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  • CFPB publishes Regulation F debt collection compliance guidance

    Agency Rule-Making & Guidance

    On October 29, the CFPB released information on validation notices to help facilitate compliance with requirements in the Regulation F debt collection final rule. As previously covered by InfoBytes, in October 2020 the CFPB issued its final rule (effective November 30) amending Regulation F, which implements the Fair Debt Collection Practices Act, addressing debt collection communications and prohibitions on harassment or abuse, false or misleading representations, and unfair practices. The CFPB released guidance for debt collectors offering instructions on how to provide certain validation information, including using the “Itemization Table” in the model validation notice as well as examples of how the table might be completed for different types of debts. The guidance also provides, among other things, examples of itemization tables for the collection of multiple debt owned by the same consumer.

    The Bureau also issued new FAQs related to Regulation F that address validation information generally and validation information related to residential mortgage debt. Among other things, the FAQs: (i) specify the validation information debt collectors must provide consumers who owe or allegedly owe a debt; (ii) clarify that while the use of the model validation notice provided in Appendix B of the final rule is not required, debt collectors must comply with the validation information content and format requirements in Regulation F; (iii) specify that a debt collector can make changes to the model validation notice and still obtain the validation information content and format safe harbor with certain limitations; (iv) state that a debt collector does not need to provide the itemization-related information in a validation notice provided the debt collector follows a special rule for certain residential mortgage debt; (v) outline validation information that may be omitted if using the Mortgage Special Rule, and clarify that generally if a debt collector uses the Mortgage Special Rule with the model validation notice, the debt collector may still receive a safe harbor as long as certain criteria is met; (vi) define “most recent periodic statement” for purposes of the Mortgage Special Rule; and (vii) clarify that under the Mortgage Special Rule, a debt collector “uses the date of the periodic statement provided under that Special Rule as the itemization date.” As previously covered by InfoBytes, the Bureau issued FAQs last month discussing limited-content messages and the call frequency provisions under the Debt Collection Rule in Regulation F.

    Agency Rule-Making & Guidance CFPB Debt Collection Regulation F Compliance Mortgages

  • OCC updates Retail Lending booklet

    Agency Rule-Making & Guidance

    On October 28, the OCC issued Bulletin 2021-52 announcing the issuance of version 2.0 of the “Retail Lending” booklet of the Comptroller’s Handbook. The booklet rescinds OCC Bulletin 2017-15, “Retail Lending: New Comptroller's Handbook Booklet” (covered by InfoBytes here) and the “Retail Lending” booklet of the Comptroller’s Handbook, version 1.1. Among other things, the revised booklet: (i) reflects changes to laws and regulations since the last update of this booklet; (ii) reflects OCC issuances published and rescinded since the last update of this booklet; (iii) clarifies supervisory guidance, sound risk management practices, and legal language; and (iv) alters some content for clarity purposes.

    Agency Rule-Making & Guidance OCC Comptroller's Handbook Bank Regulatory

  • CFPB adjusts annual dollar threshold for Regulation Z, CLA

    Agency Rule-Making & Guidance

    On October 25, the CFPB announced the annual dollar threshold adjustments that govern the application of Regulation Z (Truth in Lending Act). The final rule revises the dollar amounts, where appropriate, for provisions implementing TILA and amendments to TILA, including under the CARD Act, the Home Ownership and Equity Protection Act of 1994 (HOEPA), and Dodd-Frank. Each year the thresholds must be readjusted based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which took effect June 1. Effective January 1, 2022, the threshold that triggers requirements to disclose minimum interest charges for open-end consumer credit plans under TILA will remain unchanged at $1.00. The adjusted dollar amount for a safe harbor for a first violation penalty fee will increase to $30 in 2022, and the adjusted dollar amount for a safe harbor for a subsequent violation penalty fee will increase to $41 for open-end consumer credit plans under the CARD Act amendments to TILA. With respect to HOEPA, the adjusted total loan amount threshold for high-cost mortgages in 2022 will be $22,969, whereas the adjusted points and fees dollar trigger for high-cost mortgages will be $1,148. The final rule also specifies 2022 pricing thresholds for the spread between a qualified mortgage’s annual percentage rate and the average prime offer rate, and identifies points and fees limits for all categories of qualified mortgages.

