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E.g., Jan 24 2021

12/23/2020

Agencies revise statement on status of certain investment funds

The OCC, FRB, and FDIC yesterday issued a revised statement to supersede the "Statement Regarding Status of Certain Investment Funds and Their Portfolio Investments for Purposes of Regulation O and Reporting Requirements under Part 363 of FDIC Regulations" issued on December 27, 2019, and set to expire on January 1, 2021.

The revised interagency statement explains that the agencies will continue to exercise discretion not to take action against banks, or against certain asset managers that become principal shareholders of banks (principal shareholder fund complexes), with respect to certain extensions of credit by banks to portfolio companies of the principal shareholder fund complex (fund complex-controlled portfolio companies) that otherwise would violate Regulation O, 12 CFR 215, provided certain eligibility criteria are satisfied. The agencies are providing this temporary relief while the Board, in consultation with the other agencies, considers whether to amend Regulation O to address this issue. This temporary relief will apply until January 1, 2022, unless amended, extended, or superseded in writing before that time.

12/23/2020

Bureau fines Discover Bank for student loan servicing practices

The CFPB has announced it has reached a settlement with Discover Bank and its affiliates, The Student Loan Corporation and Discover Products, Inc., (collectively, "Discover") and issued a consent order for payment of at least $10 million in consumer redress and a $25 million civil money penalty. Discover Bank is an insured depository institution headquartered in Greenwood, Delaware, that provides and services private student loans. The Student Loan Corporation and Discover Products, Inc., also service student loans.

The Bureau had issued an Order in 2015 based on the CFPB's finding that Discover misstated the minimum amounts due on billing statements as well as tax information consumers needed to get federal income tax benefits. The Bureau also found that Discover engaged in illegal debt collection practices. The Bureau’s 2015 Order required Discover to refund $16 million to consumers, pay a penalty, and fix its unlawful practices servicing and collection practices. The Bureau found that Discover violated the 2015 Order’s requirements in several ways. Discover misrepresented the minimum loan payments consumers owed, the amount of interest consumers paid, and other material information, such as interest rates, payments, due dates, and the availability of rewards, among other things. Discover also did not provide all of the consumer redress the 2015 Order required.

For more information on the Bureau's enforcement action, see "Discover Bank and affiliates pay $25 million CMP," in BankersOnline's Penalty Pages.

12/23/2020

IRS issues 2021 mileage rates

The Internal Revenue Service has issued the 2021 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on January 1, 2021, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56 cents per mile driven for business use, down 1.5 cents from the rate for 2020,
  • 16 cents per mile driven for medical purposes, or for moving purposes for qualified active duty members of the Armed Forces, down 1 cent from the rate for 2020, and
  • 14 cents per mile driven in service of charitable organizations. This rate is set by statute and remains unchanged from 2020.

12/23/2020

Marketing Rule for Investment Advisors updated

The SEC has announced it has finalized reforms under the Investment Advisers Act to modernize rules that govern investment adviser advertisements and payments to solicitors. The amendments create a single rule that replaces the current advertising and cash solicitation rules. The final rule is designed to comprehensively and efficiently regulate investment advisers’ marketing communications.

The rule replaces the current advertising rule’s broadly drawn limitations with principles-based provisions designed to accommodate the continual evolution and interplay of technology and advice, and includes tailored requirements for certain types of advertisements. For example, the rule will require advisers to standardize certain parts of a performance presentation in order to help investors evaluate and compare investment opportunities, and will include tailored requirements for certain types of performance presentations. Advertisements that include third-party ratings will be required to include specific disclosures to prevent them from being misleading. The rule will also permit the use of testimonials and endorsements, which include traditional referral and solicitation activity, subject to certain conditions.

The changes will be effective 60 days after publication in the Federal Register.

12/22/2020

OCC updates Comptroller's Handbook booklet

OCC Bulletin 2020-109, issued yesterday, introduced version 2.2 of the updated “Foreword” booklet of the Comptroller’s Handbook. The booklet describes the overall organization and format of the Handbook and explains the OCC’s process for issuing new booklets, updating booklets, and fully revising booklets. The updated booklet—

  • clarifies the OCC’s methods for identifying updated content in Comptroller's Handbook booklets
  • revises content for consistency with the Examination Process series of Handbook booklets
  • includes information about the OCC’s adoption of interagency examination procedures and Federal Financial Institutions Examination Council handbooks and manuals

12/22/2020

HMDA asset-size exemption threshold adjustment

The CFPB has published in the December 22, 2020, Federal Register a final rule adjusting the Regulation C (HMDA) asset-size exemption threshold for banks, savings associations, and credit unions for inflation. For calendar year 2021, that threshold is increased from $47 million to $48 million. Therefore, banks, savings associations, and credit unions with assets of $48 million or less as of December 31, 2020, will be exempt from collecting HMDA data in 2021.

