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HUD to “fully enforce” prohibition against sex- and gender-based discrimination
On February 11, HUD announced that it will administer and enforce the Fair Housing Act (FHA) to prohibit discrimination on the basis of sexual orientation and gender identity, in response to President Biden’s Executive Order (E.O.) 13988. According to a memorandum issued by HUD’s Acting Assistant Secretary for Fair Housing & Equal Opportunity (FHEO), the E.O. directs federal agencies to assess actions taken under federal statutes that “prohibit sex discrimination and to fully enforce those statutes to combat discrimination based on sexual orientation and gender identity,” in response to the recent Supreme Court opinion in Bostock v Clayton County (holding that prohibitions against sex discrimination in the workplace contained in Title VII of the Civil Rights Act of 1964 extend to and include discrimination on the basis of sexual orientation and gender identity). The memorandum notes that “the [FHA’s] sex discrimination provisions are comparable in text and purpose to those of Title VII of the Civil Rights Act,” thus HUD intends to enforce the FHA to prevent and combat similar discrimination. The memorandum directs HUD’s Office of Fair Housing and Equal Opportunity to, among other things, (i) “accept and investigate all jurisdictional complaints of sex discrimination, including discrimination because of gender identity or sexual orientation…”; (ii) “conduct all activities involving the application, interpretation, and enforcement of the [FHA]’s prohibition on sex discrimination consistent with its conclusion that such discrimination includes discrimination because of sexual orientation and gender identity”; and (iii) ensure FHEO regional offices and other associated agencies review, within 30 days, all allegations of alleged discrimination based on gender identity or sexual orientation received since January 20, 2020.
OCC issues LIBOR self-assessment tool
On February 10, the OCC issued Bulletin 2021-7, which provides a self-assessment tool for banks to evaluate their preparedness for the LIBOR cessation. The Bulletin reminds banks that they should “develop and implement risk management plans to identify and control risks related to expected [LIBOR] cessation,” and that banks are expected to cease entering into new contracts using LIBOR as a reference rate by December 31, 2021. The self-assessment tool may be used by banks to identify and mitigate the bank’s transition risks, and management should use the tool to “consider all applicable risks (e.g., operational, compliance, strategic, and reputation) when scoping and completing [LIBOR] cessation preparedness assessments.” Not all sections of the tool will apply to all banks, based on the size and complexity of the bank’s LIBOR exposure.
Continuing InfoBytes coverage on the LIBOR transition available here.
Ueijo says CFPB focus is on the economically vulnerable; urges attention to consumer complaints
On February 10, CFPB acting Director Dave Uejio published a blog post sharing his “broad vision” for the Division of Consumer Education and External Affairs (CEEA). This guidance, Uejio emphasized, will help to immediately advance the Bureau’s policy priorities and protect economically vulnerable consumers, which includes making sure consumers who submit complaints to the Bureau “get the response and the relief they deserve.” Observing that some companies have not met their obligations to respond to consumer complaints, Uejio reiterated that “[i]t is the Bureau’s expectation that companies provide substantive responses that address the issues consumers describe in their complaints.” He also noted that because consumer advocates have identified disparities in certain companies’ responses to Black, Brown, and Indigenous communities, he asked Consumer Response to provide an analysis identifying companies with poor track records on these issues. To achieve his goal of assisting economically vulnerable consumers, Uejio asked CEEA to take the following steps:
- Target resources to ensure struggling homeowners in delinquency or at risk of foreclosure and renters at risk of eviction know their rights.
- Increase coordination efforts with other agencies to provide assistance and information to at-risk homeowners and renters.
- Collaborate with coalitions of stakeholders, including consumer advocates, civil rights groups, grassroots, community-based organizations, and individual consumers to ensure homeowners receive information and assistance in languages and terminology they understand.
- Help ensure homeowners and renters can access HUD-approved housing counseling organizations so they can manage financial hardships due to Covid-19.
- Take the lead on updating the Bureau’s website so it is more user friendly and focused on consumers rights, and expand the Bureau’s social media presence so consumers can be heard from directly.
- Aggressively rebuild and repair the Bureau’s relationships with external stakeholders who support economically vulnerable consumers, including consumer, civil rights, racial justice, and tribal and Indigenous rights groups.
