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On Monday, the CFPB issued its finalized mortgage servicing protections. The Bureau did not finalize a foreclosure moratorium until January 1, 2022 - the Bureau recognized the feedback from CUNA and others that the rule was not sufficiently tailored and could ultimately cause harm to consumers if implemented. Instead, the Bureau created temporary procedural protections that apply only for borrowers who becomes more than 120 days delinquent after March 1, 2020 and for which the state statute of limitations to file foreclosure will not run before January 1, 2022. For these borrowers, credit unions and other lenders can initiate foreclosure if the property has been abandoned, the borrower has been unresponsive for at least 90 days, or the borrower has already submitted a complete loss mitigation application and been evaluated. These protections only apply to first legal or first notice between the effective date of August 31, 2021 and the sunset of January 1, 2022. The rule also finalized other mortgage servicing protections, including allowing servicers to offer streamlined loan modification based on incomplete loss mitigation applications and providing certain information for borrowers nearing the end of scheduled forbearance.
As expected, HUD has proposed to reinstate its 2013 Rule titled “Implementation of the Fair Housing Act’s Discriminatory Effects Standard.”
The House of Representatives will consider H.R. 2662, the IG Independence and Empowerment Act and H.R. 3684, the INVEST in America Act.
The Senate is in recess this week.
the House of Representatives voted to nullify the Office of the Comptroller of the Currency’s “true lender” proposal. The joint resolution passed the Senate in May, and now the rule will be nullified with the signature of President Biden.
CUNA has been actively supporting the resolution of disapproval. The proposal would allow a national bank would be considered the true lender of the loan if, as of the date of origination, it is named as the lender in the loan agreement or funds the loan.
The House Financial Services Committee held a markup of a number of bills including H.R. 3958, the Central Liquidity Facility (CLF) Fairness Act. CUNA wrote a letter of support to the Committee prior to the markup. H.R. 3958 passed out of the Committee by a party-line vote of 28-22. This legislation would better protect credit unions from unexpected liquidity issues now and in the future.
Following the Supreme Court’s decision in Collins v. Yellen, President Biden announced his intention to replace Director Calabria as Director of the FHFA. Before the end of the day, President Biden had appointed Sandra L. Thompson as Acting Director, effective immediately. Acting Director Thompson had served as Deputy Director of the Division of Housing Mission and Goals at the FHFA since 2013. Prior to that, she worked in multiple leadership positions at the FDIC, including as the Director of the Division of Risk Management Supervision. One of the first actions taken by the FHFA under its new leadership is an extension of the foreclosure moratorium on single-family foreclosures and real estate owned (REO) evictions from June 30, 2021 to July 31, 2021.
The Board voted to reaffirm the current maximum loan rate of 18% (28% for PALs) through March 10, 2023. Today’s action was necessary to avoid the maximum rate from reverting back to the lower statutory level of 15%, which would have occurred in September of this year had the Board not acted.
Board Member Hood encouraged the Board to pursue a potential floating interest rate cap instead of the traditional fixed rate. The agency’s semi-annual regulatory agenda includes an item to solicit comments on various issues related to the interest rate ceiling for loans granted by FCUs. In 2019, CUNA asked the Board to explore the idea of adopting a floating interest rate cap.
The Supreme Court issued its opinion in Collins v. Yellen (formerly Collins v. Mnuchin). This case was brought by shareholders of Fannie Mae seeking to have the net worth sweep in the third amendment to the Preferred Stock Purchase Agreement (PSPA) voided. The shareholders argued, among other things, that the FHFA was unconstitutionally structured as its director was removable by the President only for cause, and not at will.
CUNA wrote to the Senate Appropriations Subcommittee in strong support of funding for the Treasury’s Community Development Financial Institutions (CDFI) Fund and NCUA’s Community Development Revolving Loan Fund (CDRLF). The President’s budget request for Fiscal Year 2022 includes $320 million for the CDFI Fund and $2 million for the CDRLF. CUNA strongly supports the requests for these two important funds in FY 2022.
The Federal Reserve announced an extension of the comment deadline for its debit card routing requirements proposal. CUNA joined other organizations earlier this month calling on the Fed to extend the July 12 comment deadline, saying addition time would help both the accuracy and specificity of feedback. Comments are now due August 11.
The FFIEC announced an update to four parts of the BSA/AML Examination Manual’s section on Assessing the BSA/AML Compliance Program. The updated parts include International Transportation of Currency or Monetary Instruments Reporting, Purchase and Sale of Monetary Instruments Recordkeeping, Reports of Foreign Financial, and Special Measures.
President Biden signed the Juneteenth National Independence Day Act establishing June 19th as a Federal Holiday going forward. CFPB Acting Director Dave Uejio released a statement acknowledging that this new holiday may have implications for scheduled mortgage closings and the provision of TRID disclosures according to the rule’s hyper-specific timeline. The statement highlighted the statutory ability to correct errors under TILA, as well as the statute’s provisions regarding unintentional violations and bona fide errors. The Bureau did not provide any guidance, but it did indicate that if it does, the guidance would “take into account the limited implementation period before the holiday.” It is not clear whether this guidance is forthcoming, and whether it will be issued within a timeframe that is at all useful to credit unions.