The BankersOnline Regulations pages for Regulation C have been updated.

12/22/2020

Small-creditor asset threshold for escrow exemption adjusted

The CFPB has published in today's Federal Register a final rule making an inflation adjustment to the asset-size threshold for certain creditors to qualify for an exemption from the requirement to establish an escrow account for a higher-priced mortgage loan under section 1026.35 of Regulation Z. The threshold is adjusted, effective January 1, 2021, to $2.230 billion from $2.202 billion. Therefore, creditors with assets of less than $2.230 billion (including assets of certain affiliates) as of December 31, 2020, will be exempt, if other requirements of section 1026.35(b)(2)(iii) of Regulation Z are also met, from establishing escrow accounts for higher-priced mortgage loans in 2021. The change is effective January 1, 2021.

The BankersOnline Regulations page for Regulation Z § 1026.35 and its Official Interpretations has been updated, noting and correcting an error in the published rule.

12/22/2020

Stimulus bill sent to president

Congress has approved and sent to the president for enactment the long-anticipated $900 billion coronavirus relief package in a record-breaking 5,500 plus-page bill. Key provisions affecting banks include:

  • An additional $284 billion in funding for the Paycheck Protection Program, included an option for prior PPP borrowers to obtain additional funds. Fifteen billion dollars were set aside for PPP loans by community financial institutions.
  • A hold-harmless provision for lenders from penalties related to borrower or applicant certifications for PPP loans
  • A simplified forgiveness process for PPP loans up to $150,000
  • A second round of economic impact payments (stimulus checks) for eligible recipients, that will not be subject to garnishment. Treasury Secretary Mnuchin predicts direct deposits of these payments could start next week.
  • An extension of federally-enhanced unemployment insurance payments
  • Extension until January 1, 2022, of the troubled debt restructuring provisions in the CARES Act
  • A delay of CECL implementation until January 1, 2022.

12/22/2020

Remittance transfer provider to pay $750,000 CMP

The CFPB has issued a Consent Order to Envios de Valores la Nacional Corp. ("La Nacional"), a remittance transfer provider incorporated in New York, headquartered in Colorado, and licensed 33 states and the District of Columbia. La Nacional provides remittance transfers from the U.S. to designated recipients primarily in the Dominican Republic, Mexico, Guatemala, El Salvador, Ecuador, Colombia, Peru, Nigeria, Honduras, and Nicaragua. The Bureau found that, since the Remittance Transfer Rule's effective date in 2013, La Nacional has engaged in thousands of violations of the Remittance Transfer Rule.

The Bureau found that La Nacional violated Regulation E by failing to provide refunds for cancellations and error claims when funds did not reach designated recipients on time, provide consumers reports of investigative findings, and treat international bill payment services as remittance transfers, among other infractions.

Under the Order, La Nacional will pay a $750,000 civil money penalty and correct its policies and practices. For additional details, see Remittance transfer provider settles with CFPB, in BankersOnline's penalty pages.

12/22/2020

OFAC adds six to SDN List

Treasury has reported that OFAC has designated the Vice President of the Nicaraguan Supreme Court of Justice, Marvin Ramiro Aguilar Garcia; a Deputy of the National Assembly, Walmaro Antonio Gutierrez Mercado; and a Chief of the Nicaraguan National Police in Leon, Fidel De Jesus Dominguez Alvarez, in an effort to target government officials that continue to assist the Ortega regime’s effort to undermine Nicaragua’s democracy. Those actions were taken under Executive Order 13851, “Blocking Property of Certain Persons Contributing to the Situation in Nicaragua.”

Treasury also reported that OFAC has targeted three entities controlled by the Cuban military with strategic roles in the Cuban economy. Two of the entities, Financiera Cimex S.A. and Kave Coffee, S.A., are subsidiaries of the third entity, the large Cuban government enterprise Grupo de Administración Empresarial S.A., and use their Panamanian incorporation to subvert international trade restrictions. These entities were targeted under the Cuban Assets Control Regulations.

For identification details on the three individuals and three entities targeted by OFAC's actions, see BankersOnline's OFAC Update.

