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  • Hsu highlights importance of MDIs, CDFIs

    On June 9, acting Comptroller of the Currency Michael J. Hsu spoke before the 2022 Community Development Bankers Association Peer Forum to discuss agency efforts to support underserved communities, as well as initiatives for revitalizing Minority Depository Institutions (MDIs) and increasing investments in Community Development Financial Institutions (CDFIs). Emphasizing the important role MDIs and CDFIs play in providing mortgage credit, small business lending, and other banking services to minority and low-to-moderate-income (LMI) communities, Hsu discussed ongoing challenges facing MDIs in terms of accessing capital and meeting customer needs. He noted that these challenges have caused many MDIs to close, fail, or be acquired by larger banks. Ensuring the survival of the remaining MDIs is important, Hsu said, since these are often the only financial institutions fulfilling minority communities’ financial needs. He further explained that the OCC is “doubling down” on Project REACh, which brings together leaders from the banking industry, national civil rights organizations, and various businesses and technology organizations to identify and reduce barriers to accessing capital and credit (covered by InfoBytes here), and stated that Project REACh has “challenged large and midsize banks to sign a pledge to revitalize MDIs with capital investments, technical assistance, business opportunities, executive training, and other resources.” Hsu also discussed recently proposed interagency rules to modernize enforcement of the Community Reinvestment Act (CRA), which will also benefit MDIs and CDFIs. As previously covered by InfoBytes, the Federal Reserve Board, FDIC, and OCC issued a joint notice of proposed rulemaking (NPRM) in May 2022 to update how CRA activities qualify for consideration, where CRA activities are considered, and how CRA activities are evaluated.

    Bank Regulatory Federal Issues OCC CDFI MDI Underserved CRA Agency Rule-Making & Guidance Federal Reserve FDIC

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  • GSEs issue Equitable Housing Finance Plans

    Federal Issues

    On June 8, Fannie Mae and Freddie Mac (GSEs) released their Equitable Housing Finance Plans for 2022-2024 (available here and here), affirming their commitment to addressing racial and ethnic disparities in homeownership and wealth. The plans were developed following FHFA’s September 2021 request for public input, which invited comments to help the GSEs prepare their first plans and to aid FHFA in overseeing the plans (covered by InfoBytes here). Among other things, the plans (which will be updated annually) include activities to (i) address future consumer education initiatives for renters and homeowners; (ii) help tenants build credit profiles and enable better access to financial services; (iii) expand counseling services to support housing stability; (iv) launch technology to increase access to sustainable credit and fair home appraisals; and (v) deploy Special Purpose Credit Programs to address barriers to sustainable homeownership, focusing particularly on consumers living in formerly redlined and underserved areas with majority Black populations. FHFA’s press release also announced the establishment of a new pilot transparency framework for the GSEs, which will require Fannie and Freddie to publish and maintain a list of pilot programs and “test-and-learn activities” on their public websites to help FHFA determine whether such activities address disparities identified in the plans.

    Earlier in the week, FHFA released its inaugural Mission Report describing housing finance activities taken in 2021 by the GSEs and Federal Home Loan Banks related to targeted economic development and affordable, equitable, and sustainable housing. The report highlighted, among other things, that the gap between mortgage acceptance rates for minority and white borrowers “remains persistent,” with Black and Latino borrowers representing 6.3 percent and 14.2 percent of all mortgages purchased by the GSEs, respectively, in the fourth quarter of 2021. The report also discussed fair lending geographical trends as well as data on multifamily and single-family loan acquisitions.

    Federal Issues FHFA Fannie Mae Freddie Mac GSEs Fair Lending Consumer Finance Mortgages Underserved Disparate Impact FHLB

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  • OCC launches Milwaukee REACh

    On April 20, the OCC announced the launch of Milwaukee REACh , which expands the OCC’s Project REACh (Roundtable for Economic Access and Change) efforts to Milwaukee, Wisconsin. As previously covered by InfoBytes, in 2020, the OCC launched this initiative to promote greater financial inclusion of underserved populations. According to the OCC, Project REACh brings together leaders from the banking industry, national civil rights organizations, and various businesses and technology organizations who will identify and reduce barriers to accessing capital and credit. Noting that “Milwaukee's residents face socioeconomic challenges including limited access to credit and capital and a lack of opportunity for affordable home ownership,” acting Comptroller Michael J. Hsu stated that Milwaukee REACh “will help address that and other barriers to financial inclusion.”