Since being named acting Director, Uejio has also published blog posts conveying his visions for the Division of Research, Markets, and Regulations and the Office of Supervision, Enforcement, and Fair Lending (covered by InfoBytes here and here).
SBA addresses PPP loan error codes
On February 10, the Small Business Administration (SBA) issued an updated procedural notice providing instructions for lenders addressing Paycheck Protection Program (PPP) loan error codes. The notice, which revises guidance provided in a previously issued procedural notice (covered by InfoBytes here), addresses (i) Second Draw PPP loan guaranty applications where there is a hold code on the borrower’s First Draw PPP loan, as well as (ii) First Draw PPP loan guaranty applications and Second Draw PPP loan guaranty applications with compliance check error messages. SBA provides lenders with several methods for resolving hold codes and compliance check error messages, including resolution through lender certification or resolution through SBA review. The notice also addresses how SBA handles duplicate loans, loans with multiple DUNS numbers, and other hold codes that cannot be resolved by these processes. The same day, SBA also announced plans to take additional steps to improve the PPP, including (i) enabling “lenders to directly certify eligibility of borrowers for First Draw and Second Draw PPP loan applications with validation errors to ensure businesses who need funds and are eligible receive them as quickly as possible”; (ii) allowing “lenders to upload supporting documentation of borrowers with validation errors during the forgiveness process”; and (iii) creating “additional communication channels with lenders to assure [SBA is] constantly improving equity, speed, and integrity of the program, including an immediate national lender call to brief them on the Platform’s added capabilities.”
SBA updates PPP processing fee guidance
On February 8, the Small Business Administration (SBA) issued an updated procedural notice addressing changes to the Paycheck Protection Program (PPP) processing fees and reporting process. The notice covers the breakdown of fees for first-draw PPP loans made after December 27, 2020 and for second-draw PPP loans. The notice notes that “all processing fees are based on the balance of the PPP loan outstanding at the time of full disbursement of the loan.” The SBA states that lenders may request payment of processing fees after the lender successfully reports that the loan has been fully disbursed by using Form 1502. Moreover, the SBA states that it will remit Economic Injury Disaster Loan (EIDL) reconciliation payments from February 9 through February 19. As previously covered by InfoBytes, SBA is no longer deducting EIDL advances from PPP forgiveness payments, and for any forgiveness payments that were already reduced by an EIDL advance, the SBA will automatically remit a reconciliation payment to the PPP lender that will include the advance amount plus interest through the remittance date.
FHFA extends foreclosure moratorium, increases forbearance and deferral timelines
On February 9, the FHFA announced that Fannie Mae and Freddie Mac (GSEs) will extend their moratorium on single-family foreclosures and real estate owned (REO) evictions until at least March 31 (which was set to expire on February 28, previously covered here). The foreclosure moratorium applies to homeowners with a GSE-backed, single-family mortgage only, and the REO eviction moratorium applies to properties that were acquired by the GSEs through foreclosure or deed-in-lieu of foreclosure transactions. Additionally, FHFA announced that borrowers may be eligible for up to a three-month forbearance extension so long as they are on a Covid-19 forbearance plan as of February 28 (details on the Covid-19 forbearance covered by InfoBytes here) and the Covid-19 payment deferral may now cover up to 15 months of missed payments (previously covering up to 12 months of missed payments, additional details covered by InfoBytes here).
Additionally, FHFA issued an extension of several loan origination guidelines put in place to assist borrowers during the Covid-19 pandemic. Specifically, FHFA extended until March 31 existing guidelines related to: (i) alternative appraisal requirements on purchase and rate term refinance loans; (ii) alternative methods for documenting income and verifying employment before loan closing; and (iii) expanding the use of power of attorney to assist with loan closings.
The extensions are implemented in updates to Fannie Mae Lender Letters LL-2021-02, LL-2021-03, LL-2021-04; LL-2021-07; and Freddie Mac Guide Bulletin 2021-6; Bulletin 2021-7 and Selling FAQs.