12/22/2020

FHA foreclosure and eviction moratorium extended

The Federal Housing Administration has announced it is extending the foreclosure and eviction moratorium for single family FHA-insured mortgages for an additional two months, through February 28, 2021. The FHA is also extending through February 28, 2021, the deadline for single family borrowers with FHA-insured mortgages to request an initial COVID-19 forbearance from their mortgage servicer to defer or reduce their mortgage payments for up to six months, which can be extended for an additional six months.

To assist lenders and servicers in continuing to supply FHA-insured affordable mortgage financing despite the considerations for social distancing, today FHA also extended:

  • The timeframe for providing an insurance endorsement on single family mortgages in forbearance through March 31, 2021
  • Temporary re-verification of employment guidance and exterior-only appraisal inspection option through February 28, 2021
  • Temporary provisions for verification of self-employment, rental income, and 203(k) Rehabilitation Mortgage escrow accounts through February 28, 2021

12/22/2020

Bureau Advisory Opinion on special-purpose credit programs

The CFPB has announced it has issued an advisory opinion to address regulatory uncertainty regarding Regulation B, which implements the Equal Credit Opportunity Act, as it applies to certain aspects of special purpose credit programs (SPCPs).

Under Regulation B, discrimination is prohibited on certain prohibited bases in any aspect of a credit transaction, but it is not discrimination for a for-profit organization to provide SPCPs designed to meet special social needs. The creditor offering the SPCP must determine the status of its own program in that regard. The regulation provides general guidance on compliance.

The CFPB has issued its advisory opinion with the hope that more creditors will offer SPCPs and increase access to credit to underserved groups. Specifically, the Bureau seeks to clarify the content that a for-profit organization must include in a written plan that establishes and administers a SPCP under Regulation B. The advisory opinion also clarifies the type of research and data that may be appropriate to inform a for-profit organization’s determination that a SPCP would benefit a certain class of people.

12/21/2020

OFAC adds pressure on Venezuela's Maduro regime

On Friday, OFAC designated Ex-Cle Soluciones Biometricas C.A. for materially supporting the illegitimate President of Venezuela Nicolas Maduro Moros, including by providing goods and services that the Maduro regime used to carry out the fraudulent December 6, 2020, parliamentary elections. OFAC also designated Guillermo Carlos San Agustin and Marcos Javier Machado Requena for having acted for or on behalf of Ex-Cle Soluciones Biometricas C.A.

Identification details can be found in BankersOnline's OFAC Update.

12/21/2020

New Year brings new Nacha rule

Nacha has posted a notice on its site that a new rule on "Egregious Violations" will take effect on January 1, 2021.

The new Rule defines an “egregious violation” as a willful or reckless action by a Financial Institution, Originator, or Third-Party Sender, involving at least 500 entries or multiple entries totaling a minimum of $500,000. The ACH Rules Enforcement Panel will have the authority to determine whether a violation is “egregious.” If it is, the Panel can then determine whether it’s a Class 2 or Class 3 Rules violation. For Class 3 violations, Nacha will have the authority to report it to the ACH Operators, federal and state banking officials, consumer protection authorities, and other appropriate regulators and agencies.

12/21/2020

Bureau issues second piece of FDCPA final rule

On Friday, the CFPB announced a final rule to implement Fair Debt Collection Practices Act (FDCPA) requirements regarding certain disclosures for consumers. The rule requires debt collectors to provide, at the outset of collection communications, detailed disclosures about the consumer’s debt and rights in debt collection, along with information to help consumers respond. The rule requires debt collectors to take specific steps to disclose the existence of a debt to consumers, orally, in writing, or electronically, before reporting information about the debt to a consumer reporting agency (CRA). The rule prohibits debt collectors from making threats to sue, or from suing, consumers on time-barred debt.

The rule will become effective on November 30, 2021, with the rule reissuing Regulation F published on November 30, 2020.

12/21/2020

Mortgage servicer settles with CFPB

The Bureau has issued a consent order against Seterus, Inc. (Seterus) and Kyanite Services, Inc. (Kyanite), as Seterus’s successor in interest, based on the Bureau’s finding that Seterus violated the Consumer Financial Protection Act of 2010 (CFPA) and Regulation X. The Bureau found that Seterus’s actions resulted in delaying or depriving some borrowers of a reasonable opportunity to get their loss mitigation applications completed and evaluated and in some borrowers' failing to timely receive protections against prohibited foreclosure activities to which they were legally entitled.