    Additionally, the Bureau and the Federal Reserve Board finalized the annual dollar threshold adjustment that governs the application of the Consumer Leasing Act (Regulation M), as required by the Dodd-Frank Act. The exemption threshold for 2022, based on the annual percentage increase in the CPI-W, will increase from $58,300 to $61,000.

    Agency Rule-Making & Guidance CFPB Regulation Z TILA Credit Cards Qualified Mortgage HOEPA CARD Act Dodd-Frank Mortgages Consumer Leasing Act Federal Reserve

  • OCC releases FAQs on proposal to rescind 2020 CRA rule

    Agency Rule-Making & Guidance

    On October 26, the OCC issued responses to frequently asked questions on its notice of proposed rulemaking (NPRM) to rescind its 2020 Community Reinvestment Act Rule (2020 Rule) and to replace it with rules based largely on those adopted jointly by the federal banking agencies in 1995, as amended. As previously covered by InfoBytes, the OCC noted it intends to align the agency’s CRA rules with current Federal Reserve Board and FDIC rules, “thereby facilitat[ing] the on-going interagency work to modernize the CRA regulatory framework and create consistency for all insured depository institutions.” The FAQs discuss the rulemaking process and provide a general timeline on the transition from the 2020 Rule. The FAQs also answer questions concerning: (i) CRA bank-type determinations; (ii) qualifying activity determinations; (iii) the qualifying activity confirmation request system; (iv) the transition period for tracking activities that qualify under the 2020 Rule but would not qualify should the 1995 rules be reinstated; (v) examination administration; (vii) assessment areas; (vii) targeted geographic areas; (viii) strategic plans; and (ix) submitting public comments.

    Agency Rule-Making & Guidance OCC Federal Reserve FDIC CRA Bank Regulatory

  • FDIC finalizes rule amending real estate lending

    Agency Rule-Making & Guidance

    On October 22, the FDIC adopted a final rule amending the Interagency Guidelines for Real Estate Lending Policies to include consideration of the capital framework established in the community bank leverage ratio (CBLR) rule into the method of calculating the ratio of loans in excess of the supervisory loan-to-value limits (LTV limits), which applies to all FDIC-supervised financial institutions. As previously covered by InfoBytes, the FDIC issued the proposed rule to amend the Interagency Guidelines for Real Estate Lending Policies in June by proposing to establish supervisory LTV criteria for certain real estate lending transaction types and allowing exceptions to the supervisory LTV limits. Among other things, the final rule: (i) “revises the Appendix so that all FDIC-supervised institutions calculate the ratio of loans in excess of the supervisory LTV limits using tier 1 capital plus the appropriate allowance for credit losses in the denominator, regardless of an institution’s CBLR election status”; and (ii) “provides a consistent approach for calculating the ratio of loans in excess of the supervisory LTV limits at all FDIC-supervised institutions,” and “would approximate the historical methodology . . . for calculating the ratio of loans in excess of the supervisory LTV limits.” The final rule is effective 30 days after publication in the Federal Register.

    Agency Rule-Making & Guidance FDIC Federal Register LTV Ratio Community Banks Real Estate Bank Regulatory

  • Agencies seek to update uniform rules for administrative enforcement proceedings

    Agency Rule-Making & Guidance

    Recently, the FDIC, OCC, Federal Reserve Board, and NCUA issued a notice of proposed rulemaking (NPRM) to modernize the agencies’ Uniform Rules of Practice and Procedure (Uniform Rules) applicable to formal administrative enforcement proceedings. The amendments would recognize the use of electronic communications and technology in all aspects of administrative hearings to increase the efficiency and fairness of administrative adjudications. Among other things, the NPRM would (i) allow electronic signatures and filings; (ii) permit depositions to be held by remote means; (iii) modernize language and definitions; and (iv) extend certain filing time limits. Amended provisions also address the authority of administrative law judges, adjudicatory proceedings, good faith certifications, ex parte communications, and expenses. The agencies also propose to modify their specific rules of administrative practice and procedure (known as the Local Rules) applicable to enforcement actions brought by each agency. FDIC staff released a memo recommending its board approve and authorize the NPRM, pointing out that the rules have not been substantively updated in 25 years and do not account for technological advances.