The House of Representatives will consider the following on the floor this week:
H.R. 1443 - LGBTQ Business Equal Credit Enforcement and Investment Act (Sponsored by Rep. Ritchie Torres / Financial Services Committee)
S.J.Res. 15 - A joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Office of the Comptroller of Currency relating to "National Banks and Federal Savings Associations as Lenders" (Sponsored by Sen. Chris Van Hollen / Financial Services Committee)
S.J.Res. 13 - A joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Equal Employment Opportunity Commission relating to "Update of Commission's Conciliation Procedures" (Sponsored by Sen. Patty Murray / Education and Labor Committee)
S.J.Res. 14 - A joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Environmental Protection Agency relating to "Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Review" (Sponsored by Sen. Martin Heinrich / Energy and Commerce Committee)
The Senate will consider S. 2093, the For the People Act of 2021.
CUNA, AACUL and the state Leagues wrote to NCUA Friday encouraging the agency to pursue additional tools to aid credit unions facing Prompt Corrective Action (PCA) and other capital challenges. The letter thanks NCUA for the Interim Final Rule that provides some relief, but highlights that Congressional action is needed for additional flexibility.
"However, this crisis has exposed what has been clear for a long time: NCUA lacks the statutory flexibility it needs to help credit unions navigate certain capital situations induced by natural disasters, public health crises, other emergencies, and the governmental responses thereto."
At next week’s meeting, the Board will take up two final rules CUNA has been pushing the agency to finalize: final rule re the Current Expected Credit Loss Methodology (Part 702), and final rule re Capitalization of Interest (Part 741, Appendix B).
In addition, the Board will discuss a potential rulemaking re the FCU Loan Interest Rate Ceiling. In 2019, CUNA asked the Board to explore the idea of adopting a floating interest rate cap instead of the traditional fixed interest rate.
As usual, we will provide a comprehensive summary of the meeting on this blog.
The FCC is launching a beta testing period where credit unions can sign up to use the new Reassigned Numbers Database for free. Callers and caller agents interested in participating in the beta test can go to https://www.reassigned.us/ or email email@example.com for more information.
The CFPB issued an interpretive rule that explains the basis for its authority to examine supervised financial institutions for compliance with the Military Lending Act (MLA). This CFPB position reverses the agency’s previous position in 2018 that it did not have examination authority regarding the MLA. Based on this announcement, the CFPB will resume MLA-related examination activities for the financial institutions under its authority, such as credit unions with over $10 billion in assets.
This is another example of the new CFPB leadership reversing positions and policies from the prior 4 years. CUNA will continue to monitor CFPB regulatory activity and advocate for fair and streamlined policies targeting the problem actors in the industry, not credit unions.
The Bureau held a Virtual Event on Home Appraisal Bias in response to several recent reports of egregious examples of racial bias by home appraisals. During the session, HUD reported a ten-fold increase in the receipt of complaints regarding discrimination in appraisers since 2019. The FFIEC’s Appraisal Subcommittee is responding to these reports by conducting a review of the professional standards and appraiser qualification criteria and conducting roundtables on diversity, equity and inclusion issues and solutions in the appraisal industry, which is aging and 89% white. It is also updating the Appraisal Complaint National Hotline to ensure it is a helpful resource for holding appraisers accountable. President Biden has directed HUD to establish a task-force to assess the extent, causes and affects of discrimination in appraisals and recommend solutions.
On May 28, 2021, the President delivered the remainder of his Fiscal Year 2022 budget to Congress. The Administration’s budget is an explanation of its spending and revenue priorities and does not have the force of law.
The House of Representatives will consider H.R. 1187, the ESG Disclosure Simplification Act of 2021 [Corporate Governance Improvement and Investor Protection Act]; and H.R. 256, a bill to repeal the Authorization for Use of Military Force Against Iraq Resolution of 2002.
The following bills will be considered under expedited procedures:
The Senate will resume consideration of Ketanji Brown Jackson to be a U.S. Circuit Judge for the District of Columbia Circuit.
CUNA filed comments with FinCEN and NCUA in response to an Interagency Request for Information regarding the use of a Model Risk Management Guidance (MRMG) in BSA/AML compliance. The Federal Reserve Board and OCC adopted the MRMG in 2011. The FDIC followed in 2017. To date, the NCUA has not adopted this guidance, and as such, the guidance does not explicitly apply to federally-insured credit unions. However, credit unions do use models in risk management as part of their BSA/AML compliance programs and the guidance does inform industry-wide products, services and processes. In April, the Federal Reserve Board, OCC, and FDIC issued a statement with NCUA and FinCEN clarifying that the MRMG represents guidance, not regulatory requirements. In its letters, CUNA discusses the role these models play in credit union BSA/AML compliance programs, the potential effects of changes to the MRMG on those programs, and it applauded the interagency statement as providing clarity for BSA/AML compliance expectations.