The order requires Kyanite to pay $4,932,525 in total redress to approximately 11,866 of the consumers to whom Seterus sent a defective acknowledgment notice. The order also imposes a $500,000 civil money penalty and includes injunctive relief that would apply in the event Kyanite engages in mortgage servicing. At its height, Seterus, a former mortgage servicer based in North Carolina, serviced approximately 500,000 residential mortgage loans. Seterus is no longer operating. On February 28, 2019, after the relevant period covered by the Bureau’s investigation, Seterus was sold and its entire mortgage servicing portfolio was transferred to Nationstar Mortgage LLC, doing business as Mr. Cooper (with which the Bureau reached a separate settlement earlier this month.

12/21/2020

FinCEN proposes virtual currency and digital assets rules

The Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has issued a proposed rule to be published Wednesday in the Federal Register that would require banks and money services businesses (MSBs) to submit reports, keep records, and verify the identity of customers in relation to transactions above certain thresholds involving CVC/LTDA wallets not hosted by a financial institution (also known as “unhosted wallets”) or CVC/LTDA wallets hosted by a financial institution in certain jurisdictions identified by FinCEN.

The proposed rule complements existing BSA requirements applicable to banks and MSBs by proposing to add reporting requirements for CVC and LTDA transactions exceeding $10,000 in value. Pursuant to the proposed rule, banks and MSBs will have 15 days from the date on which a reportable transaction occurs to file a report with FinCEN. Further, the proposed rule would require banks and MSBs to keep records of a customer’s CVC or LTDA transactions and counterparties, including verifying the identity of their customers, if a counterparty uses an unhosted or otherwise covered wallet and the transaction is greater than $3,000.

Comments on this FinCEN proposal will be accepted for only 12 days from publication, through January 4, 2021.

  • UPDATE: Proposal and comment period changed— On January 15, FinCEN published [86 FR 3897] a supplemental NPR identifying additional authority for its proposed rule, providing additional information regarding the reporting form, and reopening the comment period. FinCEN is providing an additional 17 days (through 2/1/2021) for comments on the proposed reporting requirements regarding information on CVC or LTDA transactions greater than $10,000, or aggregating to greater than $10,000, that involve unhosted wallets or wallets hosted in a jurisdiction identified by FinCEN. FinCEN is providing an additional 45 days (through 3/1/2021) for comments on the proposed requirements that banks and MSBs report certain information regarding counterparties to transactions by their hosted wallet customers, and on the proposed recordkeeping requirements.
  • 12/21/2020

    Public housing authorities to receive $78M

    HUD Secretary Carson has announced the award of approximately $78 million to hundreds of public housing authorities to help residents of public housing and voucher-assisted housing increase their earned income and reduce their dependency on public assistance and rental subsidies. HUD's Family Self -Sufficiency (FSS) Program funding helps local public housing authorities to hire Service Coordinators who work directly with residents to connect them with existing programs and services in the local community. These Service Coordinators build relationships with networks of local service providers, who provide direct assistance to FSS participants. The broad spectrum of services made possible through FSS enables participating families to find jobs, increase earned income, reduce or eliminate the need for rental and/or welfare assistance, and make progress toward achieving economic independence and self-sufficiency, according to the HUD news release.

    12/21/2020

    The Bahamas improves AML/CFT standing

    The Financial Action Task Force (FATF) has announced The Bahamas has made significant progress in improving its AML/CFT regime. The Bahamas has strengthened the effectiveness of its AML/CFT system and addressed related technical deficiencies to meet the commitments in its action plan and remedy the strategic deficiencies identified by the FATF in October 2018.

    12/18/2020

    NCUA Board approves rules and proposals

    The National Credit Union Administration Board held the first of two consecutive open meetings in December. At the meeting, the Board approved these five items:

    • A final rule on subordinated debt.
    • A temporary final rule that extends regulatory relief measures in response to COVID-19.
    • A proposed rule that permits federal credit unions to purchase mortgage-servicing rights from other federal credit unions under certain conditions;
    • A proposed rule revising the definition of a service facility for multiple common bond federal credit unions; and
    • A proposed rule on overdraft policy

    12/18/2020

    OCC proposes SAR filing exemptions

    The OCC has invited comment on a proposed rule that would modify the requirements for national banks and federal savings associations to file suspicious activity reports. The proposal would amend the agency’s SAR regulations to allow the agency to issue exemptions from the requirements of those regulations. The OCC would be able to grant relief to national banks or federal savings associations that develop innovative solutions intended to meet Bank Secrecy Act requirements more efficiently and effectively. For exemption requests from the OCC’s SAR regulation that would also require an exemption from FinCEN’s SAR rules, the request would have to be filed with both the OCC and FinCEN.

