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Top Story Lending Related

11/24/2020

HUD proposes to allow private flood insurance on FHA-insured loans

HUD has published [85 FR 74630] a proposed rule that would amend Federal Housing Administration (FHA) regulations to allow mortgagors the option to purchase private flood insurance on FHA-insured mortgages for properties located in Special Flood Hazard Areas (SFHAs), in satisfaction of the mandatory purchase requirement of the Flood Disaster Protection Act of 1973 (the FDPA), and in harmony with private flood insurance requirements under the Biggert-Waters Act.. Comments on the proposal are due by January 22, 2021.

11/24/2020

CFPB updates 2021 HMDA FIG

The Bureau has made an update to the HMDA Filing Instructions Guide (FIG) for data collected in 2021 (for submission in 2022). Edits Q656 and Q657 in Table * (Macro Quality Edits for Loan/Application Register) have been reclassified and moved to Table 7 (Quality Edits for Loan/Application Register).

11/23/2020

CFPB settles deceptive sales practice case

The Bureau has announced it has issued a consent order against U.S. Equity Advantage, Inc. (“USEA”), a nonbank located in Orlando, Florida, and its owner, Robert M. Steenbergh. The Bureau found that the company’s disclosures and advertisements of its auto loan payment program contained misleading statements in violation of the Consumer Financial Protection Act of 2010’s prohibition against deceptive acts or practices.

The consent order imposes a judgment against them requiring them to pay $9,300,000 in consumer redress and contains requirements to prevent future violations. The ordered redress amount was suspended upon payment of $900,000 and a $1 civil money penalty to the Bureau. The suspension of the full payment for redress, as well as the $1 civil penalty, is based on USEA’s and Steenbergh’s demonstrated inability to pay more based on sworn financial statements.

11/23/2020

CFPB sues debt settlement company and owners

The CFPB has filed a lawsuit against FDATR, Inc., and its owners, Dean Tucci and Kenneth Wayne Halverson. The Bureau alleges that FDATR, Tucci, and Halverson violated the Telemarketing Sales Rule (TSR) by engaging in deceptive and abusive telemarketing acts or practices and the Consumer Financial Protection Act of 2010 (CFPA) through deceptive acts or practices.

FDATR was a corporation headquartered in Wood Dale, Illinois, that promised to provide student-loan debt-relief and credit-repair services to consumers nationwide. Tucci and Halverson both owned and managed FDATR, which was involuntarily dissolved in September 2020. The Bureau’s complaint, filed in the United States District Court for the Northern District of Illinois, seeks injunctions against FDATR, Tucci, and Halverson, as well as damages, redress to consumers, disgorgement of ill-gotten gains, and the imposition of civil money penalties.

  • CFPB press release
  • 11/23/2020

    OCC proposes Fair Access to Financial Services Rule

    The OCC has issued a proposed rule that would ensure fair access to banking services provided by national banks, federal savings associations, and federal branches and agencies of foreign bank organizations.The proposal would codify more than a decade of OCC guidance stating that banks should provide access to services, capital, and credit based on the risk assessment of individual customers, rather than broad-based decisions affecting whole categories or classes of customers.

    The proposal would apply to the largest banks in the country that may exert significant pricing power or influence over sectors of the national economy and would require a covered bank to ensure it makes its products and services available to all customers in the community it serves, based on consideration of quantitative, impartial, risk-based standards established by the bank. Under the proposal, a covered bank’s decision to deny services based on an objective assessment of the person’s creditworthiness, ability to pay, or other quantitative, impartial, risk-based reasons would not violate the bank’s obligation to provide fair access. However, under the proposal, the bank may not deny a customer service to disadvantage, limit, or prevent the customer from entering or competing in a market or business segment, or to benefit another person or business activity.

    A bank would be presumed not to meet the definition of a bank covered by the proposed rule if it has less than $100 billion in total assets.

    Comments on the proposal will be accepted through January 4, 2021.

    11/23/2020

    Temporary reporting relief for community banks

    The Federal Reserve Board, FDIC, and OCC have announced an interim final rule that provides temporary relief for certain community banking organizations related to certain regulations and reporting requirements as a result, in large part, of their growth in size from the coronavirus response.

