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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.

12/22/2020

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

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

12/21/2020

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

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.

12/21/2020

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

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.

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.

12/18/2020

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:

12/18/2020

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

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

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

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

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

12/17/2020

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

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

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.

12/17/2020

$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

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

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

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

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

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.

12/16/2020

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.

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

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.

12/15/2020

FBAR deadline extended again

FinCEN has posted Notice 2020-1 to extend yet again the filing date for certain Report of Foreign Bank and Financial Accounts (FBAR) filings.

Because a proposed rulemaking FinCEN issued on March 10, 2016, which proposes to revise the regulations implementing the Bank Secrecy Act regarding FBARs is not yet finalized, FinCEN is further extending the filing due date to April 15, 2022, for individuals whose filing due date for reporting signature authority was previously extended by Notice 2019-1. This extension applies to the reporting of signature authority held during the 2020 calendar year, as well as all reporting deadlines extended by previous Notices 2019-1, 2018-1, 2017-1, 2016-1, 2015-1, 2014-1, 2013-1, 2012-1 and 2012-2, along with Notices 2011-1 and 2011-2.

For all other individuals with an FBAR filing obligation, the filing due date remains April 15, 2021.

12/15/2020

FEMA suspending communities in two states on Thursday

FEMA has published a notice at 85 FR 81142 in today's Federal Register identifying communities in Iowa and Wisconsin authorized for the sale of flood insurance under the National Flood Insurance Program that are now scheduled for suspension from the program on December 17 because of noncompliance with the floodplain management requirements of the program.

  • IA: Aplington, Aredale, Butler County (unincorporated areas), Clarksville, Dumont, Greene, New Hartford, Parkersburg, Sheldon, and Shell Rock.
  • WI: Argyle, Belmont, and South Wayne

FEMA's notice reminds the public that notices of scheduled suspensions will no longer be published in the Federal Register as of June 2021, but will be available at www.fema.gov.

12/15/2020

OFAC announces new sanctions list

OFAC has announced it has made a new Non-SDN Menu Based Sanctions (NS-MBS) List available. The NS-MBS is designed as a reference tool that identifies persons subject to certain non-blocking menu-based sanctions that have been imposed under statutory or other authorities, including certain sanctions described in Section 235 of the Countering America’s Adversaries Through Sanctions Act (CAATSA) and the Ukraine Freedom Support Act of 2014, as amended by CAATSA. When blocking is chosen as a menu-based sanction and imposed on a person, that person is identified solely on the OFAC SDN List. Any other menu-based sanctions imposed on that person are also identified on the SDN List.

In addition, the names of Ismail DEMIR, Mustafe Alper DENIZ, Serhat GENCOGLU, and Faruk YIGIT were added to the SDN List. For identification information, see BankersOnline's OFAC Update.

12/15/2020

OFAC sanctions Iranian intel officers involved in abduction

The Treasury Department has designated two senior officials of Iran’s Ministry of Intelligence and Security (MOIS) who were involved in the abduction of Robert A. “Bob” Levinson on Iran’s Kish Island on or about March 9, 2007. Senior Iranian officials authorized Levinson’s abduction and detention and launched a disinformation campaign to deflect blame from the Iranian regime. The individuals designated today, Mohammad Baseri and Ahmad Khazai, acted in their capacity as MOIS officers in the abduction, detention, and probable death of Mr. Levinson.

For identity information on Baseri and Khazai, see BankersOnline's OFAC Update.

12/15/2020

2019 CRA data available

The OCC, Federal Reserve and FDIC have jointly announced the availability of data on small business, small farm, and community development lending reported by certain commercial banks and savings associations, in accordance with the Community Reinvestment Act.

An FFIEC disclosure statement on the reported 2019 CRA data, in electronic form, is available for each reporting commercial bank and savings association. The FFIEC also prepared aggregate disclosure statements of small business and small farm lending for all of the metropolitan statistical areas and non-metropolitan counties in the United States and its territories. These statements are available for public inspection on the FFIEC website (www.ffiec.gov/cra).

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.