    Comments will be accepted for 30 days following publication in the Federal Register.

    12/18/2020

    FTC crackdown on deceptive CBD product ads

    The Federal Trade Commission has announced the first law enforcement crackdown on deceptive claims in the growing market for cannabidiol (CBD) products. The FTC is taking action against six sellers of CBD-containing products for allegedly making a wide range of scientifically unsupported claims about their ability to treat serious health conditions, including cancer, heart disease, hypertension, Alzheimer’s disease, and others.

    The FTC is requiring each of the companies, and individuals behind them, to stop making such unsupported health claims immediately, and several will pay monetary judgments to the agency. The orders settling the FTC’s complaints also bar the respondents from similar deceptive advertising in the future, and require that they have scientific evidence to support any health claims they make for CBD and other products.

    The targeted companies include Bionatrol Health,LLC; Isle Reveine, LLC; EpicHouse LLC; CBD Meds, Inc.; HempMeCBD; Reef Industries, Inc.; and Steves Distributing, LLC

    12/18/2020

    Fed and FDIC adjust CRA thresholds

    The Federal Reserve Board and FDIC have jointly announced the annual adjustment to the asset-size thresholds used to define small bank and intermediate small bank under their Community Reinvestment Act (CRA) regulations. Financial institutions are evaluated under different CRA examination procedures based upon their asset-size classification. Those meeting the small and intermediate small institution asset-size thresholds are not subject to the reporting requirements applicable to large banks unless they choose to be evaluated as a large institution. The definitions of small and intermediate small institutions for CRA examinations will change on January 1, 2021, as follows:

    • "Small bank" means an institution that, as of December 31 of either of the prior two calendar years, had assets of less than $1.322 billion.
    • "Intermediate small bank" means a small institution with assets of at least $330 million as of December 31 of both of the prior two calendar years and less than $1.322 billion as of December 31 of either of the prior two calendar years.

    12/18/2020

    FHFA foreclosure prevention and refi report

    The Federal Housing Finance Agency has released its third quarter 2020 Foreclosure Prevention and Refinance Report. The report shows that Fannie Mae and Freddie Mac (the Enterprises) completed 539,451 foreclosure prevention actions in the third quarter of 2020, bringing to 5.2 million the number of troubled homeowners who have been helped during conservatorships; 4.5 million of those actions have helped troubled homeowners stay in their homes.

    Forbearance: newly initiated forbearance dropped significantly to 231 thousand in the third quarter from 1.5 million in the second quarter of 2020. The total number of loans in forbearance plans at the end of the quarter was 1 million, representing approximately 3.66 percent of the total loans serviced and 79 percent of total delinquent loans. A majority of the forbearance actions occurred as a result of the Enterprises' response to COVID-19 impacts.

    Mortgage Performance: The 60+ days delinquency rate decreased from 4.08 percent at the end of the second quarter to 3.58 percent at the end of the third quarter. Overall, delinquency rates remained much higher than pre-coronavirus rates due to the forbearance programs being offered to borrowers affected by the pandemic.

    • The Enterprises' serious (90 days or more) delinquency rate jumped to 3.14 percent at the end of the third quarter. This compared with 10.76 percent for Federal Housing Administration (FHA) loans, 5.77 percent for Veterans Affairs (VA) loans, and 5.16 percent for all loans (industry average).

    Foreclosure starts decreased 10 percent from 7,551 in the second quarter to 6,809 in the third quarter of 2020.

    Refinances increased to 1.8 million in the third quarter, from 1.5 in the first quarter of 2020.

    REO inventory decreased 25 percent in the third quarter.

    12/18/2020

    FHFA proposes Enterprise Liquidity Requirements

    The Federal Housing Finance Agency (FHFA) has announced a proposed rule regarding liquidity requirements for Fannie Mae and Freddie Mac (the Enterprises). The proposal builds on existing FHFA guidance and the experience gained from managing the Enterprises' liquidity positions in conservatorship.

    Among other things, the proposal seeks to implement minimum Enterprise liquidity and funding requirements, daily management reporting of the Enterprises' liquidity positions, monthly public disclosure reporting requirements, and other liquidity-related requirements. It includes four liquidity requirements designed to ensure that the Enterprises are a source of strength for the mortgage market during downturns in the economy, and to incentivize the Enterprises to issue an appropriate and stable mix of debt over the long term. To protect taxpayers and support the mortgage market, the proposed rule takes into account the Enterprises' lack of access to the Federal Reserve Bank discount window, unique structure, and public charter. Currently, the Enterprises would meet or exceed all requirements of the proposed rule.