    Community banking organizations are subject to different rules and requirements based on their risk profile and asset size. Due to participating in federal coronavirus response programs—such as the Paycheck Protection Program—and other lending that supports the U.S. economy, many community banking organizations have experienced rapid and unexpected increases in their sizes, which are generally expected to be temporary. The temporary increase in size could subject community banking organizations to new regulations or reporting requirements. Community banking organizations with under $10 billion in assets may have fewer resources available to prepare and comply with previously unanticipated regulatory requirements, especially during a time of economic disruption.

    With regard to the requirements covered by the interim final rule, community banking organizations that have crossed a relevant threshold generally will have until 2022 to either reduce their size, or prepare for new regulatory and reporting standards. The rule applies to community banking organizations and financial institutions with less than $10 billion in total assets as of December 31, 2019. The rule will be effective immediately upon publication in the Federal Register. Comments on the interim final rule will be accepted for 60 days following publication.

    11/20/2020

    OCC enforcement orders

    The OCC has released a list of enforcement actions against national banks, federal savings associations and individuals now or formerly affiliated with such institutions.

    • First Abu Dhabi Banks USA N.V. was assessed a $5 million civil money penalty for BSA/AML compliance program deficiencies and violations. An earlier consent order against the bank was terminated.
    • A former director and the former senior compliance and BSA officer of a New Jersey bank were assessed penalties totaling $39,000 (and the compliance/BSA officer was issued a prohibition order) for their involvement in the bank's seriously deficient BSA/AML compliance program while the bank's management was soliciting high-risk businesses as customers.
    • A former senior vice president of a Sallisaw, Oklahoma, bank was issued a default order with an order of prohibition, a cease and desist order requiring restitution of $2.3 million, and civil money penalty of $250,000. The order indicates it has been appealed to a federal court.
    • The former VP of commercial lending and chief lending officer of a Charleroi, Pennsylvania, bank has been issued a consent order to cease and desist and to pay a $12,000 civil money penalty, for inappropriately approving large overdrafts and waiving overdraft fees; and failing to ensure that the bank's credit underwriting process properly assessed the borrower's ability to repay.

    11/20/2020

    BSA due diligence for charities and non-profits clarified

    The Federal Banking Agencies and FinCEN have issued a joint fact sheet to provide clarity to banks and credit unions on how to apply a risk-based approach to charities and other non-profit organizations. The fact sheet highlights the importance of ensuring that legitimate charities have access to financial services and can transmit funds through legitimate and transparent channels, especially during the current COVID-19 pandemic. It also reminds banks to apply a risk-based approach to customer due diligence requirements when developing the risk profiles of charities and other non-profit customers, and reaffirms that the application of a risk-based approach is consistent with existing customer due diligence and other Bank Secrecy Act/Anti-Money Laundering compliance requirements.

    11/20/2020

    FDIC updates RMS Manual

    The FDIC has issued a November 2020 update to its Risk Management Manual of Examination Policies (RMS Manual). The November updates were made to section 3.2 (Loans) of the Manual, and include revised instructions for assessing environmental risk programs; updated residential appraisal thresholds; including effective dates for lease accounting; instructions on assessing bank-to-bank credit; assessing payday lending programs; Current Expected Credit Loss (CECL) updates; and other minor technical edits.

    With the issuance of the November updates, the FDIC has moved to inactive status FIL-14-2005 (Payday Lending Programs Revised Examination Guidance), and FIL-52-2015 (FDIC Clarifying its Approach to Banks Offering Products and Services, such as Deposit Accounts and Extensions of Credit, to Non-Bank Payday Lenders). Also, the Guidelines for an Environmental Risk Program are being removed from the FDIC Statements of Policy section of the FDIC Law, Regulations, and Related Acts webpage. The two FILs and the Guidelines document are addressed in the RMS Manual.

    The RMS Manual can be downloaded as ZIP files.

    11/19/2020

    Final Capital Rule for Fannie and Freddie

    The Federal Housing Finance Agency (FHFA) has announced it has approved a final rule that establishes a new regulatory capital framework for Fannie Mae and Freddie Mac (the Enterprises).

    The final rule fulfills Congress's Housing and Economic Recovery Act of 2008 mandate that FHFA establish risk-based capital requirements for the Enterprises. The rule is intended to ensure the safety and soundness of the Enterprises by increasing the quantity and quality of the Enterprises' regulatory capital and reducing the pro-cyclicality of the aggregate capital requirements. A Fact Sheet on the rule was also released.

    The rule will become effective 60 days after publication in the Federal Register.

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