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  • Senate Banking Committee Approves Financial Regulatory Relief Bill

    Federal Issues

    On December 5, the Senate Banking Committee approved bill S.2155, Economic Growth, Regulatory Relief, and Consumer Protection Act, which would alter certain financial regulations under the Dodd-Frank Act of 2010. While not as sweeping as previous legislative relief proposals (see previous InfoBytes coverage on House Financial CHOICE Act of 2017), the bill was introduced and passed the Committee with bipartisan support. The bill’s highlights include, among other things:

    • Consumer Access to Credit. The bill deems mortgage loans held in portfolios by insured institutions with less than $10 billion in assets to be “qualified mortgages” under TILA, and removes the three-day waiting period for TILA-RESPA Integrated Disclosures if the second credit offer is a lower rate. The bill also instructs the CFPB to provide “clearer, authoritative guidance” on certain issues such as the applicability of TRID to mortgage assumptions and construction-to-permanent loans. Additionally, the bill eases appraisal requirements on certain mortgage loans and exempts small depository institutions with low mortgage originations from certain HMDA disclosure requirements.
    • Regulatory Relief for Certain Institutions. The bill exempts community banks from Section 13 of the Bank Holding Company Act if they have, “[i] less than $10 billion in total consolidated assets, and [ii] total trading assets and trading liabilities that are not more than five percent of total consolidated assets” – effectively allowing for exempt banks to engage in the trading of, or holding ownership interests in, hedge funds or private equity funds. Additionally, the bill raises the threshold of the Federal Reserve’s Small Bank Holding Company Policy Statement and the qualification for certain banks to have an 18-month examination cycle from $1 billion to $3 billion.
    • Protections for Consumers. Included in an adopted “manager’s amendment,” the bill requires credit bureaus to provide consumers unlimited free security freezes and unfreezes. The bill also limits certain medical debt information that can be included on veterans’ credit reports.
    • Changes for Bank Holding Companies. The bill raises the threshold for applying enhanced prudential standards from $50 billion to $250 billion.

    The bill now moves to the Senate, which is not expected to take up the package before the end of this year.

    Federal Issues Senate Banking Committee Dodd-Frank Federal Legislation TILA RESPA TRID Federal Reserve OCC FDIC Mortgages HMDA Credit Reporting Agency

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  • Federal Banking Agencies Amend CRA Regulations to Conform With HMDA Regulation Changes

    Agency Rule-Making & Guidance

    On November 24, the Federal Reserve Board, FDIC, and OCC published a joint final rule in the Federal Register, amending their respective Community Reinvestment Act (CRA) regulations. The amended regulations conform with the CFPB’s amendments to Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The amendments are designed to reduce the burden associated with CRA performance evaluation reporting requirements. Specifically, the amended regulations (i) modify the definitions of “home mortgage loan” and “consumer loan”; (ii) revise the public file content requirements; and (iii) make technical corrections and remove obsolete references to the Neighborhood Stabilization Program (see previous InfoBytes coverage here).

    As previously reported in InfoBytes, amendments to Regulation C generally take effect January 1, 2018, with the agencies’ specific amendments to the CRA regulations taking effect the same day.

    Agency Rule-Making & Guidance OCC Federal Reserve FDIC HMDA Regulation C CRA Federal Register

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  • CFPB Launches Beta Version of HMDA Platform

    Agency Rule-Making & Guidance

    On November 3, the CFPB announced the beta release of the new HMDA Platform. The beta version enables financial institutions to become familiar with the platform and permits entities to establish test log-in credentials, upload sample files and validate data, receive edit reports, and confirm test their test submissions. Entities can test and retest throughout the beta period, and any test data will be removed from the system when the 2017 filing period opens on January 1, 2018.

    As previously covered by InfoBytes, in November 2016 the Federal Financial Institutions Examination Council (FFIEC) announced that it was discontinuing its HMDA Data Entry Software and instead requiring that financial institutions file HMDA data through a new web-based interface. In August, the CFPB issued the final rule amending the 2015 HMDA Rule, with most of the revisions taking effect January 1, 2018 (see InfoBytes coverage here).

    The CFPB is requesting feedback on the platform and test experiences during the beta period time.

    Agency Rule-Making & Guidance CFPB HMDA FFIEC

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  • CFPB Updates HMDA Implementation Materials; Federal Regulatory Agencies Release Key Data Fields

    Agency Rule-Making & Guidance

    On October 17, the CFPB published a new reference chart titled “Reportable HMDA Data: A Regulatory and Reporting Overview Reference” designed to be used as a reference tool for required data points to be collected, recorded, and reported under Regulation C. The chart takes into account HMDA rules issued on August 24, which generally take effect January 1, 2018. (See previous InfoBytes coverage here.) The CFPB noted that the reporting reference chart “does not itself establish any binding obligations” and is not intended to be viewed as a “substitute for the regulation or its official commentary.”