    Comments on the proposal will be accepted for 60 days following publication in the Federal Register

    12/18/2020

    OCC November enforcement actions

    The OCC has released a list of enforcement actions taken in November, which included:

    12/17/2020

    FATF updates COVID-19 report

    The FATF issued a report in May 2020 highlighting COVID-19-related money laundering and terrorist financing risks and policy responses. Yesterday it released an update to the report, highlighting the latest developments.

    Using input from the FATF Global Network of over 200 countries and jurisdictions, and from private and public sector webinars in July and September, the update details how criminals continue to exploit the crisis. A selection of case studies illustrates how the risks have evolved as the pandemic has progressed, and how authorities have dealt with them. These include mounting cases of counterfeiting medical goods, cybercrime, investment fraud, charity fraud and abuse of economic stimulus measures.

    To respond to evolving risks, FATF urged authorities and the private sector need to take a risk-based approach, as required by the FATF Standards. This means mitigating the money laundering and terrorist financing risks without disrupting essential and legitimate financial services or driving financial activities towards unregulated service providers.

    12/17/2020

    Supporters of Iranian petrochemical sales sanctioned

    The Treasury Department has announced that OFAC has designated four entities for facilitating the export of Iranian petrochemical products by Triliance Petrochemical Co. Ltd., an entity designated by Treasury in January 2020. These China- and United Arab Emirates-based companies have provided Triliance with critical shipping services or conducted financial transactions on behalf of the company, enabling Triliance to continue brokering and moving Iranian petrochemical exports.

    The State Department concurrently imposed sanctions on Vietnam Gas and Chemicals Transportation Corporation in connection with significant transactions for the transport of petroleum products from Iran, and on the company’s Managing Director, Vo Ngoc Phung, for serving as a principal executive officer of the company.

    Identification information for the entities and individual designated by OFAC and the State Department can be found in BankersOnline's OFAC Update.

    12/17/2020

    $5M from HUD to revitalize neighborhoods

    HUD Secretary Carson yesterday awarded nearly $5 million to eleven communities to help create plans to redevelop severely distressed HUD assisted housing and revitalize neighborhoods. Funded through HUD's Choice Neighborhoods program, these grants will help local leaders craft comprehensive, homegrown plans to revitalize and transform their neighborhoods.

    12/17/2020

    FOMC Statement issued

    The Federal Reserve Board has released the Statement of the Federal Open Market Committee following its December 15–16 meeting.

    "The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee's maximum employment and price stability goals. These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses."

    Also released were tables and charts summarizing the economic projections made by Committee participants for the meeting.

    12/17/2020

    2021 affordable housing goals for Fannie and Freddie

    The FHFA has announced its 2021 affordable housing goals for the Enterprises, Fannie Mae and Freddie Mac. Due to the pandemic, the goals have been established only for one year, and are unchanged from the current benchmarks, which expire December 31, 2020.

    The FHFA has also issued an advance notice of proposed rulemaking seeking input on issues that FHFA may address in future housing goals rulemaking. FHFA plans to issue a proposed and final rule in 2021 that will establish housing goal benchmarks for 2022 and beyond. The ANPR provides an opportunity for the public to provide input on issues that will help ensure the housing goals benchmarks continue to effectively support affordable housing. The deadline for submitting responses to the ANPR is February 28, 2021.

    12/17/2020

    Fed Board joins world "greening the system" group

    The Federal Reserve Board has announced that it has formally joined the Network of Central Banks and Supervisors for Greening the Financial System, or NGFS, as a member. The NFGS supports the exchange of ideas, research, and best practices on the development of environment and climate risk management for the financial sector, bringing together central banks and supervisory authorities from around the world.

    12/17/2020

    CFPB: Avoiding reverse-mortgage scams

    The CFPB has posted a Bureau Blog article, "Avoid reverse mortgage scams," explaining reverse mortgage shopping scams and how to avoid them. As a result of the economic uncertainty caused by the COVID-19 pandemic, scammers may be targeting older homeowners through reverse mortgage schemes. The article describes several such schemes, and offers tips on how to avoid them.