12/15/2020

NCUA Board meeting agenda

The National Credit Union Administration has published notices of meetings of its Board on December 17 and 18, 2020. On Thursday, December 17, the published agenda includes consideration of NCUA rules and regulations on:

  • Regulatory relief in response to COVID-19
  • Mortgage servicing rights
  • Overdraft policy
  • Subordinated debt

The agenda in the notice for the December 18 meeting includes consideration of:

  • NCUA's Rules and Regulations - Annual operating fee assessment
  • NCUA's 2021-2022 budget
  • Board briefing on NCUA's operating fee schedule and overhead transfer rate

The remainder of the December 18 meeting will be closed to the public.

12/15/2020

SBA disaster loans for AL, GA and TN

The Small Business Administration has announced Working Capital Disaster Loans are available in the following counties as the result of drought:

  • Alabama: Jackson and Madison Counties
  • Georgia: Dade County
  • Tennessee: Coffee, Franklin, Grundy, Hamilton, Lincoln, Marion, Moore, and Sequatchie Counties

12/14/2020

Swap Margin Rule - legacy swaps

The OCC has issued Bulletin 2020-108 concerning the Joint Statement issued by the OCC and Board of Governors of the Federal Reserve System to address the ability of a covered swap entity subject to the OCC’s or Federal Reserve Board’s jurisdiction, respectively, to service the covered swap entity’s cross-border clients. The OCC and the Federal Reserve Board are issuing this statement in light of the approaching end of the transition period during which the laws of the European Union have continued to apply in the United Kingdom after the United Kingdom’s withdrawal (commonly referred to as Brexit) from the European Union. The OCC’s swap margin rule applies to certain national banks, federal savings associations, and federal branches and agencies of foreign banking organizations (collectively, banks).

The OCC expects the Joint Statement to have no impact on community banks.

12/14/2020

CFPB Fall 2020 rulemaking agenda

The Bureau has published its Fall 2020 Rulemaking Agenda, which lists the regulatory matters that it expects to focus on for the remainder of 2020 through the spring of 2021. Key among these are:

  • In addition to completing and publishing the October 30, 2020, final rule on debt collection, the Bureau has also engaged in testing of time-barred debt disclosures that were not the focus of the May 2019 proposal. In early 2020, after completing the testing, the Bureau published a supplemental NPRM related to time-barred debt disclosures. The Bureau expects to issue a final rule in December 2020 addressing, among other things, disclosures related to the validation notice and time-barred debt.
  • The Bureau is continuing a rulemaking to address the anticipated expiration of the LIBOR index On Monday, November 30, regulatory authorities in the UK announced that they are considering extending the availability of US$ LIBOR for legacy loan contracts until June 2023 instead of the end of 2021. In light of this development, the Bureau anticipates publishing the final rulemaking on the LIBOR transition later than the January 2021 target identified in the Unified Agenda.
  • The Bureau is participating in interagency rulemaking processes with the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Federal Housing Finance Agency to develop regulations to implement the amendments made by the Dodd-Frank Act to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) concerning appraisals. These amendments require implementing regulations for quality control standards for automated valuation models (AVMs). The Agencies will continue to develop a proposed rule to implement the Dodd-Frank Act’s AVM amendments to FIRREA.
  • The Bureau anticipates issuing an NPRM in spring 2021 to consider possible amendments to the Bureau’s mortgage servicing rules to address actions required of servicers working with borrowers affected by natural disasters or other emergencies.
  • The Bureau anticipates publishing two NPRMs in early 2021 concerning possible revisions to the 2015 Home Mortgage Disclosure Act (HMDA). One of these follows an Advance Notice of Proposed Rulemaking in May 2019 concerning certain data points that are required to be reported under the HMDA rule and coverage of certain business or commercial purpose loans, addressing concerns about regulatory burden. The second would address the public disclosure of HMDA data in light of consumer privacy interests, so that stakeholders can concurrently consider and comment on the collection and reporting of data points and public disclosure of those data points. This NPRM will follow up on the Bureau’s 2018 final policy guidance regarding disclosure of the HMDA data. (These proposed rules may not be released by the anticipated February target in the Unified Agenda.)

