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  • Federal, state financial regulatory agencies issue guidance for institutions affected by Hurricane Michael

    Federal Issues

    On October 10, the OCC, Federal Reserve Board, FDIC, NCUA, and the Conference of State Bank Supervisors (collectively, the “agencies”) issued a joint statement providing guidance to financial institutions impacted by Hurricane Michael. The agencies encouraged lenders to work with borrowers in impacted communities to modify loans as appropriate based on the facts and circumstances of each borrower and loan. In addition, the agencies assured lenders that they would (i) expedite any request to operate temporary facilities to provide more convenient services to those affected by Hurricane Michael; (ii) not generally assess penalties for institutions who take prudent steps to satisfy any publishing or reporting requirements, including by contacting their state or federal regulator to discuss satisfaction of such requirements; and (iii) consider granting institutions favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery.

    On the same day the joint statement was issued, the FDIC issued a statement encouraging depository institutions to assist affected customers (see FIL-59-2018), which may include “waiving fees, increasing ATM cash limits, easing credit card limits, allowing loan customers to defer or skip payments, and delaying the submission of delinquency notices to credit bureaus.” The FDIC also encouraged depository institutions to use Bank Secrecy Act-permitted “non-documentary verification methods” for customers unable to provide standard identification documents and stated that prudent efforts taken to meet customers’ cash and financial needs “generally will not be subject to examiner criticism.”

    Find continuing InfoBytes coverage on disaster relief here.

    Federal Issues FDIC OCC Federal Reserve Disaster Relief CRA Bank Secrecy Act Consumer Finance

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  • OCC provides guidance to institutions affected by Hurricane Michael

    Federal Issues

    On October 9, the OCC issued a proclamation permitting OCC-regulated institutions to close their offices affected by Hurricane Michael in the Gulf Coast region. The OCC noted that only institutions directly impacted by the potentially unsafe conditions should close, and that those offices should attempt to reopen as soon as possible to serve their customers’ banking needs. OCC Bulletin 2012-28 provides further guidance on natural disasters and other emergency conditions.

    Find continuing InfoBytes coverage on disaster relief here.

    Federal Issues OCC Disaster Relief

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  • FCC seeks comments on interpretation of TCPA definition of autodialer following 9th Circuit decision

    Federal Issues

    On October 3, the FCC’s Consumer and Governmental Affairs Bureau released a notice seeking comment on the interpretation of the TCPA in light of a recent 9th Circuit decision, which broadened the definition of an automatic telephone dialing system (autodialer) under the TCPA. As previously covered in InfoBytes, on September 20, the 9th Circuit held that the TCPA’s definition of an autodialer includes equipment with the capacity to store numbers to be called and to automatically dial such numbers whether or not those numbers have been generated by a random or sequential number generator. The court, however, declared the statutory definition of an autodialer to be “ambiguous on its face” and, thus, it looked to the context and structure of the TCPA in reaching its conclusion regarding the scope of the definition.

    The FCC issued the notice “to supplement the record developed in response” to a prior notice issued last May, which sought comments on the interpretation of the TCPA following the D.C. Circuit’s decision in ACA International v. FCC. (See previous InfoBytes coverage on the May 2018 notice here.) Specifically, the FCC seeks comments on the following issues relevant to developing an interpretation of the TCPA’s definition of autodialer: (i) To the extent the definition of an autodialer is ambiguous, how should the FCC exercise its discretion to interpret such ambiguities? (ii) Does the 9th Circuit’s interpretation mean that any device with the capacity to dial stored numbers automatically qualifies as an autodialer? (iii) What devices have the capacity to store numbers, and do smartphones have such capacity? and (iv) What devices that have the capacity to dial stored numbers also have the capacity to automatically dial such numbers and do smartphones have such capacity?

    Comments are due October 17 with reply comments due October 24.