We filed a letter in support of NCUA’s interim final rule providing temporary regulatory relief (until March 31, 2022) regarding PCA, and to encourage the NCUA Board to pursue additional PCA relief. The rule follows a temporary rule adopted last year that provided the same relief but expired at the end of 2020.
In addition, we reiterated our call for the agency to provide additional PCA relief by temporarily excluding certain assets from the net worth ratio.
We also called on NCUA to engage Congress to pursue changes to the FCU Act to provide the Board with additional tools to aid credit unions that encounter difficulties in the area of PCA.
CUNA joined several organizations encouraging Congress to carefully assess the costs and benefits of imposing a new level of data collection to the tax reporting structure. President Joe Biden’s FY22 budget proposal includes language about requiring financial institutions to report information on account flows.
“This proposal will have real costs, not only for government, but also for financial institutions, small businesses, and individual taxpayers,” the letter reads. “Strengthening IRS funding and overhauling outdated technology to use existing information reporting to facilitate targeted auditing of questionable tax returns is a much more efficient and effective approach to closing the tax gap.”
Damon Smith, who previously served as CUNA Senior Director of Advocacy and Counsel, was nominated Wednesday by President Joe Biden to serve as General Counsel at the Department of Housing and Urban Development (HUD). A Senate-confirmed position, the role serves as the agency’s chief legal position.
Smith, in his role at CUNA, contributed to regulatory analysis for CUNA’s advocacy team, particularly relating to housing policy and finance issues. Smith left CUNA in January 2021 to serve as the acting General Counsel for the agency.
CUNA wrote to House Financial Services Committee leadership in strong support of the Expanding Financial Access for Underserved Communities Act. The committee discussed the draft legislation during a hearing last month.
The Expanding Financial Access for Underserved Communities Act is a market-based solution that would make three changes to the Federal Credit Union Act to enable and encourage credit unions to serve underserved and abandoned communities and promote financial inclusion to all at no cost to the taxpayer.
CUNA, along with several other trade associations, filed comment in response to a recent petition by USTelecom asking the FCC to permit a flexible range of notification methods when calls are blocked, rather than the use of SIP/ISUP Codes in the Commission’s December 2020 Order. The petition also seeks to delay the January 1, 2022 implementation date of the blocked call notification requirement.
The joint comments urge the FCC to maintain the requirement that the Voice Service Providers use the SIP/ISUP Codes because a standardized notification method is critical for credit unions to be able to receive it and recognize their calls are being blocked. If the SIP/ISUP Codes are not yet technically operational by the January 1, 2022 deadline, the comments suggest the Commission should permit an alternative method of notification in the interim, as long as that interim method is immediate, informs the caller the call is being blocked, and who is blocking it.
The CFPB recently added 23 new FAQs to its Mortgage Servicing compliance resources. These are all on the topic of servicing escrow accounts under Regulation X, and are broken down into four categories: General; Escrow Account Analysis; Deficiencies, Shortages, and Surpluses; and Public Guidance Documents. Most of these new FAQs are fairly basic restatements of the regulation, however the questions describing the Bureau’s approach to the Public Guidance Documents and their relationship to HUD’s prior guidance may be helpful.
CUNA delivered remarks during a Federal Housing Finance Agency (FHFA) Listening Session focused on Single Family Small Lender Access. During this listening session, the FHFA sought feedback on challenges small lenders face in connection with appraisals, the COVID-19 pandemic, and obstacles faced in doing business with the Enterprises. CUNA’s remarks focused on the importance of the credit union industry, affordable housing issues, appraisal difficulties, and the barriers for small lenders to sell loans to the Enterprises.
The FHFA has announced that it will extend to availability of COVID-19 forbearance, scheduled to expire on June 30, 2021, to qualifying multifamily property owners until September 30, 2021. In the announcement, the FHFA recognized that while COVID-19 cases are declining, many renters are still recovering financially and may need additional time to enter into a paying status. A homeowner who enters into forbearance must agree not to evict tenants solely for nonpayment of rent while the property is in forbearance, provide notice of that fact, and offer some additional protections during the repayment period, such as not charging late fee. The FHFA has not announced any extension of its forbearance programs or foreclosure moratorium for single-family mortgages, currently set to expire on June 30, 2021.
CUNA and other organizations requested the Federal Reserve extend the comment deadline on a proposal that could increase costs and complexity for debit card routing requirements. Comments are currently due July 12, CUNA requested a 30-day extension.
CUNA and other financial industry associations filed an amicus brief in support of a petition for a rehearing en banc of a lawsuit that deals with communications under the Fair Debt Collection Practices Act (FDCPA). CUNA and the organizations seek a re-hearing before the entire 11th Circuit Court of Appeals. A three-judge panel in the 11th Circuit Court issued an opinion in Hunstein v. Preferred Collection and Management Services, Inc. that would expand the potential actions that could violate the FDCPA.
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