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CFPB publishes 2022 reportable HMDA data reference chart
On January 27, the CFPB published the Reportable HMDA Data: A Regulatory and Reporting Overview Reference Chart for HMDA Data Collected in 2022. The chart serves as a reference tool for data points that are required to be collected, recorded, and reported under Regulation C, as amended by HMDA rules, which were most recently issued in April 2020 (covered by InfoBytes here). The chart also provides relevant regulation and commentary sections and guidance for when to report “not applicable or exempt.” The Bureau notes that the “chart does not provide data fields or enumerations used in preparing the HMDA loan/application register (LAR).” For additional information on preparing the HMDA LAR, financial institutions should consult FFIEC guidance here.
Five agencies launch effort to address romance scams
On February 7, the CFTC, FinCEN, CFPB, ICE, and U.S. Postal Inspection Service launched the nationwide awareness effort “Dating or Defrauding?” to remind the public about the ongoing dangers of romance scams that target individuals through dating apps or social media. The agencies draw attention to new types of scams that have costs victims millions of dollars, and highlight recent FTC studies showing that 2020 was a record year for romance scams with the number of these types of complaints continuing to increase in 2021. According to a January FTC blog post (covered by InfoBytes here), more than 95,000 people reported about $770 million in losses to fraud initiated on social media platforms in 2021, with investment scams and romance scams having the most reported dollars lost. A recent FTC data spotlight showed that consumers reported losing $547 million to romance scams in 2021 alone. The agencies’ initiative provides guidance on how to recognize scams before individuals give away any money or assets, as well as measures to take if they have been victimized.
House passes America COMPETES Act
On February 4, the U.S. House passed, by a vote of 222-210, the “America Creating Opportunities for Manufacturing Pre-Eminence in Technology and Economic Strength (COMPETES) Act” H.R. 4521, which aims to strengthen the competitiveness of the U.S. economy and U.S. businesses, and counters anti-competitive actions taken by the People’s Republic of China. The COMPETES Act includes provisions affecting financial services, such as:
- U.S. Policy on World Bank Group and Asian Development Bank Loans to China. This provision would, among other things, direct Treasury to vote against any loans to China from the World Bank or Asian Development Bank under certain circumstances, and allow borrowing countries to seek restructuring of China loans in official multilateral debt relief forums.
- Prohibitions or Conditions on Certain Transmittal of Funds. This provision would streamline the process by which special measures may be introduced and modernizes the authorities granted to the FinCEN by permitting the agency to pursue bad actors.
- Study on Chinese Support for Afghan Illicit Finance. This provision would direct Treasury’s Office of Terrorism and Financial Intelligence to brief Congress on the identification and analysis of Chinese economic, commercial, and financial connections to Afghanistan, to include illicit financial networks involved in narcotics trafficking, illicit financial transactions, official corruption, natural resources exploitation, and terrorist networks.
- Support for Debt Relief for Developing Countries. This provision would direct the Treasury secretary and U.S. representatives at the International Monetary Fund and the World Bank to engage with international financial institutions, official creditors, and relevant commercial creditor groups to advocate for the effective implementation of the G-20’s Common Framework.
Judgments reached in SEC’s first crowdfunding regulation enforcement action
On January 28, the U.S. District Court for the Eastern District of Michigan issued judgments (see here and here) against a real estate company and its CEO in the SEC’s first crowdfunding regulation enforcement action. As previously covered by InfoBytes, the SEC filed a complaint last September alleging that several entities and related individuals participated in a fraudulent scheme to sell nearly $2 million of unregistered securities through two crowdfunding offerings. The complaint alleged that two of the entities issued securities without registering with the SEC, while their principals diverted investor funds for personal use rather than using the funds for the disclosed purposes. Without admitting or denying the SEC’s allegations, the real estate company and the CEO consented to be permanently enjoined from violating certain securities laws. The CEO also agreed to a prohibition on “acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)].” The judgments decreed that, upon motion of the SEC, the court will decide whether disgorgement and/or civil money penalties are appropriate.