    12/17/2020

    Mortgage performance declines

    The OCC has reported the performance of first-lien mortgages in the federal banking system declined during the third quarter of 2020. The OCC Mortgage Metrics Report, Third Quarter 2020 showed that 92.5 percent of mortgages included in the report were current and performing at the end of the quarter, compared to 96.4 percent a year earlier. The percentage of seriously delinquent mortgages—mortgages that are 60 or more days past due and all mortgages held by bankrupt borrowers whose payments are 30 or more days past due—was 5.8 percent in the third quarter of 2020, compared to 6.8 percent in the prior quarter and 1.5 percent a year ago.

    Servicers initiated 369 new foreclosures during the third quarter of 2020­, a 48.2 percent increase from the previous quarter and a 98.3 percent decrease from a year ago. Events associated with the COVID-19 pandemic, including foreclosure moratoriums, caused significant decreases in these metrics. Servicers completed 14,097 mortgage modifications in the third quarter of 2020, and 40.8 percent of the modifications reduced borrowers’ monthly payments. Of these 14,097 modifications, 10,050, or 71.3 percent, were “combination modifications”— modifications that included multiple actions affecting affordability and sustainability of the loan, such as an interest rate reduction and a term extension. Among the 10,050 combination modifications completed during the quarter, 78.1 percent included capitalization of delinquent interest and fees, 69.9 percent included an interest rate reduction or freeze, 54.4 percent included a term extension and 47.4 percent included principal deferral. Of the modifications with a single action, 3,692 or 91.9 percent received a term extension.

    The first-lien mortgages included in the OCC’s quarterly report comprise 27 percent of all residential mortgage debt outstanding in the United States or approximately 14.4 million loans totaling $2.87 trillion in principal balances.

    12/17/2020

    FHA Catalyst Claims Module updated

    The FHA has announced the implementation of additional functionality in its FHA Catalyst: Claims Module, achieving full, digital submission capabilities for all FHA Single Family Title II forward mortgage claim types and the elimination of manual, labor intensive paper-based claim submission processes for servicers of FHA-insured mortgages. New claim types available in the module include electronic submissions for FHA’s Claims Without Conveyance of Title (CWCOT) program, augmenting the programmatic streamlining made to this alternative conveyance method announced by FHA in July. Servicers submitting claims to FHA for insurance can now use the FHA Catalyst: Claims Module for all 17 Single Family forward mortgage claim types, including FHA’s special COVID-19 National Emergency Standalone Partial Claim and other home retention claim types designed to help homeowners regain sustainable homeownership as they recover from the financial effects of the COVID-19 global pandemic.

    12/16/2020

    Mortgage data analytics company settles FTC allegations

    The FTC has announced a mortgage industry data analytics company will be required to implement a comprehensive data security program as part of a settlement resolving Federal Trade Commission allegations that the firm failed to ensure one of its vendors was adequately securing personal data about tens of thousands of mortgage holders. The complaint filed by the FTC alleged that Texas-based Ascension Data & Analytics, LLC violated the Gramm-Leach Bliley Act’s Safeguard Rule, which requires financial institutions to develop, implement, and maintain a comprehensive information security program. As part of that program, financial institutions must oversee their third-party vendors, by ensuring they are capable of implementing and maintaining appropriate safeguards for customer information, and requiring them to do so by contract.

    The FTC alleged that a vendor, OpticsML, which Ascension hired to perform text recognition scanning on mortgage documents, stored the contents of the documents on a cloud-based server in plain text, without any protections to block unauthorized access, such as requiring a password or encrypting the information. The documents contained sensitive information about mortgage holders and others, such as names, dates of birth, Social Security numbers, loan information, credit and debit account numbers, drivers’ license numbers, or credit files. As a result of the inadequate security, the cloud-based server containing the mortgage data was accessed dozens of times.

    12/16/2020

    Final rule: Brokered deposits and interest rate restrictions

    The FDIC has issued a final rule revising its regulations relating to the brokered deposits and interest rate restrictions that apply to less than well capitalized insured depository institutions (IDIs). For brokered deposits, the final rule establishes a new framework for analyzing certain provisions of the “deposit broker” definition, including “placing deposits,” “facilitating the placement of deposits,” and “primary purpose.” For the interest rate restrictions, the FDIC amended its methodology for calculating the national rate, the national rate cap, and the local market rate cap. Further, the FDIC explained when non-maturity deposits are accepted and when non-maturity deposits are solicited for purposes of applying the brokered deposits and interest rate restrictions.