Fed further extends temporary exception to allow bank insiders access to PPP
On February 9, the Federal Reserve Board announced the second extension of a temporary exception from the requirements of section 22(h) of the Federal Reserve Act and corresponding provisions of Regulation O to allow bank directors and shareholders to apply for Small Business Administration (SBA) Paycheck Protection Program (PPP) loans from their affiliated banks. The extension is effective immediately and goes through March 31. The Fed reiterated that any PPP loans extended to bank directors and shareholders must be consistent with SBA’s PPP lending restrictions and done without favoritism from the bank. The original extension was announced on April 17 and already extended once (covered by InfoBytes here).
OCC conditionally approves conversion of cryptocurrency trust company
On February 5, the OCC announced that it conditionally approved a Washington state-chartered trust company’s application to convert to a national trust bank. According to the OCC, the trust company—which will provide cryptocurrency custody services for clients in a fiduciary capacity—“is currently in the organizational phase of development and will have up to 18 months to meet the terms of its conditional approval before it converts to a national trust bank and begins to operate.” By receiving a national trust bank charter, the trust company will be allowed to provide nationwide services to customers through offices in Seattle, Boston, and New York, and over the internet. The trust company also intends to expand its custody services to support additional types of digital assets beyond cryptocurrencies, including certain tokens and stable coins, and plans to eventually offer, among other things, client-to-client trading and lending platforms. The OCC notes that approval of the conversion is subject to several conditions, including that the trust company “not engage in activities that would cause it to be a ‘bank’ as defined in section 2(c) of the Bank Holding Company Act.”
FDIC assesses bank $12.5 million BSA penalty
On January 29, the FDIC released a list of administrative enforcement actions taken against banks and individuals in December. During the month, the FDIC issued 10 orders consisting of “three consent orders, one termination of consent order, three section 19 orders, two removal and prohibition orders and two orders to pay civil money penalties.” Among the orders, the FDIC issued a $12.5 million civil money penalty order against a New York-based bank resolving allegations that the bank violated the Bank Secrecy Act (BSA) and its implementing regulations from April 2014 through September 2018, including failing to comply with the FDIC’s December 2015 consent order, which required the bank to strengthen its BSA/anti-money laundering oversight. The $12.5 million civil money penalty is reflective of the “the financial resources and good faith of the [bank], the gravity of the violations by the [bank], the history of previous violations by the [bank], and such other matters[.]”
Acting director outlines future direction for CFPB
On February 4, CFPB acting Director Dave Uejio published a blog post conveying his “broad vision” for the Division of Research, Markets, and Regulations (RMR). Uejio emphasized that in order for the Bureau to respond to his previously stated policy priorities—(i) relief for consumers facing hardship and economic crisis due to the Covid-19 pandemic, and (ii) racial equity (covered by InfoBytes here)—the agency must sharpen its focus on the consumer experience. To achieve this goal, Uejio is authorizing the Bureau’s use of its 1022(c)(4) data collection authority and has asked RMR to examine “the impact of specific industry practices on consumers’ daily budget and overall bottom line in order to target effective policy interventions.” Among other things, RMR has been asked to take the following immediate steps:
- Prepare an analysis assessing housing insecurities such as mortgage foreclosures, mobile home repossessions, and landlord-tenant evictions.
- Prepare an analysis to address pressing consumer financial barriers to racial equity in order to “inform research and rulemaking priorities,” and “[e]xplicity include in policy proposals the racial equity impact of the policy intervention.”
- Resume data collections paused due to Covid-19, including HMDA quarterly reporting, CARD Act data collection, PACE data collection, and the previously completed 1071 data collection.
- Focus mortgage servicing rulemaking on Covid-19 responses “to avert, to the extent possible, a foreclosure crisis” when pandemic forbearances end in March and April.
- Explore options for preserving the status quo with respect to QM and debt collection rules. (QM rules covered by InfoBytes here and a Buckley Special Alert; debt collection rules covered by InfoBytes here and here.)
Uejio also noted that he “will be assessing regulatory actions taken by the previous leadership and adjusting as necessary and appropriate those not in line with [the Bureau's] consumer protection mission and mandate,” and that he wants to “preserve, where possible, maximum policy flexibility” for President Biden’s nominee once confirmed.