DSNews--Radhika Ojha

A joint ruling by banking regulators including the Federal Reserve, the Office of the Comptroller of Currency (OCC), National Credit Union Administration, Federal Deposit Insurance Corporation, and Farm Credit Administration will implement the provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 to require mortgage lenders and credit unions to accept certain private flood insurance policies in addition to policies under the National Flood Insurance Program (NFIP).

With the addition of acceptance of private insurance flood policies through this rule, the regulators have widened the scope for lenders to accept private flood insurance policies by allowing them to conclude that the policy meets the definition of private flood insurance, "without a further review of the policy, if the policy  or an endorsement to the policy, states: This policy meets the definition of private flood insurance contained in 42 U.S.C. 4012a(b)(7) and the corresponding regulation."

According to the OCC, the rule which takes effect on July 1 would also allow financial institutions to rely on an insurer's written assurances in a private flood insurance policy stating that the policy meets the criteria for flood insurance. It also clarifies that lenders, under certain conditions, can accept policies that don't meet the Biggert-Waters Act criteria. It also allows lenders to accept some flood coverage plans provided by mutual aid societies subject to agency approval.

The regulation specifies that the amendment would "permit regulated lending institutions to exercise their discretion to accept flood insurance policies issued by private insurers and plans providing flood coverage issued by mutual aid societies that do not meet the statutory definition of private flood insurance, subject to certain restrictions."

The OCC said that The proposed rule included conditions for accepting these policies. However, in response to commenters, the agencies removed some of these conditions from the final rule. "The key conditions in the final rule are a requirement that the policy provides sufficient protection for a designated loan, consistent with general safety and soundness principles, and a requirement that the regulated lending institution document its conclusion regarding the sufficiency of protection in writing."

Read the full analysis of the final rule here.

New Rule Covers Private Flood Insurance

WASHINGTON—Five federal regulatory agencies issued a joint final rule to implement provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 requiring regulated institutions to accept certain private flood insurance policies in addition to National Flood Insurance Program policies.

The rule, which takes effect July 1, 2019:

• Implements the Biggert-Waters Act requirement that regulated lending institutions accept private flood insurance policies that satisfy criteria specified in the Act;
• Allows institutions to rely on an insurer’s written assurances in a private flood insurance policy stating the criteria are met;
• Clarifies that institutions may, under certain conditions, accept private flood insurance policies that do not meet the Biggert-Waters Act criteria; and
• Allows institutions to accept certain flood coverage plans provided by mutual aid societies, subject to agency approval.

Regulations implementing the federal flood insurance statutes prohibit regulated lending institutions from making loans secured by improved real property located in special flood hazard areas unless the property has adequate flood insurance coverage.

Related Link

• Attachment

The Bureau has published on its website the 2019 list of rural and underserved counties and a separate 2019 list that includes only rural counties. The Bureau has also updated the rural and underserved areas website tool for 2019. The lists and the tool help creditors determine whether a property is located in a rural or underserved area for purposes of applying certain regulatory provisions related to mortgage loans. A creditor that makes a first-lien mortgage loan secured by a property located in a rural or underserved area during 2019 meets the requirements to be a creditor that operates in rural or underserved areas during 2020 and for loan applications received before April 1, 2021.

The 2019 lists can be found here. The rural and underserved areas tool can be found here.

Thank you,

Consumer Financial Protection Bureau 

WASHINGTON—Comptroller of the Currency Joseph Otting today issued the following statement supporting Director Kathy Kraninger and the Consumer Financial Protection Bureau’s proposed rule rescinding requirements that lenders make certain underwriting determinations before issuing short-term small-dollar loans.

On February 6, 2019, the Consumer Financial Protection Bureau took an important and courageous step that will allow banks and other responsible lenders to again help consumers meet their short-term small-dollar needs. The proposed rule allows lenders to re-enter the market with quality products and services that offer consumers better regulated, priced, and structured products.
Each year, millions of Americans rely on nearly $90 billion in small-dollar loans, typically between $300 and $5,000. This kind of credit helps families cope with emergencies and assists small businesses with meeting short-term expenses. When regulatory actions took banks out of the market, the demand did not go away. Other lenders stepped in. The shrinking supply and steady demand drove up prices and promoted much less favorable terms.
By reestablishing a framework of rules that allow responsible lenders to compete, the market can work better for everyone. When banks offer products with reasonable pricing and repayment terms, consumers benefit from other services that banks regularly provide, such as financial education and credit reporting.
Banks may not be able to serve all of this large market, but they can reach a significant portion of it and bring additional options and more competition to the marketplace while delivering safe, fair, and affordable products that promote the long-term financial goals of their customers.