    Separately that same day, in a measure to promote efficiency and consistency, the Board of Governors of the Federal Reserve, FDIC, and OCC identified 37 key data fields that examiners will typically use to test and validate the accuracy and reliability of data collected under the new HMDA requirements beginning in 2018. In certain circumstances, however, examiners may find it necessary to review additional HMDA data fields as appropriate. OCC Acting Comptroller of the Currency Keith Noreika noted in a statement that these actions should help ensure the accurate collection of HMDA data without creating “needless burden” on community banks surrounding the full resubmission of data “simply because of a few minor errors.”

    Agency Rule-Making & Guidance HMDA Mortgages Regulation C CFPB Federal Reserve FDIC OCC

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  • FDIC to Host Teleconference on HMDA Implementation

    Federal Issues

    On October 26, the FDIC’s Division of Depositor and Consumer Protection is scheduled to host a teleconference that will focus on the implementation of the 2015 HMDA Final Rule requirements scheduled to take effect January 1, 2018. The FDIC encourages financial institutions to submit questions prior to October 20 to be included during a Q&A segment following the formal presentation. Registration is required.

    Federal Issues FDIC HMDA Mortgages

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  • CFPB Publishes Updated Reference Material for HMDA

    Agency Rule-Making & Guidance

    On September 28, the CFPB released, on its website, updates to the reference material for the Home Mortgage Disclosure Act (HMDA). The Bureau updated the, (i) institutional coverage criteria; (ii) transactional coverage criteria; and (iii) key dates timeline.

    These updates are associated with the changes, previously reported in InfoBytes, that the CFPB made in the 2017 HMDA final rule.

    Agency Rule-Making & Guidance CFPB HMDA Consumer Finance Compliance Mortgages

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  • CFPB Announces Final Rule Modifying ECOA Regulations, Seeks Public Comment on Proposed Disclosure of HMDA Data

    Agency Rule-Making & Guidance

    On September 20, the CFPB announced its Final Rule amending Regulation B, which implements the Equal Credit Opportunity Act (ECOA), as well as a notice of proposed policy guidance requesting public comment on modifications to loan-level HMDA data that will be made publicly available beginning in 2019.

    Amendments to Regulation B. The Final Rule, among other things, permits institutions not subject to HMDA reporting requirements to choose, on an “application-by-application basis,” between two approaches to collecting race and ethnicity data from applicants for certain dwelling-secured loans: either collect such data in the aggregate or use the disaggregated and more expansive categories required for HMDA-reporting institutions under revisions to Regulation C effective in 2018.  According to the Final Rule, this means that creditors that are not HMDA reporters could transition to using the 2016 Uniform Residential Loan Application, which was updated to comply with the upcoming changes to Regulation C. As previously covered in InfoBytes, the justification for the change was to provide consistency and clarity with respect to other Bureau rules.

    Proposed Policy Guidance Regarding Publicly Available Loan-Level HMDA Data. The CFPB has issued a notice of proposed policy guidance with a request for public comment concerning modifications that it intends to apply to publicly available loan-level HMDA data that financial institutions will be required to report in connection with the new HMDA data reporting requirements that become effective January 1, 2018. The CFPB is specifically seeking comment on whether certain data fields should be included or modified in the publicly available loan-level HMDA data; these fields include the universal loan identifier, application date, loan amount, action taken date, property address, age, credit score, debt-to-income ratio, and property value, among others. As previously covered in InfoBytes, the CFPB issued its final rule amending Regulation C in August. Comments on the proposed guidance are due 60 days after publication in the Federal Register.

    Agency Rule-Making & Guidance Consumer Finance CFPB ECOA HMDA Mortgages Regulation B Regulation C

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  • CFPB’s Summer Edition of Supervisory Highlights Discloses Findings Across Many Financial Services Areas

    Consumer Finance

    On September 12, the CFPB released its summer 2017 Supervisory Highlights, which outlines its supervisory and oversight actions in areas such as auto loan servicing, credit card account management, debt collection, deposit account supervision, mortgage origination and servicing, remittances, service provider programs, short-term small-dollar lending, and fair lending. According to the Supervisory Highlights, recent supervisory resolutions have “resulted in total restitution payments of approximately $14 million to more than 104,000 consumers during the review period” between January 2017 and June 2017.