    Federal Issues FCC Autodialer TCPA Ninth Circuit Appellate ACA International

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  • Freddie Mac announces temporary selling requirements related to Hurricane Florence

    Federal Issues

    On October 3, Freddie Mac issued Bulletin 2018-17 (Bulletin) to announce temporary revisions to its selling requirements for certain mortgages and borrowers impacted by Hurricane Florence. The Bulletin also reminds servicers that the previously announced temporary reimbursement process for property inspections conducted on or after August 29, 2017, of mortgaged premises located in “Eligible Disaster Areas,” remains in effect. Among other things, the temporary selling requirements: (i) provide that sellers who meet certain requirements will be reimbursed for property inspections completed on and before March 14, 2019; (ii) specify age of documentation requirements that will remain in effect for six months for certain mortgages and borrowers; (iii) provide specific collateral requirements and guidance, including sellers’ responsibilities with respect to property damage, appraisal waivers, and collateral representation and warranty relief—along with notice of updates to Loan Selling Advisor, Loan Quality Advisor, and Loan Product Advisor. The Bulletin notes that the Single-Family Seller/Servicer Guide will not be updated to include the temporary requirements and advises sellers and servicers that they must retain a copy of the Bulletin to ensure compliance with these requirements.

    Find continuing InfoBytes coverage on disaster relief here.

    Federal Issues Freddie Mac Selling Guide Disaster Relief Mortgages

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  • Fannie Mae announces updates to Selling Guide

    Federal Issues

    On October 2, Fannie Mae issued SEL-2018-08, announcing updates to its Selling Guide.  Notably, Fannie Mae expanded its policy on the use of employment-related assets as qualifying income, increasing to 80 percent the maximum LTV, CLTV, and HCLTV ratios for loans held by asset owners who are at least 62 years old upon loan closing. With respect to jointly-owned assets, all owners must be listed as borrowers on the loan, but only the borrower whose employment-related asset is being used as income must meet the minimum age requirement. Fannie Mae indicates that, until Desktop Underwriter is updated to reflect this policy change, it will accept delivery of any loan that receives an Approve/Ineligible recommendation because of a ratio over 70 percent and has been confirmed compliant by the lender.

    Effective immediately, other announced updates to the Selling Guide include: (i) clarifications to employment verification policies for union member borrowers employed in a series of short-term job assignments; (ii) changes intended to provide clarity to Fannie’s expectations for lenders managing third-party originators; and (iii) clarifications to comparable sales requirements for appraisers of MH Advantage homes.

    Federal Issues Fannie Mae Selling Guide Mortgages

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  • FHA to require second appraisal for certain reverse mortgages

    Federal Issues

    On September 28, FHA announced that it will require a second appraisal for certain reverse mortgage transactions. The purpose of this requirement, according to Mortgagee Letter 2018-06, is mitigation of the risk that valuation of the collateral poses to FHA borrowers and the Mutual Mortgage Insurance Fund. FHA will perform a collateral risk assessment of the appraisal prepared for use in all Home Equity Conversion Mortgage (HECM) originations (also known as “reverse mortgages”); whether a second appraisal is required will depend on the results of the assessment. A mortgagee may not approve or close a transaction until a second appraisal, if required, is obtained. If the second appraisal provides a lower value, the mortgagee must use the lower value in the origination of the HECM. The new requirements are effective for all HECM originations with FHA case numbers assigned on or after October 1 through September 30, 2019. FHA will evaluate these program changes at six and nine months to determine if it should extend the requirements beyond the current end date.

    Federal Issues FHA Reverse Mortgages Appraisal

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  • FHFA issues guidance for third-party provider relationships

    Federal Issues

    On September 28, FHFA released Advisory Bulletin AB 2018-08, which provides guidance to Fannie Mae and Freddie Mac, the Federal Home Loan Banks, and the Office of Finance (regulated entities) on the evaluation and management of risks associated with third-party provider relationships. (FHFA defines a third-party provider relationship as a “business arrangement between a regulated entity and another entity that provides a product or service.”)

