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The Federal Trade Commission on Friday announced that a federal court has issued an order banning the operators of the Home Matters USA mortgage relief scam from the telemarketing and debt relief businesses and requiring them to turn over $19 million as a result of a lawsuit by the Commission and the California Department of Financial Protection and Innovation (DFPI).

The FTC and DFPI sued companies doing business as Home Matters USA, Academy Home Services, Atlantic Pacific Service Group, and Golden Home Services America and the owners of the companies, Michael R. Nabati, Armando Solis Barron, Dominic Ahiga (also known as Michael D. Grinnell), and Roger S. Dyer in September 2022, charging them with taking millions of dollars from thousands of struggling homeowners seeking mortgage relief.

The court found that the defendants falsely promised to reduce homeowners’ mortgage payments and prevent foreclosures, defrauding distressed homeowners out of millions of dollars. The scheme harmed more than 3,000 people nationwide, particularly elders and veterans.

The Federal Reserve Board, OCC, and FDIC on February 16 reported in the 2023 Shared National Credit (SNC) Report that credit quality associated with large, syndicated bank loans remains moderate. However, the agencies noted declining credit quality trends due to the pressure of higher interest rates on leveraged borrowers and compressed operating margins in some industry sectors.

Risks in leveraged loans remain high, and risks in certain industries, including technology, telecom and media; health care and pharmaceuticals; and transportation services are also elevated. Risk in the real estate and construction sector is segmented, with deteriorating trends in some sub-sectors being offset by stability and/or improvement in other sub-sectors. Industries affected by the pandemic, including transportation services and entertainment/recreation, continue to show notable improvement.

The 2023 review reflects the examination of SNC loans originated on or before June 30, 2023. The review focused on leveraged loans and stressed borrowers from various industry sectors.

• Joint press release

The CFPB has announced its release of a report based on the first set of results from the newly updated Terms of Credit Card Plans survey. The survey data reveal that large banks are offering worse credit card terms and interest rates than small banks and credit unions, regardless of credit risk. In fact, reports the Bureau, the 25 largest credit card issuers charged customers interest rates of 8 to 10 points higher than small- and medium-sized banks and credit unions. This difference can translate to $400 to $500 in additional annual interest for the average cardholder.

The survey data include information on all general-purpose credit cards of the largest 25 credit card issuers in the United States. The data also include a representative sample of products from small- and medium-sized banks and credit unions across the country.

The OCC, FDIC, and Federal Reserve Board have released the hypothetical scenarios for their annual Dodd-Frank stress tests, which help ensure that large banks can lend to households and businesses even in a severe recession.

The OCC has released its February 2024 list of enforcement actions taken against national banks and federal savings associations and related individuals.

• The previously announced cease and desist order, order for civil money penalty, and Gramm-Leach-Bliley agreement issued to City National Bank, Los Angeles, California.
• A cease and desist order against Blue Ridge Bank, N.A., Martinsville, Virginia, for unsafe or unsound practices, including those related to BSA/AML, capital ratios, capital and strategic planning, liquidity risk management, and information technology controls. The deficiencies in the BSA/AML compliance program resulted in violations of law, rule, or regulation, and the bank also failed to correct previously reported BSA problems.
• A formal agreement with The First National Bank of St. Ignace, St. Ignace, Michigan, for unsafe or unsound practices, including those related to capital planning, capital stress testing, and strategic planning, and a violation of law, rule, or regulation related to payment of dividends.
• An order of prohibition and for payment of a $50,000 civil money penalty against Stephen Adams, former senior vice president and managing director of residential lending, Sterling Bank and Trust, FSB, Southfield Michigan, for his role in failing to appropriately supervise, investigate, and discipline employees originating residential mortgage loans.
• Orders of prohibition issued to—
  • Cole R. Mann, former branch manager, PNC Bank, National Association, Wilmington, Delaware, for stealing, embezzling, or otherwise misappropriating funds from the bank and a bank customer
  • Chimere Shanta Mitchell, former fraud and claims operations specialist at Wells Fargo Bank, N.A., Sioux Falls, South Dakota, for misappropriating confidential information of bank customers, including more than 20 elderly customers, and selling the information to a third party, resulting in fraudulent transactions
  • Aaron Parsons, relationship banker and Webster Bank N.A., Stamford, Connecticut, for unauthorized withdrawals from accounts of bank customers, four of whom are elderly, and depositing the funds in his own bank account
  • Nyema'sha Taylor, former teller at Wells Fargo Bank, N.A., Sioux Falls, South Dakota, for knowingly processing unauthorized cash withdrawals from a customer’s account
  • Francis Andujar Velazquez, former senior customer service representative, Santander Bank, Wilmington, Delaware, for misappropriating funds from customers’ accounts by making purchases using confidential bank customer information and selling confidential information of bank customers to a third party and facilitating fraudulent transactions
  • Mirsha Yamili Wilson, former associate Banker, JPMorgan Chase Bank, N.A., Columbus, Ohio, for taking cash used to supply a bank branch’s ATMs and concealing the shortage
• Personal cease and desist orders against—
  • Colleen Kimmel, former general counsel, Sterling Bank and Trust, FSB, Southfield, Michigan, for her role in not ensuring the bank conducted or suggesting to the Board that the bank conduct an investigation into concerns related to a residential mortgage loan product, not ensuring the bank’s BSA program had an adequate system of internal controls, and not timely reporting suspicious activity related to certain residential mortgage loans
  • Jonathan Kolk, former residential underwriting manager, Sterling Bank and Trust, FSB, Southfield, Michigan, for capitulating to pressure to quickly underwrite certain residential mortgage loans and his role in underwriting, and supervising the underwriting of, loans that had false or fraudulent loan applications