The Bureau of Consumer Financial Protection is proposing to rescind mandatory underwriting provisions of the regulation promulgated by the Bureau in November 2017 governing Payday, Vehicle Title, and Certain High-Cost Installment Loans (2017 Final Rule). The provisions of the Rule which the Bureau proposes to rescind (1) provide that it is an unfair and abusive practice for a lender to make a covered short-term or longer-term balloon-payment loan, including payday and vehicle title loans, without reasonably determining that consumers have the ability to repay those loans according to their terms; (2) prescribe mandatory underwriting requirements for making the ability-to-repay determination; (3) exempt certain loans from the underwriting requirements; and (4) establish related definitions, reporting, and recordkeeping requirements. This proposal is related to another proposal seeking comment on whether the Bureau should delay the August 19, 2019 compliance date for these portions of the 2017 Final Rule.

The Bureau is releasing a table of contents 

 for this proposal as well as an unofficial, informal redline 

to assist industry and other stakeholders in reviewing the changes that this proposal’s amendments would make to the regulatory text and commentary of the 2017 Final Rule.

PROPOSED RULE WITH REQUEST FOR PUBLIC COMMENT

View pdf 

AGENCY:

Bureau of Consumer Financial Protection.

ACTION:

Fair Lending Report of the Bureau of Consumer Financial Protection.

SUMMARY:

The Bureau of Consumer Financial Protection (Bureau) is issuing its sixth Fair Lending Report of the Bureau of Consumer Financial Protection (Fair Lending Report) to Congress. The Bureau is committed to ensuring fair access to credit and eliminating discriminatory lending practices. This report describes the Bureau's fair lending activities in prioritization, supervision, enforcement, rulemaking, interagency coordination, and outreach for calendar year 2017.

DATES:

The Bureau released the December 2018 Fair Lending Report on its website on December 4, 2018.

FOR FURTHER INFORMATION CONTACT:

Anita Visser, Senior Policy Advisor to the Director of Fair Lending, Office of Fair Lending and Equal Opportunity, at 1-855-411-2372. If you require this document in an alternative electronic format, please contact CFPB_Accessibility@cfpb.gov.

[Click link below to review the report]

SUMMARY:

The Federal Housing Finance Agency (FHFA) has adjusted the cap on average total assets that is used in determining whether a Federal Home Loan Bank (Bank) member qualifies as a “community financial institution” (CFI) to $1,199,000,000, based on the annual percentage increase in the Consumer Price Index for all urban consumers (CPI-U), as published by the Department of Labor (DOL). These changes took effect on January 1, 2019.

FOR FURTHER INFORMATION CONTACT:

James Hedrick, Division of Federal Home Loan Bank Regulation, (202) 649-3319, James.Hedrick@fhfa.gov; or Eric M. Raudenbush, Associate General Counsel, (202) 649-3084, Eric.Raudenbush@fhfa.gov, (not toll-free numbers), Federal Housing Finance Agency, Constitution Center, 400 Seventh Street SW, Washington, DC 20219.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

The Federal Home Loan Bank Act (Bank Act) confers upon insured depository institutions that meet the statutory definition of a CFI certain advantages over non-CFI insured depository institutions in qualifying for Bank membership, and in the purposes for which they may receive long-term advances and the collateral they may pledge to secure advances.[1] Section 2(10)(A) of the Bank Act and § 1263.1 of FHFA's regulations define a CFI as any Bank member the deposits of which are insured by the Federal Deposit Insurance Corporation and that has average total assets below the statutory cap.[2] The Bank Act was amended in 2008 to set the statutory cap at $1 billion and to require FHFA to adjust the cap annually to reflect the percentage increase in the CPI-U, as published by the DOL.[3] For 2018, FHFA set the CFI asset cap at $1,173,000,000, which reflected a 2.2 percent increase over 2017, based upon the increase in the CPI-U between 2016 and 2017.[4]

II. The CFI Asset Cap for 2019

As of January 1, 2019, FHFA has increased the CFI asset cap to $1,199,000,000, which reflects a 2.2 percent increase in the unadjusted CPI-U from November 2017 to November 2018. Consistent with the practice of other Federal agencies, FHFA bases the annual adjustment to the CFI asset cap on the percentage increase in the CPI-U from November of the year prior to the preceding calendar year to November of the preceding calendar year, because the November figures represent the most recent available data as of January 1st of the current calendar year. The new CFI asset cap was obtained by applying the percentage increase in the CPI-U to the unrounded amount for the preceding year and rounding to the nearest million, as has been FHFA's practice for all previous adjustments.

In calculating the CFI asset cap, FHFA uses CPI-U data that have not been seasonally adjusted (i.e., the data have not been adjusted to remove the estimated effect of price changes that normally occur at the same time and in about the same magnitude every year). The DOL encourages use of unadjusted CPI-U data in applying “escalation” provisions such as that governing the CFI asset cap, because the factors that are used to seasonally adjust the data are amended annually, and seasonally adjusted data that are published earlier are subject to revision for up to five years following their original release. Unadjusted data are not routinely subject to revision, and previously published unadjusted data are only corrected when significant calculation errors are discovered.

Dated: January 16, 2019.

Andre D. Galeano,

Deputy Director, Division of Federal Home Loan Bank Regulation, Federal Housing Finance Agency.