The Bureau has also added two new items to its long-term agenda. First, the Bureau will weigh feedback from its assessment of the TRID Rule suggesting that modifications of certain aspects of that rule make it more effective. Second, the CFPB has begun research that focuses on providing information to consumers about the costs associated with payday loans. The results of the qualitative testing will inform the Bureau in deciding whether and how to move forward with quantitative testing that might support possible future rulemaking or other actions related to payday loan disclosures.

In August 2020, the Bureau also began its review of Regulation Z rules that implement the CARD Act of 2009, with a focus on an interim final rule and three final rules published by the Federal Reserve Board from July 2009 to April 2011.

12/14/2020

McWilliams remarks at Federal Reserve Bank Supervision Conference

In a presentation at the Federal Reserve Board Conference on Bank Supervision: Past, Present, and Future, FDIC Chairman McWilliams discussed the steps taken by the FDIC in the last two years to improve its supervisory program. She noted the FDIC's task is really quite simple:

  • Foster a technological transformation in the industry we oversee, promoting a safe, dynamic, technology-driven marketplace for financial services;
  • Develop a more dynamic supervision model that improves FDIC effectiveness and promotes financial stability; and
  • Do it all in a manner that reduces unnecessary regulatory burden and cuts compliance costs for banks.

McWilliams said of the agency's current project to leverage technology to engage more regularly and more informally to discuss operations, understanding emerging risks, and resolve questions surrounding new products and services, “When we are successful, this system will reduce the reporting burden for institutions and the compliance costs of an annual examination, while simultaneously providing greater visibility for the FDIC into an institution's financial health and into the health of the entire financial system. And, because we are engaging more regularly, the FDIC will be able to help institutions identify and mitigate risks to financial health or consumers before they become bigger, more challenging problems.”

12/14/2020

CFPB settles with home-alarm company

The Bureau and the Arkansas Attorney General have settled with Alder Holdings, LLC, resolving their allegations that Alder failed to provide proper notices under the Fair Credit Reporting Act. Alder is a Utah-based company that sells home-security and alarm systems, primarily door-to-door, throughout the country and has sold its products and services to over 115,000 customers. The Bureau and Arkansas filed a proposed stipulated final judgment and order in the United States District Court for the Eastern District of Arkansas. If entered by the court, the settlement would require Alder to pay a $600,000 civil money penalty, $100,000 of which will be offset if Alder pays that amount to settle related litigation with the State of Arkansas that is currently pending in state court in Arkansas. The settlement would also require Alder to provide proper notices under the FCRA.

12/14/2020

FDIC Board meeting tomorrow

The FDIC Board of Directors will hold an open meeting at 10:00 a.m. on Tuesday, December 15, 2020, via a and subsequently made available on-demand approximately one week after the event.

Selected items from the Summary Agenda for the meeting include—

  • Final Rule on Revising the FDIC’s Regulations Concerning Collection of Delinquent Civil Money Penalties.
  • Notice of Proposed Rulemaking on Computer-Security Incident Notification.
  • Notice of Proposed Rulemaking on Additional Exemptions to Suspicious Activity Report Requirements (12 CFR part 353).
  • Final Rules on the Removal and Rescission of Transferred OTS Regulations
  • Combined Final Rule on Brokered Deposits and Interest Rate Restrictions.
  • Final Rule on Parent Companies of Industrial Banks and Industrial Loan Companies.

12/14/2020

New charts for FOMC economic projections

The Federal Reserve has released illustrative examples of new charts that will be included in the Federal Open Market Committee's quarterly Summary of Economic Projections. The new charts show FOMC participants' judgments of uncertainty and risks related to their projections of the change in real gross domestic product, the unemployment rate, personal consumption expenditures (PCE) inflation, and core PCE inflation.

The first new illustrative chart shows the proportion of participants who indicated that the uncertainty surrounding their projections for each variable was higher or lower relative to the average level of uncertainty over the past 20 years. The second new illustrative chart shows the proportion of participants who saw the risks to their projections as weighted toward the upside or downside.