The Federal Trade Commission has announced a federal court has entered a judgment requiring merchant cash advance operator Jonathan Braun to pay $20.3 million in monetary relief and civil penalties. This is the first trial by jury that the FTC has ever conducted.

The judgment follows a January trial in which a jury found that Braun, in his role with small-business funding company RCG Advances, which formerly did business as Richmond Capital Group, knowingly violated the Gramm-Leach-Bliley Act by deceiving small businesses about the amount of funding that Defendants would provide to and collect from them. The court entered a judgment of $3,421,067 to redress the harm that Braun’s misconduct caused to small businesses. In addition, noting the utter disregard and contempt that Braun showed to consumers, including spewing vile threats and profanities to small business owners, the court imposed $16,956,000 in civil penalties for Braun’s violations of law.

The FTC sued Braun in June 2020, along with four other defendants, charging that he deceived small businesses and other organizations by misrepresenting the terms of merchant cash advances his business provided, and then used unfair collection practices, including sometimes threatening physical violence, to compel consumers to pay.

The Conference of State Banking Supervisors yesterday announced that an annual review of NMLS fees has begun. The fees are reviewed annually to determine if the fee structure is properly aligned with the costs of efficiently operating NMLS for the 600,000 industry users who rely on the system to maintain their licensing or registration. The fee review process will continue throughout 2024. Any changes to NMLS fees will take effect in 2025.

• FAQ on the review process
• Current NMLS fees

The OCC reports it has opened registration for its 2024 schedule of in-person workshops for board directors and senior management of national community banks and federal savings associations.

The OCC examiner-led workshops provide practical training and guidance to directors and senior management of national community banks and federal savings associations to support the safe and sound operation of community-based financial institutions.

The OCC offers five daylong workshops:

• Building Blocks: Developing Strong Management
• Risk Governance: Improving Effectiveness
• Compliance Risk: Understanding the Rules
• Credit Risk: Recognizing and Responding to Risk
• Operational Risk: Navigating Rapid Changes

The OCC is also offering a half-day workshop, Capital Markets: Keeping Current. This workshop covers balance sheet management risks, as well as hot topics and risk themes for bankers and regulators in the capital markets area.

Workshops are limited to 35 participants. Attendees will receive course materials, supervisory publications, and lunch.

Schedules, locations, cost and fee waiver information, and online registration are available on the OCC's website.

The Federal Reserve Board has reported it has issued a consent order for the payment of a civil money penalty of $9,600 to Select Bank, Forest, Virginia, for a pattern or practice of unspecified flood insurance violations.

The FDIC has issued FIL-6-2024 with guidance to help financial institutions and facilitate recovery in areas of Michigan affected by severe storms, tornadoes, and flooding August 24–26, 2023.