RespectAbility. Online registration for the two-hour webinar is now open.


Meeting promotes access to capital in underserved areas

The OCC has reported that Acting Comptroller of the Currency Brian Brooks joined Senator Tim Scott and HUD Secretary HUD Ben Carson on Friday in Charleston, South Carolina, to raise awareness of investment and lending related to Opportunity Zones, which also may receive credit under the Office of the Comptroller of the Currency’s (OCC) new Community Reinvestment Act (CRA) rule. The event brought together approximately 50 bankers, developers, and advocates from throughout the mid-Atlantic region and featured presentations on projects already underway, as well as the potential for additional initiatives that can include participation by small community- and minority-owned banks serving the area. The event also included remarks by Senator Scott, Secretary Carson, and Acting Comptroller Brooks, as well as a robust roundtable discussion of CRA lending and investment relationships in underserved markets and opportunity zones.


Fed modifies Main Street Lending Program

The Federal Reserve Board has announced modifications to the Main Street Lending Program to provide greater access to credit for nonprofit organizations such as educational institutions, hospitals, and social service organizations.

As detailed in term sheets released Friday, the Board approved two new loan options to provide support to a broad set of nonprofit organizations that were in sound financial condition prior to the pandemic. Based on public feedback to proposals released for comment on June 15, the minimum employment threshold for nonprofits was lowered from 50 employees to 10, the limit on donation-based funding was eased, and several financial eligibility criteria were adjusted to accommodate a wider range of nonprofit operating models. Additionally, like the proposed terms, each organization must be a tax-exempt organization as described in section 501(c)(3) or 501(c)(19) of the Internal Revenue Code.

Term sheets:


FEMA revises Flood Program regulations

FEMA has published a final rule [85 FR 43946] amending its regulations at 44 CFR parts 59 (General Provisions), 61 (Insurance Coverage and Rates) and 62 (Sale of Insurance and Adjustment of Claims), to codify certain provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014, and to clarify certain existing NFIP rules relating to NFIP operations and the Standard Flood Insurance Policy.

This final rule was preceded by a notice of proposed rulemaking on July 16, 2018 (83 FR 32956). The final rule will become effective October 1, 2021.


FEMA suspending communities in IA and PA from flood program

FEMA has published a final rule [85 FR 43708] in the July 20 Federal Register listing communities in Iowa and Pennsylvania that are scheduled for suspension from the National Flood Insurance Program on July 22, 2020, for noncompliance with the flood plain management requirements of the program.

  • Iowa: Andover, Calamus, Camanche, Clayton, Clinton, DeWitt, Elkader, Elkport, Form Madison, Garber, Garnavillo, Goose Lake, Grand Mound, Guttenberg, Keokuk, Lost Nation, Low Moor, Luana, Marquette, McGregor, Montrose, North Buena Vista, Saint Olaf, Strawberry Point, Toronto, Welton, and unincorporated areas of Clayton, Cllnton, and Lee counties
  • Pennsylvania: Butler, Carroll Valley, Cumberland, Hamiltonban, Littlestown, Menallen, Mount Joy, Mount Pleasant, Straban, and Union


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