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Top Story Lending Related

06/17/2021

Bureau resumes examining for MLA compliance

An Interpretive Rule has been issued by the CFPB explaining the basis for its authority to examine supervised financial institutions for risks to active duty servicemembers and their dependents (i.e. military borrowers) from conduct that violates the Military Lending Act (MLA).

In 2018, the CFPB’s leadership discontinued MLA-related examination activities, based on its stated belief that Congress did not specifically confer examination authority on the CFPB with respect to the MLA. The current CFPB leadership does not find those prior beliefs persuasive and the CFPB will now resume MLA-related examination activities.

06/17/2021

Credit account delinquencies still low

The CFPB has posted the first in a series of blog articles documenting trends in consumer credit outcomes during the COVID-19 pandemic for auto loans, student loans, mortgages and credit cards.

New delinquencies remain low and have not returned to 2019 Levels. After June 2020, new delinquencies for auto loan and credit card accounts began to rise gradually, although by December 2020, the share of open accounts transitioning into delinquency was lower or approximately the same as it had been prior to the pandemic.

New delinquencies for student loans also ticked up slightly since the summer of 2020, although the rate of delinquencies for these loans is still quite low, since a large share of student loans continue to be subject to automatic payment suspension under the CARES Act and administrative action by the Department of Education. Indeed, for student loans that do not appear to be receiving payment assistance, new delinquencies began rising in April of 2020.

New delinquencies on mortgages remained low from July 2020 through April 2021, likely reflecting the forbearances available under the CARES Act, which have since been extended through September 30, 2021.

06/16/2021

Hsu on reducing bias in RE appraisals

In remarks at an event hosted by the Consumer Financial Protection Bureau on reducing bias in real estate appraisals, Acting Comptroller of the Currency Michael J. Hsu highlighted the significant impact bias in appraisals has on minority families and how it contributes to a greater wealth gap between minority and majority populations. He stated, ”Holding banks accountable is necessary but not sufficient to solve the problem of bias in appraisals. The solution requires a collective effort by all the stakeholders participating and watching this event today. I applaud the civil rights leaders and others participating for holding us accountable on this issue and engaging in solutions-oriented discussions that can make appraisals fairer in the future while also meeting the underwriting needs of the $11 trillion in mortgage loans in our country.”

06/16/2021

Industrial production increases

The Federal Reserve has released G.17 Industrial Production and Capacity Utilization data for May 2021.

Total industrial production increased 0.8 percent in May. Manufacturing production advanced 0.9 percent, reflecting, in part, a large gain in motor vehicle assemblies; factory output excluding motor vehicles and parts increased 0.5 percent. The indexes for mining and utilities rose 1.2 percent and 0.2 percent, respectively.

In May, at 99.9 percent of its 2017 average, total industrial production was 16.3 percent higher than it was a year earlier but 1.4 percent lower than its pre-pandemic (February 2020) level. Capacity utilization for the industrial sector rose 0.6 percentage point in May to 75.2 percent, a rate that is 4.4 percentage points below its long-run (1972–2020) average.

06/16/2021

CDFIs awarded $1.25B for COVID-19 relief

Treasury yesterday awarded $1.25 billion in COVID-19 relief funds to 863 community development financial institutions (CDFIs). The awards were announced today by Vice President Kamala Harris at the White House with Treasury Secretary Janet L. Yellen. The grants will be made through Treasury’s CDFI Rapid Response Program (CDFI RRP) and will provide necessary capital for CDFIs to respond to economic challenges created by the COVID-19 pandemic, particularly in underserved communities. CDFI RRP award recipients are headquartered in 48 states, the District of Columbia, Guam, and Puerto Rico.

The award recipients include 58 organizations that committed to direct their awards to investments in Native American, Native Alaskan, and Native Hawaiian communities; they received a total of $54.6 million in awards. In addition, 28 organizations that primarily serve Puerto Rico received $47.3 million in awards, and 90 minority depository institutions received a total of $133.9 million in awards.

06/16/2021

FDIC proposes change to real estate lending guidelines

The FDIC has proposed a rule to amend the Interagency Guidelines for Real Estate Lending Policies to conform the method for calculating the ratio of loans in excess of the supervisory loan-to-value (LTV) limits with the capital framework established in the community bank leverage ratio (CBLR) rule. The proposed amendment would provide a consistent approach for calculating the ratio of loans in excess of the supervisory LTV limits at all FDIC-supervised institutions.

Comments on the proposed rule will be accepted for 30 days after publication in the Federal Register.

06/15/2021

Bureau blog on HMDA threshold report

The CFPB posted a blog article, "HMDA Threshold Report Blog," announcing the release yesterday of a report analyzing differences in lending patterns for lenders below and above the 100-loan closed-end threshold set by the 2020 Home Mortgage Disclosure Act rule. While this analysis is necessarily limited and preliminary, the report does find some differences in lending patterns for lenders above and below the threshold.

Lenders below the 100-loan threshold appear to make more investment purpose loans to higher income borrowers and non-natural person borrowers (i.e., trusts, partnerships, and corporations), as well as more loans secured by properties in low-to-moderate income census tracts. These findings are consistent with a possible explanation that lenders below the 2020 rule’s 100-loan closed-end threshold are making more loans to investors buying up property in low-to-moderate income census tracts for rental or resale.

06/15/2021

FTC amends complaint against RCG Advances

In a newly filed amended complaint, the Federal Trade Commission alleges that merchant cash advance provider RCG Advances and other defendants made multiple unauthorized withdrawals from small businesses’ banks, sometimes taking thousands of dollars more than the agreed repayment amount. The amended complaint also alleges that RCG, formerly known as Richmond Capital Group, LLC and also doing business as Viceroy Capital Funding and Ram Capital Funding, violated the Gramm-Leach-Bliley Act’s prohibition on using false or deceptive information to obtain a consumer’s bank account information.

The amended complaint also alleges wanton and egregious behavior by the defendants, including laughing at consumer requests for refunds from RCG’s unauthorized withdrawals from customer bank accounts; abusing the legal system to seize the business and personal assets of their customers; and threatening to break their customers’ jaws or falsely accusing them of child molestation during collection calls. The FTC asks the court to assess civil penalties against the defendants, along with injunctive relief and requiring the defendants to turn over ill-gotten gains.

The case was originally filed in June 2020.

06/15/2021

FDIC Board meets today

The FDIC Board will meet today [Sunshine Act notice] in open session, with public observation via webcast only. Included on the summary agenda for the meeting are memoranda and resolutions regarding:

  • a Final Policy Statement Regarding Minority Depository Institutions
  • a Notice of Proposed Rulemaking on Real Estate Lending Standards

06/14/2021

Other agency agendas

Other agencies also published their Spring 2021 Regulatory Agendas.

The Federal Reserve and FinCEN plan to issue a final rule in September that would apply information collection requirements to domestic and cross-border transactions involving cryptocurrencies.

FinCEN intends to issue a final rule in November to impose BSA recordkeeping and identity verification requirements to transactions involving convertible virtual currency or digital assets with legal tender status.

The Fed, FDIC and OCC continue to work toward modernization of their CRA regulations.

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