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Top Story Lending Related

12/13/2019

FDIC and OCC proposal to modernize CRA

The FDIC and the OCC have announced a proposal to modernize the agencies’ regulations under the Community Reinvestment Act (CRA) that have not been substantively updated for nearly 25 years. The proposed rules are intended to increase bank activity in low- and moderate-income communities where there is significant need for credit, more responsible lending, greater access to banking services, and improvements to critical infrastructure. The proposals will clarify what qualifies for credit under the CRA, enabling banks and their partners to better implement reinvestment and other activities that can benefit communities. The agencies will also create an additional definition of “assessment areas” tied to where deposits are located—ensuring that banks provide loans and other services to low- and moderate-income persons in those areas.

Comptroller Otting and FDIC Chairman McWilliams issued statements regarding the publication of the joint notice of proposed rulemaking to modernize the Community Reinvestment Act (CRA) regulations. Comments on the proposal will be accepted for 60 days following Federal Register publication.

12/13/2019

Update on status of Payday Lending Rule

The U.S. District Court for the Western District of Texas (Austin Division) has again continued its stays of the litigation of pending case Community Financial Services Association of America, Ltd. et al v. Consumer Financial Protection Bureau et al and of the August 19, 2019, compliance date of the Bureau's Payday Lending Rule, and ordered that the parties file a Joint Status Report about proceedings related to the Rule and litigation no later than April 24, 2020.

12/12/2019

Fed issued three outstanding CRA evals in November

Our review of the CRA evaluations made public by the Federal Reserve Board in November reveals that, of the 21 evaluations issued that month, 18 received a Satisfactory rating, and these three institutions' evaluations were rated Outstanding (links are to their evaluation reports):

12/11/2019

CFPB Quarterly Consumer Credit Trends report

The Bureau has released its ninth quarterly consumer credit trends report. This edition of the report is a retrospective on the removal of tax liens and civil judgments from credit reports that began July 2017. The report looks at the National Consumer Assistance Plan's public records provision’s effects on the relationship between credit scores and consumers’ credit performance for consumers that had a civil judgment or tax lien removed from their credit report and those that did not. Key findings include:

  • Since the February 2018 quarterly report, the nationwide consumer reporting agencies (NCRAs) have taken further steps to remove public records. Almost half of tax liens survived the July 2017 removals, but by April 2018, none remained. Bankruptcies are now the only type of public record on NCRA credit reports.
  • Consumers with public records tended to have lower scores than those without. In June 2017 (before the NCAP’s changes took effect), half of consumers with judgments or liens had Deep Subprime scores (below 580).
  • Consumers with judgments or liens had a much higher overall delinquency rate than those without, but this difference is smaller when looking at consumers in the same credit score group.
  • Looking within credit score categories, the difference in delinquency rates between consumers with judgments or liens and those without stays largely constant across time periods. This evidence suggests that the public records provision of the NCAP did not have a large effect on the relationship between credit scores and consumers’ credit performance.

12/11/2019

University of Phoenix pays $191M to settle charges

The Federal Trade Commission has announced the University of Phoenix and its parent company, Apollo Education Group, will settle for a record $191 million to resolve FTC charges that they used deceptive advertisements that falsely touted their relationships and job opportunities with companies such as AT&T, Yahoo!, Microsoft, Twitter, and The American Red Cross. Under the settlement, the university will pay $50 million in cash and cancel $141 million in debts owed to the school by students who were harmed by the deceptive ads. A complaint filed by the Commission alleged that the university and Apollo relied heavily on advertising to attract students, including specific ads that targeted military and Hispanic consumers. The companies’ ads featured employers such as Microsoft, Twitter, Adobe, and Yahoo!, giving the false impression that the university worked with those companies to create job opportunities for its students and tailor its curriculum for such jobs.

12/11/2019

NMLS renewal period ends soon

The NMLS has posted a reminder that the annual renewal period for registered mortgage loan originators (MLOs) (organizations and individuals) ends December 31. Failure to renew an institution's registration may impact its MLOs’ ability to engage in mortgage loan origination activity, just as failures of individual MLOs to complete their renewal process will prevent them from legally acting in that role after year-end. For complete information, visit the Renew-Reactivate page of the NMLS Federal Registry Resource Center.

12/10/2019

CFPB consumer tips on store credit cards

The Bureau has posted tips for consumers who are offered or receive a retail store credit card to protect themselves against fraud.

12/10/2019

OCC on key risks for federal banking system

The OCC's National Risk Committee has issued its Semiannual Risk Perspective for Fall 2019, which indicates operational, credit, and interest rate risks are among the key themes for the federal banking system. Report highlights include:

  • Operational risk is elevated as banks adapt to a changing and increasingly complex operating environment. Key drivers elevating operational risk include the need to adapt and evolve current technology systems for ongoing cybersecurity threats.
  • Credit risk has accumulated in many portfolios. Banks should prepare for a cyclical change while credit performance remains strong. Preparation includes maintaining robust credit control functions, particularly credit review, problem loan identification and workout, collections, and collateral management.
  • Recent volatility in market rates has led to increasing levels of interest rate risk. The complexity of asset/liability management is exacerbated by the recent yield curve inversions.
  • The London InterBank Offered Rate (Libor) will likely cease to be an active index by the end of 2021. Accordingly, the OCC is increasing regulatory oversight of this area to evaluate bank awareness and preparedness.
  • Banks face strategic risks from non-depository financial institutions, use of innovative and evolving technology, and progressive data analysis capabilities.

12/09/2019

Consumer credit increases

The Federal Reserve Board has released Consumer Credit G.19 data indicating that in October 2019 consumer credit increased at a seasonally adjusted annual rate of 5-1/2 percent. Revolving credit increased at an annual rate of 8-3/4 percent, while nonrevolving credit increased at an annual rate of 4-1/4 percent.

12/06/2019

OCC lists 10 Outstanding CRA evals

The OCC yesterday released a list of Community Reinvestment Act (CRA) performance evaluations that became public in November. Of the 22 evaluations listed, 12 are rated "Satisfactory" and these ten are rated "Outstanding" (links are to their evaluations):

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