12/11/2020

FinCEN issues new 314(b) sharing information

In prepared remarks at the American Bankers Association/ American Bar Association Financial Crimes Enforcement Conference, Kenneth Blanco, FinCEN Director, announced that FinCEN was issuing important guidance clarifying how financial institutions may fully utilize FinCEN’s 314(b) information sharing program. A new 314(b) Fact Sheet was issued yesterday as the result of the feedback provided by financial institutions and through our own experiences at FinCEN. It is intended to clarify in greater detail the circumstances where 314(b) applies, with the hope of enhancing participation and utility of the 314(b) program. [FinCEN rescinded previously issued guidance (FIN-2009-G002) and a former administrative ruling (FIN-2012-R006) with the publication of the new Fact Sheet.]

The main themes of the 314(b) Fact Sheet are:

  • Financial institutions may share under Section 314(b) information relating to activities that they suspect may involve possible terrorist financing or money laundering. This includes, but is not limited to, information about activities they suspect involve the proceeds of a specified unlawful activity (SUA). Importantly, our guidance clarifies that:
  • Financial institutions do not need to have specific information that these activities directly relate to proceeds of an SUA, or to have identified specific proceeds of an SUA being laundered.
  • Financial institutions do not need to have made a conclusive determination that the activity is suspicious.
  • Financial institutions may share information about activities as described, even if such activities do not constitute a “transaction.” This includes, for example, an attempted transaction, or an attempt to induce others to engage in a transaction. This clarification is significant and addresses some uncertainty with sharing incidents involving possible fraud, cybercrime, and other predicate offenses when financial institutions suspect those offenses may involve terrorist acts or money laundering activities.
  • In addition, the guidance notes that there is no limitation under Section 314(b) on the sharing of personally identifiable information, or the type or medium of information that can be shared (to include sharing information verbally).
  • An entity that is not itself a financial institution under the Bank Secrecy Act may form and operate an association of financial institutions whose members share information under Section 314(b). Notably, this includes compliance service providers.
  • An unincorporated association governed by a contract among the group of financial institutions that constitutes its members may engage in information sharing under Section 314(b).

Director Blanco also discussed FinCEN’s COVID-19 Response, Expansion of Rapid Response Program, Guidance to Financial Institutions, FinCEN Advisories, Medical Fraud, Imposter Scams and Money Mules, Cybercrime and Cyber-Enabled Crime , Unemployment Insurance Fraud, Charities Fact Sheet, COVID-related SAR Filings, Rulemakings, and Stakeholder Engagement.

12/11/2020

HUD awards $46M for vets housing assistance

HUD yesterday announced it is awarding $46 million in rental assistance and housing vouchers to help veterans at risk of experiencing homelessness. The supportive housing assistance is provided through the HUD-Veterans Affairs Supportive Housing (HUD-VASH) Program, which combines rental assistance from HUD with case management and clinical services provided by the VA.

12/11/2020

Payment processor and CEO pay $1.5M for consumer fraud

The Federal Trade Commission has announced that Complete Merchant Solutions, LLC (CMS) and its former CEO, Jack Wilson, have settled charges that they illegally processed millions of dollars in consumer credit card payments for fraudulent schemes when they knew or should have known that the schemes were defrauding consumers. Those schemes include Apply Knowledge and Tarr, which were ultimately shut down by an FTC enforcement action, and USFIA, which was shut down following an enforcement action by the U.S. Securities and Exchange Commission.

The FTC alleges that CMS and Wilson ignored clear red flags of illegal conduct by those schemes, such as high rates of consumer chargebacks, use of multiple merchant accounts to artificially reduce chargeback rates so as to evade detection by banks and the credit card associations, submission of sham chargeback reduction plans, and the use of merchant accounts to process payments for products and services for which the merchant did not get approval from the bank holding the accounts.

The proposed order requires CMS and Wilson to pay $1.5 million to the FTC for use in providing refunds to harmed consumers. In addition, among other restrictions, CMS and Wilson are banned from acting as a payment processor for any companies that offer “free trials” for nutraceutical products, and prohibited from engaging in credit card laundering and helping clients evade fraud monitoring programs established by financial institutions.