    The bulletin sets forth the structure and describes the features of the third-party provider risk management programs that FHFA expects regulated entities to establish. With respect to governance, the bulletin recommends such programs address: (i) the responsibilities of the board and senior management; (ii) policies, procedures, and internal standards; and (iii) the implementation of a reporting system to ensure management and the board are adequately informed. The bulletin also specifies that an effective program include policies and procedures that cover each of the following phases of a third-party provider relationship life cycle: (i) Risk Assessment; (ii) Due Diligence in Third-Party Provider Selection; (iii) Contract Negotiation; (iv) Ongoing Monitoring; and (v) Termination. The bulletin suggests that regulated entities should ensure that their third-party risk management corresponds with the level of risk and complexity of their third-party relationships and notes that not every aspect of the bulletin may apply to every relationship.

    Federal Issues FHFA Third-Party Governance Fannie Mae Freddie Mac FHLB

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  • FDIC issues RFI aimed at improving its communication with banks

    Federal Issues

    On October 1, the FDIC released a request for information (RFI) on “FDIC Communication and Transparency.” The agency is seeking comments and information on how the agency can make its “communication with insured depository institutions (IDIs) more effective, streamlined, and clear [, including] . . . maximiz[ing] efficiency and minimiz[ing] burden associated with obtaining information on FDIC laws, regulations, policies, and other materials relevant to IDIs.” The RFI requests feedback on all types of communication from the FDIC, including (i) regulations, policies, procedures, and guidance; (ii) news and updates; (iii) industry data, educational materials, and outreach; and (iv) general and direct communications, such as email subscriptions, in-person meetings, and compliance reviews. In addition to general feedback, the RFI includes a list of suggested topics and questions for commenters to address.

    Comments must be received by December 4.

    Federal Issues Agency Rule-Making & Guidance FDIC RFI

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  • DOJ settles with Washington state foreclosure trustee for alleged SCRA violations

    Federal Issues

    On September 27, the DOJ announced a settlement with a Washington state foreclosure services company resolving allegations that the company violated the Servicemembers Civil Relief Act (SCRA) by foreclosing on homes owned by servicemembers without first obtaining the required court orders. As previously covered by InfoBytes, in November 2017, the DOJ filed a complaint in the Western District of Washington alleging its investigation into the company’s practices uncovered at least 28 unlawful non-judicial foreclosures. The DOJ initiated the investigation following the same court’s dismissal of a private SCRA action brought by a veteran on the ground that it was time-barred.

    Under the settlement, each affected servicemember may receive up to $125,000, with a total payout by the company of up to $750,000. The DOJ notes that the company ceased operations in December 2017 and was placed into receivership in March.

    Federal Issues DOJ SCRA Servicemembers Foreclosure

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  • Fannie Mae and Freddie Mac issue servicing updates

    Federal Issues

    On September 26, Fannie Mae issued SVC-2018-07, which includes changes to the foreclosure and third party sale program. In order to encourage more third-party foreclosure sales, Fannie Mae is now requiring the use of Fannie Mae vendors for foreclosure sale marketing services in certain jurisdictions and encouraging the use of Fannie Mae vendors for public foreclosure auctions in certain jurisdictions. Servicers must implement the requirements for all sales scheduled on or after January 1, 2019. Additionally, effective October 28, Fannie Mae will now allow servicers to accept payment changes with future effective dates.

    Freddie Mac released Guide Bulletin 2018-16, which announces new and revised requirements to facilitate a secondary market for mortgages in support of affordable housing preservation and rural housing, including (i) allowing the sale of Community Land Trust Mortgages to Freddie Mac (effective November 5); (ii) updating requirements for mortgages secured by properties subject to resale restrictions (effective November 5); and (iii) revising the Home Possible mortgage requirements to permit sweat equity as a source of funds to cover the entire amount of cash to close for the down payment and/or closing costs (effective September 26).

    Federal Issues Fannie Mae Freddie Mac Servicing Guide Mortgages Mortgage Servicing Foreclosure

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