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  • Fed finalizes updates to policy on payment system risk

    On December 2, the Federal Reserve Board finalized clarifying and technical updates to its Policy on Payment System Risk (PSR). The changes, which are adopted largely as proposed in May 2021 (covered by InfoBytes here), expand depository institutions’ eligibility to request collateralized intraday credit from the Federal Reserve Banks (FRBs), and ease the process for submitting such requests. The final updates also clarify eligibility standards for accessing uncollateralized intraday credit; modify the PSR policy to support the launch of the FedNow instant-payments platform, which is scheduled for mid-year 2023 (covered by InfoBytes here); and simplify and incorporate the related Overnight Overdrafts policy into the PSR policy. Updates related to FedNow and the Overnight Overdrafts policy will take effect once the FRBs start processing live transactions for FedNow. The remaining updates are effective 60 days following publication in the Federal Register.

    Bank Regulatory Federal Issues Agency Rule-Making & Guidance Federal Reserve Federal Reserve Banks Payments FedNow Risk Management

  • HUD increases FHA loan limits for 2023

    Agency Rule-Making & Guidance

    On December 1, HUD announced the 2023 loan limits for Single Family Title II Forward and Home Equity Conversion Mortgage (HECM) insurance programs. (See also Mortgagee Letter 2022-20 and Mortgagee Letter 2022-21). For FHA case numbers assigned on or after January 1, 2023, the maximum loan limits for FHA forward mortgages will increase in 3,222 counties and remain unchanged in 12 counties. The HECM maximum claim amount will also increase from $970,800 to $1,089,300. 

    Agency Rule-Making & Guidance Federal Issues FHA Mortgages HECM HUD

  • FHA extends temporary partial waivers for specific HECM policies

    Agency Rule-Making & Guidance

    On November 28, FHA announced FHA INFO 2022-98 to extend two temporary partial waivers to its Home Equity Conversion Mortgage (HECM) loss mitigation policies for senior borrowers impacted by the Covid-19 pandemic who continue to experience significant financial difficulties. The first temporary partial waiver concerns Mortgagee Letter 2015-11. FHA notes that the waiver “allows mortgagees to offer repayment plans to HECM borrowers with unpaid property charges regardless of their total outstanding arrearage.” The second waiver—concerning Mortgagee Letter 2016-07—“permits mortgagees to seek assignment of a HECM immediately after using their own funds to pay property taxes and insurance on or after March 1, 2020, by temporarily eliminating the three-year waiting period for such assignments.” Both waivers were set to expire at the end of December, but are now effective through December 31, 2023.

    Agency Rule-Making & Guidance FHA HECM Mortgages Consumer Finance HUD Loss Mitigation Covid-19

  • CFPB sets 2023 FCRA asset threshold

    Federal Issues

    On November 22, the CFPB announced the annual adjustment to the maximum amount that consumer reporting agencies are permitted to charge consumers for making a file disclosure to a consumer under the FCRA. According to the rule, the ceiling on allowable charges under Section 612(f) of the FCRA will increase to $14.50, which is a $1.00 increase from the ceiling on allowable charges for 2022. The rule is effective January 1, 2023.

    Federal Issues Agency Rule-Making & Guidance CFPB FCRA Consumer Finance Consumer Reporting Agency

  • FCC says consent is required for ringless voicemails

    Agency Rule-Making & Guidance

    On November 21, the FCC issued a declaratory ruling that entities using ringless voicemail products must first obtain a consumer's consent prior to using the product to leave voicemails. According to the FCC, it receives “dozens of consumer complaints annually related to ringless voicemail.” The unanimous ruling establishes that ringless voicemails are “calls” that require consumers’ prior express consent, and further clarifies that a ringless voicemail is a form of a robocall, and therefore subject to the TCPA robocall prohibition, which prohibits making any non-emergency call with an automatic telephone dialing system or an artificial or prerecorded voice to a wireless telephone number without the prior express consent of the called party.

