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  • FDIC Chairman Speaks About Financial Inclusion

    Federal Issues

    On November 7, the Chairman of the FDIC, Martin J Gruenberg, addressed the Local Initiatives Support Corporation (LISC) in New York, New York regarding financial inclusion and expanding economic opportunity for the underbanked. In his speech, Gruenberg discussed the agency’s most recent report, FDIC National Survey of Unbanked and Underbanked Households, which found that nearly 27 percent of American households are unbanked or underbanked.  Gruenberg also highlighted the initiatives the agency has undertaken to address the results of this report, including (i) creating access to “Safe Accounts,” which are electronic transaction accounts with low costs; (ii) conducting research on mobile financial services and how technology can lead to more sustainable banking relationships; and (iii) continuing financial education initiatives with a particular focus on youth savings.

    Federal Issues FDIC Consumer Finance Mobile Banking Consumer Education

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  • FTC Fines California Auto Dealer for Violating Order About Disclosures

    Lending

    On November 6, the FTC announced a settlement of $1.4 million with a Southern California auto dealership for violating a 2014 administrative order (Order). The Order prohibited the dealership from misrepresenting the cost to finance or lease a vehicle. In issuing the Order, the FTC alleged that the dealership had violated the FTC Act by using advertisements that deceptively stated a $0 up-front lease option while excluding other fees and costs, and also that the dealership’s advertisements violated disclosure requirements of the Consumer Leasing Act (CLA) and TILA.

    The new settlement resolves a complaint in which the FTC alleged the auto dealership “routinely violated” the Order requiring the dealership to, among other things, (i) accurately represent costs and terms of financing or leasing vehicles; (ii) conform its advertisements to the requirements of the CLA and TILA; and (iv) maintain necessary records and make those records available to the agency. In addition to the monetary penalty and the prohibition of similar practices, the settlement also subjects the dealership to strong compliance and reporting requirements.

    Lending Auto Finance FTC Enforcement Settlement. FTC Act CLA TILA Disclosures

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  • Cordray Speaks at Consumer Advisory Board Meeting

    Consumer Finance

    On November 2, CFPB Director Richard Cordray delivered prepared remarks at the Consumer Advisory Board (CAB) Meeting in Tampa, Florida addressing, among other things, the new rule (Rule) covering payday loans and certain other installment products (previously covered by a Buckley Sandler Special Alert). Cordray indicated that the Rule is intended to reform a market where many borrowers end up rolling over their loans multiple times, incur fees, and have trouble ultimately paying off their original balance. Cordray encouraged the CAB to discuss the Rule, noting the Bureau previously received over 1.4 million public comments on the proposal. Cordray also touched on topics regarding (i) financial security of older consumers, including reverse mortgages; (ii) complexities with delivering products to consumers with limited English proficiency ; and (iii) the Bureau’s September report, “Financial Well-Being in America,” which discussed the results of a nationwide survey measuring individual financial well-being.

    Consumer Finance CFPB Payday Lending Reverse Mortgages

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  • CSBS Accepting Licensing Renewal Applications from Non-Depository Financial Institutions

    State Issues

    On November 1, the Conference of State Bank Supervisors (CSBS) announced it is accepting state license renewal applications through December 31 from non-depository financial institutions that wish to continue operating in 2018. Institutions can submit licensing renewals through the Nationwide Multistate Licensing System (NMLS)—operated by CSBS on behalf of state regulators. However, CSBS warned institutions to apply early, noting that last year “almost 93 percent of renewal applications submitted by November 30 were approved by December 31, [but] only about 49 percent of license renewals requested after December 15 were approved by the end of the year.”

    As previously announced in InfoBytes, the New York Department of Financial Services recently announced that it will transition licensed lenders and sales finance companies to the NMLS, as part of its continued initiative to link with other states and provide enhanced supervision of non-depository institutions.

    State Issues CSBS Licensing NMLS

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  • Acting Comptroller Discusses Efforts to Promote Lending and Investment in Distressed Communities

    Lending

    On November 2, Acting Comptroller of the Currency Keith A. Noreika addressed the National Association of Affordable Home Lenders to emphasize the OCC’s efforts to support depository institution lending and investment in distressed communities. In his speech, Noreika discussed the guidance issued by the OCC in August (previously covered by InfoBytes), which covers owner-occupied residential mortgage originations with loan-to-value (LTV) ratios greater than 100 percent. The guidance is intended to aid in the revitalization of certain areas around the country and provide a framework for the OCC’s monitoring of these programs for safe and sound lending practices. Noreika concluded that since August “the guidance and the programs being established…are beginning to make differences in the communities that need reinvestment the most” and encouraged their continued use by reminding the conference that these programs can also provide banks credit under the Community Reinvestment Act (CRA).

    Lending OCC CRA Mortgage Lenders

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  • Federal Banking Agencies Seek Comments on Proposal to Further Streamline Call Reports

    Agency Rule-Making & Guidance

    On November 2, the Federal Reserve Board, FDIC, and OCC (agencies)—all members of the Federal Financial Institutions Examination Council (FFIEC)—issued a joint notice and request for comment on a proposal to further streamline the Consolidated Reports of Condition and Income (Call Reports) in an effort to reduce data reporting requirements and regulatory burdens for financial institutions. The proposal would modify Call Reports applicable to banks with (i) domestic offices only and less than $1 billion in total assets (FFIEC 051); (ii) domestic offices only (FFIEC 041); and (iii) domestic and foreign offices (FFIEC 031). The proposed revisions, which would eliminate or combine several data items and revise certain existing reporting thresholds, would take effect as of the June 30, 2018, report date. Comments on the proposal are due within 60 days after its publication in the Federal Register.