    With respect to brokered deposits, the final rule:

    • Clarifies when a person meets the "placing deposits” and “facilitation” parts of the deposit broker definition;
    • Provides that a person with an exclusive deposit placement arrangement with one IDI will not meet the “deposit broker” definition;
    • Provides that the “primary purpose” exception will apply when, with respect to a particular business line, the primary purpose of the agent’s or nominee’s business relationship with its customers is not the placement of funds with depository institutions;
    • Designates a list of business relationships that meet the primary purpose exception;
    • Requires written notice for certain designated exceptions;
    • Allows entities that do not meet one of the designated business relationships to apply for a primary purpose exception;
    • Restates that brokered CDs will continue to be considered brokered deposits; and
    • Affirms that third parties that either place or assist in the placement of deposits with a primary purpose of encouraging savings will not qualify for the primary purpose exception.

    With respect to interest rate restrictions, the final rule:

    • Defines the “National Rate” as the average (weighted by market share of domestic deposits) of rates paid by all IDIs and insured credit unions;
    • Defines the “National Rate Cap” as the higher of (1) the national rate, plus 75 basis points; or (2) for maturity deposits, 120 percent of the current yield on similar maturity U.S. Treasury obligations and, for non-maturity deposits, the federal funds rate plus 75 basis points; and
    • Defines “Local Market Rate Cap” as 90 percent of the highest interest rate paid on a particular deposit product in the IDI’s local market area.

    With respect to non-maturity deposits, the final rule:

    • Defines when non-maturity deposits are considered solicited or accepted for purposes of the brokered deposits and interest rate restrictions.

    The final rule will become effective April 1, 2021; full compliance with the revised brokered deposit regulation is extended to January 1, 2022.

    12/16/2020

    Enterprise non-performing loan sales report

    The Federal Housing Finance Agency has released the latest report on the sale of non-performing loans (NPLs) by Fannie Mae and Freddie Mac (the Enterprises). The Enterprise Non-Performing Loan Sales Report includes sales information about NPLs sold through June 30, 2020 and reflects borrower outcomes on NPLs sold through December 31, 2019, and reported through June 30, 2020. The sale of NPLs reduces the number of delinquent loans in the Enterprises' portfolios and transfers credit risk to the private sector. The FHFA and the Enterprises impose requirements on NPL buyers designed to achieve more favorable outcomes for borrowers than foreclosure. The report shows that from program inception in 2014 through June 30, 2020, the Enterprises sold 128,471 NPLs with a total unpaid principal balance of $24.1 billion. From December 31, 2015, to June 30, 2020, the number of loans one or more years delinquent held in the Enterprises’ portfolios decreased by 70 percent.

    12/16/2020

    Proposal to permit additional SAR filing exemptions

    FDIC FIL-114-2020, issued yesterday, announced the FDIC Board of Directors has authorized publication of a notice of proposed rulemaking that would amend the FDIC’s Suspicious Activity Report (SAR) regulation [12 CFR Part 353] to permit the FDIC to issue additional, case-by-case exemptions from SAR filing requirements to FDIC-supervised institutions. The FDIC expects that the amendments to the SAR regulation will reduce regulatory burden on financial institutions and encourage technological innovation in the banking sector.

    The FDIC’s current SAR regulation allows exemptions from SAR filing requirements for physical crimes (robberies and burglaries) and lost, missing, counterfeit, or stolen securities. The proposed amendments would allow the FDIC, in conjunction with FinCEN, to grant exemptions to FDIC-supervised institutions that develop innovative solutions to otherwise meet Bank Secrecy Act requirements more efficiently and effectively. The FDIC is proposing this rule as a proactive measure to address the likelihood that FDIC-supervised institutions will leverage existing or future technologies to report, share, or disclose suspicious activity in a different manner.

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

    Publication and Comment Period Update: Scheduled for publication on 1/22/2021, with a comment period ending 2/22/2021.

    12/15/2020

    Agencies issue rule on equal treatment of faith-based organizations

    On Monday, the U.S. Department of Health and Human Services announced a joint final rule with eight other agencies—the Department of Justice, the Department of Homeland Security, the Department of Labor, the Department of Education, the Department of Housing and Urban Development, the Department of Agriculture, the Agency for International Development, and the Department of Veterans Affairs—to implement Executive Order No. 13831, on the Establishment of a White House Faith and Opportunity Initiative (May 3, 2018). The rule was issued to ensure that faith-based and secular organizations are treated equally in HHS-supported programs, and it clarifies that faith-based organizations do not lose their legal protections and rights just because they participate in federal programs and activities.

    The rule is scheduled for Federal Register publication on Thursday, December 17, and will become effective on January 18, 2021.

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