    The FCC’s declaratory ruling denied a 2017 petition filed by a company that distributes technology that permits voicemail messages to be delivered directly to consumers’ voicemail services. The petitioner argued that ringless messages, and the process by which the ringless voicemail is deposited on a carrier’s platform, is neither a call made to a mobile telephone number nor a call for which a consumer is charged and, therefore, is a service that is not regulated. The FCC rejected the petitioner’s argument that ringless voicemail is not a TCPA call because it does not pass through a consumer’s phone line and that the TCPA protects only calls made directly to a wireless handset, and does not result in a charge to the consumer for the delivery of the voicemail message. The ruling noted that “consumers cannot block these messages and consumers experience an intrusion on their time and their privacy by being forced to spend time reviewing unwanted messages in order to delete them.” The ruling also noted that a “consumer’s phone may signal that there is a voicemail message and may ring once before the message is delivered, which is another means of intrusion. Consumers must also contend with their voicemail box filling with unwanted messages, which may prevent other callers from leaving important wanted messages.” According to a statement by FCC Chairwoman Jessica Rosenworcel, the rule makes it “crystal clear" that ringless voicemails are subject to the TCPA and that the Commission's rules "prohibit[] callers from sending this kind of junk without consumers first giving their permission to be contacted this way.”

    Agency Rule-Making & Guidance Federal Issues FCC Robocalls TCPA

  • FHA to accept private flood insurance for FHA-insured mortgages

    Agency Rule-Making & Guidance

    On November 21, FHA published a final rule in the Federal Register to allow homeowners with FHA-insured mortgages to obtain flood insurance policies that meet FHA requirements from private insurance providers. Specifically, the Acceptance of Private Flood Insurance for FHA-Insured Mortgages final rule updates agency regulations to give borrowers the option to purchase a comparable private insurance policy that conforms to FHA requirements in lieu of a National Flood Insurance Program (NFIP) policy for FHA-insured mortgages secured by properties located in FEMA-designated special flood hazard areas (SFHAs). Previously, only flood insurance obtained through the NFIP was accepted. The final rule applies to all FHA-insured single family Title II mortgages, including home equity conversion mortgages, and loans insured under FHA Title I programs. Lenders should refer to Mortgagee Letter 2022-18 for guidance on implementing the final rule’s requirements, which are effective December 21.

    Concurrently, HUD issued a press release stating that beginning December 21, “FHA will require lenders to provide detailed flood insurance coverage information when electronically submitting mortgages for FHA insurance on properties in SFHAs.” According to HUD, “[t]his data collection is an objective included in HUD’s Climate Action Plan and will allow FHA to capture and analyze flood insurance information on mortgages in its portfolio at a more granular level than has been possible previously.”

    Agency Rule-Making & Guidance Federal Issues HUD FHA Mortgages Flood Insurance Flood Disaster Protection Act National Flood Insurance Program

  • FTC seeks feedback on possible changes to Business Opportunity Rule

    Federal Issues

    On November 17, the FTC announced it is soliciting public comments on possible modifications to the Business Opportunity Rule. According to the FTC’s advance notice of proposed rulemaking (ANPR), the Commission is seeking feedback on the rule’s effectiveness, whether it is necessary, and whether it should be expanded to cover other types of money-making opportunities, such as coaching or mentoring programs, e-commerce opportunities, or investment opportunities. The Business Opportunity Rule prohibits the use of deceptive statements when selling business opportunities, and requires sellers to make several key disclosures to potential buyers, including: (i) the seller’s identifying information; (ii) information supporting claims about possible earnings or profits; (iii) disclosures about whether the seller, its affiliates, or key personnel have been included in certain legal actions; (iv) information on whether the seller has a cancellation or refund policy and any applicable policy terms; and (v) a list covering the past three years of consumers who have purchased the business opportunity. The FTC will also require sellers who conduct business in languages other than English to provide disclosures in the language in which the sale is conducted.

    The ANPR also asks commenters to address whether business opportunity practices “disproportionately target or affect certain communities or groups, including but not limited to people living in lower-income communities, communities of color, or other historically underserved communities,” and requests feedback on suggested amendments to address any negative effects. Comments on the ANPR are due 60 days after publication in the Federal Register.

    Federal Issues Agency Rule-Making & Guidance FTC Business Opportunity Rule Deceptive

  • FTC extends compliance on some Safeguards provisions

    Federal Issues

    On November 15, the FTC announced that covered financial institutions now have until June 9, 2023, to comply with certain updated Safeguards Rule requirements. The Commission issued this extension based on reports, including a letter from the SBA’s Office of Advocacy, that a shortage of qualified personnel to implement financial institutions’ information security programs and supply chain issues could delay security system upgrades.