    Agency Rule-Making & Guidance FDIC OCC Federal Reserve NCUA Enforcement Bank Regulatory

  • Fed announces new rules for staff securities trading

    Agency Rule-Making & Guidance

    On October 21, the Federal Reserve Board announced new rules to prohibit the purchase of individual securities, restrict active trading, and increase the timeliness of reporting and public disclosure. According to the announcement, the new rules apply to the Reserve Bank and Board policymakers and senior staff. Among other things, the rules require that Fed policymakers and senior staff provide 45 days’ advance notice and obtain approval before purchasing or selling approved securities. In addition, they will be required to hold investments for a minimum of one year.

    Agency Rule-Making & Guidance Federal Reserve Securities Bank Regulatory

  • FHA proposes changes to defect taxonomy for loan servicing

    Agency Rule-Making & Guidance

    On October 28, FHA requested stakeholder review and feedback on a draft update to Appendix 8.0 – FHA Defect Taxonomy for its Single Family Housing Policy Handbook 4000.1. The updated draft appendix includes, among other things, (i) six new defect areas to incorporate loan-level servicing reviews (servicer operations, account administration, delinquent and default servicing, loss mitigation processing, home retention, and home disposition); (ii) severity tier descriptions explaining the process used for determining whether defects require corrective servicing action or a different response “based on the impact of non-compliance on FHA, the property, or both”; and (iii) and expanded, servicing-specific remedies for violations. As previously covered by InfoBytes, FHA issued an update to Section III of the handbook, which streamlined many standard mortgage servicing operational requirements and incorporated FHA actions taken to support borrowers experiencing Covid-19-related financial hardships. The proposed defect taxonomy updates are intended to increase transparency into FHA’s servicing loan review process and provide clarity on how FHA will hold servicers accountable for loan-level compliance. Comments are due December 27.

    Agency Rule-Making & Guidance FHA Mortgages HUD Mortgage Servicing Covid-19 Consumer Finance

  • NCUA approves expansion of CUSO lending rights

    Agency Rule-Making & Guidance

    On October 21, the National Credit Union Administration Board approved a final rule by a 2-1 vote to expand the range of permissible activities and services that credit union service organizations (CUSOs) may engage in. Under the final rule, CUSOs will be allowed to originate, purchase, sell, and hold any type of loan a federal credit union is permitted to, including auto and payday loans. The final rule also provides the Board “additional flexibility to approve permissible CUSO activities and services outside of notice and comment rulemaking.” NCUA Vice Chairman Kyle Hauptman stated the rule “gives credit unions the tools to compete more effectively in the digital marketplace.” However, NCUA Chairman Todd Harper opposed the final rule, warning that because NCUA “lacks the third-party vendor authorities that the other federal banking agencies and several state regulators have, the NCUA has no power to supervise CUSOs for compliance with federal consumer financial protection laws and regulations and compliance with prudential standards like concentration limits, maximum loan-to-value ratios, and minimum capital levels.” The final rule takes effect 30 days after publication in the Federal Register.

    Agency Rule-Making & Guidance NCUA Credit Union CUSO Consumer Lending

  • OCC updates Payment Systems booklet

    Agency Rule-Making & Guidance

    On October 21, the OCC issued Bulletin 2021-49 announcing the revision of the Payment Systems booklet of the Comptroller’s Handbook. The booklet rescinds the Payment Systems and Funds Transfer Activities booklet of the Comptroller’s Handbook (March 1990); the Office of Thrift Supervision Examination Handbook section 580, the Payments Systems Risk (January 1994); banking Circular 235, International Payments Systems Risks (May 10, 1989); and OCC Bulletin 1996-48, Stored Value Card Systems: Information for Bankers and Examiners (September 3, 1996). Among other things, the revised booklet: (i) provides information on payment systems, types of payments, risks associated with payment systems, and associated risk management practices; (ii) highlights the requirements of 12 CFR 7.1026 on payment systems memberships; and (iii) includes expanded examination procedures and “supplemental procedures for deeper review of certain payment activities.”

    Agency Rule-Making & Guidance OCC Comptroller's Handbook Bank Regulatory Payments Payment Systems

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