Treasury says banks need to collaborate to combat corruption
On February 3, U.S. Treasury Department Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg spoke before the Union of Arab Banks Conference to discuss the importance of working with member institutions in the Middle East and Africa to fight corruption. While noting that countering terrorist financing remains a crucial priority, Rosenberg pointed out that terrorist financing is not the only threat affecting the financial system. “In countries across the region, we have seen trends in which some politically exposed persons have sought to hide their ill-gotten gains through transfers to secondary jurisdictions under both themselves as well as family members’ and associates’ names,” Rosenberg said. “This is something that banks have a responsibility, indeed an obligation, to identify and halt,” she added, emphasizing that “[w]e will all be stronger, more secure, if every bank represented here builds and maintains strong compliance programs” designed to “identify and disrupt the onboarding of customers and the processing of transactions involv[ing] bribes or expropriated government funds.” Rosenberg encouraged the banks to share information on corruption with each other and to ensure enhanced due diligence, especially when dealing with politically exposed persons. “Nearly every act of corruption flows through the formal financial system, the system we are all a part of, which means all of us have the ability—and the responsibility—to stop it,” Rosenberg noted, highlighting the “global corruption boom” in recent decades resulting from individuals seeking to conceal assets and ownerships though shell companies or transactions involving art, real estate, and cryptocurrencies. Rosenberg also informed the banks that as part of the Biden Administration anti-corruption strategy, Treasury “will soon require many U.S. and foreign companies to report their true beneficial owners and to update that information when those beneficial owners change.”
OCC hosts virtual Innovation Hours
On February 3, the OCC announced it will host virtual Innovation Office Hours on March 16 through 17, to promote responsible innovation in the federal banking system. As previously covered by InfoBytes, the OCC established the Office of Innovation in 2016 to implement certain aspects of the OCC’s responsible innovation framework, including, among other things: (i) creating an outreach and technical assistance program; (ii) conducting awareness and training activities for OCC staff, such as implementing an internal web page that provides OCC staff a ‘one-stop-shop’ to access information on industry trends and innovative products, services, and processes; and (iii) encouraging coordination and facilitation among the regulatory community and industry stakeholders. According to the OCC’s recent announcement, office hours are one-on-one meetings with representatives from the OCC Office of Innovation to discuss fintech, new products or services, partnering with a bank or fintech company, or other matters. Each meeting will last no longer than one hour. Interested parties should request a virtual office hours session by February 18.
VA establishes threshold for reporting VA debts to CRAs
On February 2, the Department of Veterans Affairs published a final rule in the Federal Register amending its regulations around the conditions by which VA benefits debts or medical debts are reported to consumer reporting agencies (CRAs), and creating a methodology for determining a minimum threshold for debts reported to the CRAs. According to the VA, approximately 5,000 delinquent accounts are reported monthly to credit bureaus, and, in many cases, veterans complained about the loss of security clearance or an inability to obtain credit or rental housing. In amending the rule, the VA acknowledged that certain debts, such as medical debts, “are fundamentally different than consumer debt.” Under the new rule, debts are to be reported to a credit bureau if (i) they are considered to be “currently not collectible,” meaning the VA has exhausted available debt collection efforts; (ii) the debt is not owed by someone who has been determined to be catastrophically disabled or has a gross household income below a certain amount; and (iii) the debt owed is over $25. The rule is effective March 4.
On February 7, the CFPB published a blog highlighting the changes that the VA made in its final rule. Among other things, the blog discussed changes to VA’s debt collection practices, protections against surprise medical bills, and getting help with medical bills.