Footnotes

1.  See 12 U.S.C. 1424(a), 1430(a). Back to Citation

2.  See 12 U.S.C. 1422(10)(A); 12 CFR 1263.1. Back to Citation

3.  See 12 U.S.C. 1422(10)(B); 12 CFR 1263.1 (defining the term CFI asset cap). Back to Citation

4.  See 83 FR 2153 (Jan. 16, 2018). Back to Citation

[FR Doc. 2019-01154 Filed 2-5-19; 8:45 am]

BILLING CODE 8070-01-P

HousingWire--Kelsey Ramírez

Consumer Financial Protection Bureau Director Kathy Kraninger announced a delay to the Payday Lending Rule as the bureau reconsiders some portions.

The CFPB proposed Wednesday to rescind certain provisions of its 2017 final rule governing “Payday, Vehicle Title, and Certain High-Cost Installment Loans.” The bureau announced it is looking to rescind the rule’s requirements that lenders make certain underwriting determinations before issuing payday, single-payment vehicle title, and longer-term balloon payment loans.

The CFPB explained it found that by rescinding this requirement, it would allow consumers greater access to credit.

In October 2018, under the leadership of then Acting Director Mick Mulvaney, the bureau announced that it would issue Notice of Proposed Rulemakings to reconsider the rule’s mandatory underwriting requirements and to address the rule’s compliance date.

“The bureau’s proposal suggests there was insufficient evidence and legal support for the mandatory underwriting provisions in the 2017 final rule,” the CFPB stated. “Additionally, the bureau is concerned that these provisions would reduce access to credit and competition in states that have determined that it is in their residents’ interests to be able to use such products, subject to state-law limitations.”

The CFPB announced that the proposal to remove the ability to repay portions of the rule will be open for comment for 90 days.

But the housing industry is already weighing in.

“We are pleased that the CFPB is going to delay the payday rule for further consideration,” said Dan Berger, National Association of Federally Insured Credit Unions president and CEO. “NAFCU supports the removal of problematic ability to repay portions of the rule, but we also want to ensure, that going forward, the egregious practices of certain payday lenders are addressed.”

“Credit unions provide many forms of small-dollar loans and other affordable products to their members, and NAFCU urges all consumers to consider a credit union for their financial needs,” Berger continued.

But not everyone was happy to hear the news.

“Kathy Kraninger is siding with the payday loan sharks instead of the American people,” said Rebecca Borné, senior policy counsel at the Center for Responsible Lending. “The CFPB, under a previous director, spent five years developing these consumer safeguards, taking input from lenders, faith leaders, veteran and military organizations, civil rights groups, consumer advocates and consumers from across the country.”

“But over the past year, payday lenders have spearheaded an effort, with Mick Mulvaney and now Kraninger’s help, to take consumer protections away from financially vulnerable Americans,” Borné said. “We urge Director Kraninger to reconsider, as her current plan will keep families trapped in predatory, unaffordable debt.”

And others agreed with her.

“The Consumer Financial Protection Bureau, under Director Kathy Kraninger, has officially given predatory debt traps its seal of approval,” said Mike Litt, U.S. PIRG consumer campaign director. “By proposing to get rid of its underwriting requirement, the CFPB is gutting its own protections.”

The NCUA has issued a final rule making a series of technical amendments to the NCUA’s regulations. The final rule makes a number of technical amendments to the NCUA’s regulations. These amendments include several changes to correct minor errors and inaccurate citations throughout the NCUA’s regulations. The final rule also rescinds various provisions of part 717, the NCUA’s rule implementing the Fair Credit Reporting Act, that were transferred to the Bureau of Consumer Financial Protection as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

The final rule is effective on February 5, 2019.

The Federal Deposit Insurance Corporation (FDIC) issued a final rule to amend its regulations that implement brokered deposits and interest rate restrictions to conform with recent changes to section 29 of the Federal Deposit Insurance Act. This final rule is effective on March 6, 2019.

WASHINGTON—The Office of the Comptroller of the Currency (OCC) released economic and financial market scenarios for use in the upcoming stress tests for covered institutions.

The supervisory scenarios include baseline, adverse, and severely adverse scenarios, as described in the OCC’s final rule that implements stress test requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Section 165(i)(2) of the Dodd-Frank Act requires certain financial companies, including certain national banks and federal savings associations, to conduct annual stress tests. The OCC’s stress test rule states that the OCC will provide scenarios to covered institutions by February 15 of each year.

Covered institutions are required to use the scenarios to conduct annual stress tests. The results of the company-run stress tests provide the OCC with forward-looking information used in bank supervision and will assist the agency in assessing the company’s risk profile and capital adequacy.

The 2019 scenario and background information can be found on the OCC’s stress test website. The final policy statement on the development and distribution of the scenarios was issued on October 28, 2013, in the Federal Register.

Related Links

• 2019 Dodd-Frank Act Annual Stress Test Scenario Information
• Policy Statement on the Principles for Development and Distribution of Annual Stress Test Scenarios