    As examples, in the area of auto loan servicing, examiners discovered vehicles were being repossessed even though the repossession should have been cancelled. Coding errors, document mishandling, and failure to timely cancel the repossession order were cited causes. Regarding fair lending examination findings, the CFPB discovered, in general, “deficiencies in oversight by board and senior management, monitoring and corrective action processes, compliance audits, and oversight of third-party service providers.” Examiners also conducted ECOA Baseline Reviews on mortgage servicers and discovered weaknesses in servicers’ fair lending compliance management systems. Findings in other areas include the following:

    • consumers were provided inaccurate information about when bank checking account service fees would be waived, and banks misrepresented overdraft protection;
    • debt collectors engaged in improper debt collection practices related to short-term, small-dollar loans, including attempts to collect debts owed by a different person or contacting third parties about consumers’ debts;
    • companies overcharged mortgage closing fees or wrongly charged application fees that are prohibited by the Bureau’s Know Before You Owe mortgage disclosure rules; and
    • borrowers were denied the opportunity to take full advantage of the mortgage loss mitigation options, and mortgage servicers failed to “exercise reasonable diligence in collecting information needed to complete the borrower’s application.”

    The Bureau also set forth new examination procedures for HMDA data collection and reporting requirements as well as student loan servicers, in addition to providing guidance for covered persons and service providers regarding pay-by-phone fee assessments.

    Consumer Finance CFPB Enforcement Auto Finance Credit Cards Debt Collection Fair Lending ECOA Compliance Mortgage Origination Mortgage Servicing HMDA Student Lending

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  • Agencies Issue Proposed Rulemaking to Amend CRA Regulations to Conform With HMDA Regulation Changes

    Lending

    On September 13, the Federal Reserve Board, the FDIC, and the OCC (Agencies) issued a joint notice of proposed rulemaking to amend Community Reinvestment Act (CRA) regulations to conform to the CFPB’s changes to Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The proposed amendments revise the definition of “home mortgage loan” and “consumer loan,” update the public file content requirements to comply with recent Regulation C changes, and make various technical corrections. In addition, the proposal will eliminate obsolete references to the Neighborhood Stabilization Program (NSP), an initiative created by HUD to help stabilize communities contending with foreclosures and abandonment. In 2016, under CRA regulations, NSP-eligible activities were no longer considered “community development.” The Agencies anticipate that the proposed rule will become effective on January 1, 2018, when most of the changes to the HMDA rules go into effect.

    Home Mortgage Loan. Under the 2015 HMDA Rule changes, “most consumer-purpose transactions, including closed-end mortgage loans, closed-end home equity loans, home-equity lines of credit, and reverse mortgages will be reported under HMDA if they are secured by a dwelling.” To conform to the Regulation C amendments, effective January 1, 2018, for purposes of CRA regulations, a “home mortgage loan” will now mean a “closed-end mortgage loan” or an “open-end line of credit,” both of which will now apply only to loans that are secured by a dwelling. Financial institutions will now have the option to decide whether they want home improvement loans that are not secured by a dwelling, which will no longer be HMDA, considered for CRA purposes, although the Agencies note that they may choose to still evaluate some of these loans in certain circumstances “where the consumer lending is so significant a portion of an institution’s lending by activity and dollar volume of loans that the lending test evaluation would not meaningfully reflect lending performance if consumer loans were excluded.”

    Consumer Loan. The proposed rulemaking would no longer include “home equity loans” in the list of “consumer loan” categories for CRA purposes, as it will now be included within the proposed revised definition of a “home mortgage loan.”  

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

    Lending Agency Rule-Making & Guidance OCC Federal Reserve FDIC CFPB CRA HMDA Mortgages

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  • FFIEC Releases Guidelines on HMDA Data Testing and Resubmission Standards

    Agency Rule-Making & Guidance

    Earlier this week the Federal Financial Institutions Examination Council (FFIEC) issued new FFIEC Home Mortgage Disclosure Act Examiner Transaction Testing Guidelines (guidelines). Examiners will use the new guidelines to assess the accuracy of the HMDA data recorded and reported by financial institutions and determine when an institution must correct and resubmit its HMDA Loan Application Register. The guidelines will apply to data collected beginning January 1, 2018. As further explained in a CFPB blog post issued the same day, this will be the first time all federal HMDA supervisory agencies—including the CFPB, FDIC, Federal Reserve, NCUA, and the OCC—will adopt uniform guidelines, which are designed to ensure HMDA data integrity (HMDA data includes certain information financial institutions are required to collect, record, and report about their home mortgage lending activity). The purpose for collecting the HMDA data is to evaluate housing trends and issues to monitor lending patterns, assist agencies with fair lending and Community Reinvestment Act examinations, and help identify discriminatory lending practices. According to a FDIC financial institution letter (FIL-36-2017) released on August 23, the highlights of the guidelines include, among other things, a data sampling process, error threshold levels, tolerance levels for minor errors, and the ability of examiners to direct a financial institution to make appropriate change to its compliance management system to prevent recurring HMDA data errors.

    As previously discussed in InfoBytes, in 2016 the CFPB issued a request for public feedback on the resubmission of mortgage lending data reported under HMDA.

    Agency Rule-Making & Guidance HMDA Mortgages CFPB FDIC Federal Reserve NCUA OCC CRA

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