Borrowers may request SBA loan review of partially forgiven PPP loans
On January 27, SBA issued Procedural Notice 5000-827666 outlining a new process for borrowers to request an SBA loan review of partially approved forgiveness decisions by their Paycheck Protection Program (PPP) lenders. Effective immediately, when a PPP lender receives a forgiveness remittance from SBA on a partial approval decision (including instances when the lender required a borrower to apply for forgiveness in an amount less than the full amount of the loan), the lender must inform the borrower that the borrower has 30 calendar days from receipt of the notification to seek an SBA loan review of the lender’s partial approval decision. The lender must then notify SBA within 5 calendar days of receiving the borrower’s timely request for review. If SBA selects the loan for review, the borrower must continue to make payments on the remaining balance. Additionally, SBA noted that borrowers should be aware that the agency “may determine that the borrower is entitled to forgiveness in an amount less than what the [l]ender decided (including zero if, for example, the borrower is determined to be ineligible for the PPP loan), an amount more than what the [l]ender decided, or the same amount as the [l]ender decided.” The SBA notice outlined details related to forgiveness payment remittances resulting from a partial approval loan review, and noted that SBA will provide lenders additional guidance through the platform, including step-by-step instructions. The notice expires January 1, 2023.
Agencies emphasize illegality of appraisal discrimination
On February 4, CFPB Fair Lending Director Patrice Ficklin, along with senior staff from the Federal Reserve Board, OCC, FDIC, NCUA, HUD, FHFA, and DOJ, sent a joint letter to The Appraisal Foundation (TAF) emphasizing that discrimination prohibitions under the Fair Housing Act (FHA) and ECOA extend to appraisals. The joint letter, sent in response to a request for comments on proposed changes to the 2023 Appraisal Standards Board Ethics Rule (Ethics Rule) and Advisory Opinion 16, noted that while provisions prohibit an appraiser from relying on “unsupported conclusions relating to characteristics such as race, color, religion, national origin, sex, sexual orientation, gender, marital status, familial status, age, receipt of public assistance income, disability, or an unsupported conclusion that homogeneity of such characteristics is necessary to maximize value,’” the “provisions do not prohibit an appraiser from relying on ‘supported conclusions’ based on such characteristics and, therefore, suggest that such reliance may be permissible.” The letter noted that the federal ban on discrimination under the FHA and ECOA is not limited only to “unsupported” conclusions, and any discussions related to potential appraisal bias should be consistent with all applicable nondiscrimination laws. The joint letter encouraged TAF to present the nondiscrimination requirements as “an essential part of any guidance provided in the Ethics Rule or Advisory Opinion 16 to ensure compliance with fair housing and fair lending laws.”
In a blog post, Ficklin noted that despite the fact that federal law prohibits racial, religious, and other discrimination in home appraisals, there are still reports of appraisers making “value judgments on biased, unfounded assumptions about borrowers and the neighborhoods in which they live.” Additionally, Ficklin noted that the Bureau is carefully reviewing findings presented in a report funded by the Federal Financial Institutions Examination Council's Appraisal Subcommittee, which raised serious concerns related to existing appraisal standards and provided recommendations with respect to fairness, equity, objectivity, and diversity in appraisals and the training and credentialing of appraisers.
Acting FDIC Chairman Gruenberg outlines priorities
On February 7, acting FDIC Chairman Martin J. Gruenberg released a statement and summary of the FDIC’s priorities for the coming year. According to Gruenberg, the federal banking agencies intend to act on a notice of proposed rulemaking to strengthen and enhance the Community Reinvestment Act which is the FDIC’s “top priority.” For evaluating crypto-asset risks, Gruenberg noted the need for “robust guidance to the banking industry on the management of prudential and consumer protection risks raised by crypto-asset activities.” Additionally, Gruenberg stated that the financial risks of climate change to the financial system will also be a top priority of the FDIC, and that the FDIC’s actions “will include seeking public comment on guidance designed to help banks prudently manage these risks, establishing an FDIC interdivisional, interdisciplinary working group on climate-related financial risks, and joining the international Network of Central Banks and Supervisors for Greening the Financial System.” Other priorities include reviewing the bank merger process and finalizing the Basel III Capital Rule.