12/11/2020

Bureau issues two final QM rules

The Consumer Financial Protection Bureau has issued two final rules related to qualified mortgage (QM) loans. The first final rule, the General QM Final Rule, replaces the current requirement for General QM loans that the consumer’s debt-to-income ratio (DTI) not exceed 43 percent with a limit based on the loan’s pricing. In the second final rule issued today, the Bureau creates a new category for QMs, Seasoned QMs.

Under the General QM Final Rule, a loan receives a conclusive presumption that the consumer had the ability to repay if the annual percentage rate does not exceed the average prime offer rate for a comparable transaction by 1.5 percentage points or more as of the date the interest rate is set. A loan receives a rebuttable presumption that the consumer had the ability to repay if the annual percentage rate exceeds the average prime offer rate for a comparable transaction by 1.5 percentage points or more but by less than 2.25 percentage points. In addition, the General QM Final Rule:

  • Provides higher pricing thresholds for loans with smaller loan amounts, for certain manufactured housing loans, and for subordinate-lien transactions.
  • Retains the General QM loan definition’s existing product-feature and underwriting requirements and limits on points and fees.
  • Requires lenders to consider a consumer’s DTI ratio or residual income, income or assets other than the value of the dwelling, and debts and removes appendix Q and provides more flexible options for creditors to verify the consumer’s income or assets other than the value of the dwelling and the consumer’s debts for QM loans.

The Seasoned QM Final Rule creates a new category of Seasoned QMs for first-lien, fixed-rate covered transactions that have met certain performance requirements, are held in portfolio by the originating creditor or first purchaser for a 36-month period, comply with general restrictions on product features and points and fees, and meet certain underwriting requirements. To be eligible to become a Seasoned QM, a loan must be a first-lien, fixed-rate loan with no balloon payments and must meet certain other product restrictions. As under the General QM Final Rule, the creditor must also consider the consumer’s DTI ratio or residual income, income or assets other than the value of the dwelling, and debts and verify the consumer’s income or assets other than the value of the dwelling and the consumer’s debts. The loan can have no more than two delinquencies of 30 or more days and no delinquencies of 60 or more days at the end of the seasoning period. The creditor or first purchaser also generally must hold the loan in portfolio until the end of the seasoning period.

These final rules will take effect 60 days after publication in the Federal Register. The General QM Final Rule will have a mandatory compliance date of July 1, 2021. Between the General QM Final Rule’s effective date and mandatory compliance date, there will be an optional early compliance period during which creditors will be able to use either the current General QM definition or the revised General QM definition. The Seasoned QM Final Rule will apply to covered transactions for which creditors receive an application on or after the effective date.

  • PUBLICATION AND EFFECTIVE DATE UPDATE: These rules were published at 85 FR 86308 (General Qualified Loan Definition) and 85 FR 86402 (Seasoned Qualified Mortgage Loan Definition) on December 29, 2020. Both rules become effective March 1, 2021.

12/11/2020

OFAC targets more human rights abusers

Yesterday, OFAC targeted perpetrators of serious human rights abuse across several countries in the Western Hemisphere, Middle East, and Eurasia. Yesterday’s actions were taken under Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act, and targets perpetrators of serious human rights abuse and corruption. OFAC also designated one Yemeni individual pursuant to E.O. 13611, “Blocking Property of Persons Threatening the Peace, Security, or Stability of Yemen.”

For information on the individuals and entities OFAC designated in these actions, see BankersOnline's OFAC Update.

12/11/2020

COVID 19-related loan flexibilities extended

The Federal Housing Finance Agency has announced that Fannie Mae and Freddie Mac (the Enterprises) will extend several loan origination flexibilities through January 31, 2021. The changes are to ensure continued support for borrowers during the COVID-19 national emergency. The flexibilities were set to expire on December 31, 2020.

Extended flexibilities include:

  • Alternative appraisals on purchase and rate term refinance loans
  • Alternative methods for documenting income and verifying employment before loan closing; and
  • Expanding the use of powers of attorney to assist with loan closings.

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