    As previously covered by InfoBytes, in October 2021, the FTC issued a final rule updating the Safeguards Rule to strengthen data security protections for consumer financial information following widespread data breaches and cyberattacks. Among other things, the final rule added specific criteria financial institutions and other entities, such as mortgage brokers, motor vehicle dealers, and payday lenders, must undertake when conducting a risk assessment and implementing an information security program. Among other requirements, these include implementing provisions related to access controls, data inventory and classification, authentication, encryption, disposal procedures, and incident response. The final rule also added measures to ensure employee training and service provider oversight are effective and expanded the definition of “financial institution” to include “entities engaged in activities that the Federal Reserve Board determines to be incidental to financial activities.” Included in the definition are “finders” (i.e. companies that bring together buyers and sellers of products or services that fall within the scope of the Safeguards Rule). While many provisions of the Safeguards Rule became effective 30 days after publication in the Federal Register, certain other provisions, including requirements applicable to covered financial institutions, were set to take effect December 9, 2022.

    Federal Issues Privacy, Cyber Risk & Data Security Agency Rule-Making & Guidance Safeguards Rule FTC Compliance

  • CFPB finalizes nonbank supervisory rule

    Agency Rule-Making & Guidance

    On November 10, the CFPB announced a final rule finalizing changes to a nonbank supervision procedural rule issued in April. As previously covered by InfoBytes, the Bureau announced earlier this year that it was invoking a “dormant authority” under the Dodd-Frank Act to conduct supervisory examinations of fintech firms and other nonbank financial services providers based upon a determination of risk. Specifically, the Bureau said it intends to use a provision under Section 1024 of Dodd-Frank that allows it to examine nonbank financial entities, upon notice and an opportunity to respond, if it has “reasonable cause” to determine that consumer harm is possible. Concurrently, the Bureau issued a request for public comment on an updated version of a procedural rule that implements its statutory authority to supervise nonbanks “whose activities the CFPB has reasonable cause to determine pose risks to consumers,” including potentially unfair, deceptive, or abusive acts or practices. Provisions outlined in the procedural rule would exempt final decisions and orders by the Bureau director from being considered confidential supervisory information, thus allowing the Bureau to publish the decisions on its website. Subject companies would be given an opportunity seven days after a final decision is issued to provide input on what information, if any, should be publicly released, the Bureau said.

    After reviewing public comments received on the procedural rule, the Bureau incorporated certain changes to clarify the standard that the agency will apply when deciding what information is appropriate for public release, in whole or in part. The Bureau explained that information falling within Freedom of Information Act Exemptions 4 and 6 (which protect confidential commercial information and personal privacy) will not be published. Additionally, the Bureau said it may also choose to withhold information if the director determines there is other good cause to do so. The final rule also extends the deadline from seven to ten business days for nonbanks to submit input about what information should be released. The final rule will take effect upon publication in the Federal Register.

    Notably, the Bureau emphasized that the “amended procedures only relate to the initial decision to extend supervision to a nonbank entity” and “do not affect the confidentiality of any ensuing supervisory examination or any other aspect of the supervisory process.”

    Agency Rule-Making & Guidance Federal Issues Fintech CFPB Nonbank Supervision Dodd-Frank Consumer Finance UDAA{ FOIA

  • FTC looks to Section 5 in enforcing “unfair” competition

    Federal Issues

    On November 10, the FTC issued a policy statement announcing that it would “rigorously enforc[e] the federal ban on unfair methods of competition.” According to the announcement, the FTC intends to make wider use of the FTC Act to police companies that use unfair tactics to try to gain a competitive advantage. “When Congress created the FTC, it clearly commanded us to crack down on unfair methods of competition,” FTC Chair Lina M. Khan said. “Enforcers have to use discretion, but that doesn’t give us the right to ignore a central part of our mandate. Today’s policy statement reactivates Section 5 and puts us on track to faithfully enforce the law as Congress designed.” In enacting Section 5, Congress purposely introduced the phrase “unfair methods of competition” in the statute to distinguish the FTC’s authority from the definition of “unfair competition” at common law, the policy explained, adding that Section 5 was designed to extend beyond the reach of antitrust laws. However, recognizing that a static definition would become outdated, Congress afforded the FTC flexibility to adapt to changing circumstances. The policy statement lays out the FTC’s approach for policing unfair methods of competition, and will allow the Commission to, among other things, sue companies under its mandate to protect consumers from fraudulent practices, price discrimination, exclusive deals and loyalty rebates, and misleading business practices such as commercial bribery and false or deceptive advertising.

    Federal Issues Agency Rule-Making & Guidance FTC Unfair FTC Act Competition Antitrust

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