    Previous requests for proposed burden-reducing Call Report revisions were submitted by the agencies in August 2016 and June 2017. (See InfoBytes’ coverage of the August request here.)

    Agency Rule-Making & Guidance Federal Reserve FDIC OCC FFIEC Call Report Federal Register

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  • Fannie and Freddie Introduce Extended Modifications for Disaster Relief

    Federal Issues

    On November 2, at the direction of the Federal Housing and Finance Authority (FHFA), Fannie Mae introduced in Lender Letter LL-2017-09 (Letter) a temporary forbearance mortgage loan modification (Extend Mod) for servicers with mortgage loans affected by the recent disasters. The Letter covers the requirements for an Extend Mod, including outlining loan eligibility criteria. Among other requirements, the loan must (i) be located in a FEMA-Declared Disaster Area; (ii) be less than 31 days delinquent when the disaster occurred and complete the forbearance plan while between 31 days delinquent and 360 days delinquent; (iii) not be delinquent after being previously modified with an Extend Mod from the same disaster; (iv) not be insured or guaranteed by a federal government agency; and (v) not be subject to a recourse or indemnification arrangement, another workout option, or a current repayment plan that is performing. The Letter also provides information on disbursing hazard loss draft proceeds, reimbursement for property inspections, and payment records for borrower-initiated termination of mortgage insurance.

    Under the same FHFA direction and in coordination with Fannie Mae, Freddie Mac issued Guide Bulletin 2017-25 announcing the servicing requirements for the Freddie Mac Extend Modification for Disaster Relief. Both Fannie and Freddie note the deadline for implementing the Extend Mod is February 1, 2018.

    Find more InfoBytes disaster relief coverage here.

    Federal Issues Disaster Relief Mortgages Mortgage Modification Mortgage Servicing FHFA Fannie Mae Freddie Mac

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  • FinCEN Announces Final Rule Restricting North Korea’s Access to U.S. Financial System; Issues Advisory Regarding North Korean Strategies

    Financial Crimes

    On November 2, the Financial Crimes Enforcement Network (FinCEN) issued a final rule (Rule) under Section 311 of the USA PATRIOT ACT, which prohibits U.S. financial institutions from processing transactions for foreign correspondent accounts involving a Chinese bank (Bank) that was suspected of facilitating illicit North Korean financial activity and laundering funds to finance North Korea’s nuclear and ballistic missile programs. U.S. financial institutions are also instructed to apply enhanced due diligence to foreign correspondent accounts to prevent them from being used to process transactions involving the Bank. The Rule is effective 30 days after its publication in the Federal Register.

    In tandem with the issuance of the Rule, FinCEN issued an advisory (FIN-2017-A008) to warn U.S. financial institutions about strategies used by North Korean enterprises as a means to gain access to international financial systems, including (i) the use of a network of global financial representatives; (ii) trade-based payment schemes; (iii) front and shell companies; (iv) surge activity cycles; and (v) financial institutions that operate in areas bordering North Korea. The advisory’s regulatory guidance is designed to assist financial institutions in identifying and reporting suspicious activity by North Korea and its financial institutions. The guidance follows a September 26 announcement by the Treasury Department’s Office of Foreign Assets Control that imposed additional sanctions on North Korean banks and individuals connected to global North Korean financial networks. (See previous InfoBytes coverage here.)

    Financial Crimes FinCEN Sanctions Anti-Money Laundering Federal Register

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  • CFPB Reports Increase in Longer-Term Auto Loans

    Consumer Finance

    On November 1, the CFPB released a report finding an increase in the number of auto loans with terms of six years or longer. Specifically, the report notes that these longer-term loans made up 42 percent of auto loans originated in 2017, an increase from 26 percent of auto loans originated in 2009. The report observes that, while longer-term loans may make monthly payments more affordable, it is not clear that consumers are “better off” or more likely to repay such loans because of the increased financing costs and larger amounts financed.

    The report is a product of the CFPB’s Consumer Credit Trends tool (previously covered by InfoBytes) – a web-based resource that collects data on the auto finance, credit card, mortgage, and student loan markets. The tool’s data is drawn from a “nationally representative sample of credit records” kept by one of the top three U.S. credit reporting companies.

    Consumer Finance CFPB Auto Finance

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  • Fannie Mae Updates Selling Guide

    Lending

    On October 31, Fannie Mae issued Announcement SEL-2017-09, highlighting recent updates to its Selling Guide, that generally affirm the ability to conduct activity using electronic records.  Among other things, the update (i) confirms that sellers and servicers are authorized to originate, service, and modify loans using electronic records; (ii) requires that validation and security measures be put in place for systems generating electronic records; (iii) specifies that recorded mortgages and deeds of trust are not required to be maintained in paper form; and (iv) clarifies that all electronic signatures must comply with ESIGN, the Uniform Electronic Transactions Act (UETA), and other applicable laws. The updates are effective immediately.

    Additional changes address the (i) introduction of Fannie Mae’s Servicing Execution Tool and Servicing Marketplace, which are designed to improve transfers of servicing; (ii) clarification that property owned by inter vivos revocable trusts qualify as eligible collateral; and (iii) updates to policies related to mortgage debts paid by parties other than the borrower.

    Lending Fannie Mae Electronic Signatures Mortgages UETA ESIGN

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