    Bank Regulatory Federal Issues OCC Consumer Finance Underserved

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  • Hsu discusses expanding minority homeownership

    On April 19, acting Comptroller of the Currency Michael J. Hsu delivered remarks before the Black Homeownership Collaborative’s Fair Housing Month Virtual Forum. In his remarks, Hsu described initiatives to expand fair access and homeownership opportunities for minorities, low- and moderate-income areas, and communities of color. Regarding home valuations, Hsu quoted a PAVE Program report (covered by InfoBytes here) that cited research finding that “12.5 percent of appraisals for home purchases in majority-Black neighborhoods and 15.4 percent in majority-Latino neighborhoods resulted in a value below the contract price—or what a buyer was willing to pay—compared with only 7.4 percent of appraisals in predominantly White neighborhoods.” Second, Hsu mentioned the OCC’s Project REACh (covered by InfoBytes here), which was launched in 2020 and promotes greater access to capital and credit for minority and underserved populations. Hsu compared Project REACh and the Black Homeownership Collaborative by claiming they both “recognize[] that there is power in bringing a range of stakeholders together to collaborate and solve problems.” Finally, Hsu noted that the federal banking agencies are modernizing and strengthening the CRA regulations to expand financial access and inclusion to low- and moderate-income communities, and noted that he expects an interagency CRA Notice of Proposed Rulemaking to come soon.

    Bank Regulatory OCC Diversity Underserved Consumer Finance

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  • NYDFS encourages banks to expand access to low-cost banking services

    State Issues

    On April 15, NYDFS issued guidance determining that offering a “Bank On” certified deposit accounts would satisfy a New York Basic Banking services law that requires institutions to offer low-cost banking services to consumers. According to NYDFS, Bank On accounts (which offer services that eliminate several fees, including overdraft, account activation, closure, dormancy, inactivity, and low balance fees) may be offered as an alternative to existing basic banking accounts. Following an assessment of the New York banking industry to determine the receptiveness and operational viability of offering Bank On accounts, NYDFS concluded that “all New York State regulated banking institutions, as defined under Section 14-f.9(a) of the New York Banking Law . . ., will be deemed to satisfy the Basic Banking requirements under the New York Banking Law and the General Regulations of the Superintendent, by offering Bank On accounts as an alternative to Basic Banking accounts.” Banking institutions may offer Bank On accounts instead of Basic Banking accounts without the need to submit a separate application to the NYDFS for approval.  However, because the national standards for Bank On accounts are subject to change without input from NYDFS, institutions that offer the accounts should keep up to date on the national standards.

    The guidance follows an announcement from New York Governor Kathy Hochul stating that the “COVID-19 pandemic has shown how important it is for every New Yorker to have financial security.” Stressing that “access to low-cost banking services is critical to managing and securing their financial needs,” Hochul stated that “[t]hese new accounts will help hard working individuals in underserved communities get the affordable, accessible banking options they need and is a crucial step towards ensuring a more inclusive economy for all.” 

    State Issues State Regulators NYDFS Consumer Finance Underserved Overdraft Fees New York

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  • NYDFS encourages banks to expand access to low-cost banking services

    State Issues

    On April 15, NYDFS issued guidance determining that offering a “Bank On” certified deposit accounts would satisfy a New York Basic Banking services law that requires institutions to offer low-cost banking services to consumers. According to NYDFS, Bank On accounts (which offer services that eliminate several fees, including overdraft, account activation, closure, dormancy, inactivity, and low balance fees) may be offered as an alternative to existing basic banking accounts. Following an assessment of the New York banking industry to determine the receptiveness and operational viability of offering Bank On accounts, NYDFS concluded that “all New York State regulated banking institutions, as defined under Section 14-f.9(a) of the New York Banking Law . . ., will be deemed to satisfy the Basic Banking requirements under the New York Banking Law and the General Regulations of the Superintendent, by offering Bank On accounts as an alternative to Basic Banking accounts.” Banking institutions may offer Bank On accounts instead of Basic Banking accounts without the need to submit a separate application to the NYDFS for approval.  However, because the national standards for Bank On accounts are subject to change without input from NYDFS, institutions that offer the accounts should keep up to date on the national standards.

    The guidance follows an announcement from New York Governor Kathy Hochul stating that the “COVID-19 pandemic has shown how important it is for every New Yorker to have financial security.” Stressing that “access to low-cost banking services is critical to managing and securing their financial needs,” Hochul stated that “[t]hese new accounts will help hard working individuals in underserved communities get the affordable, accessible banking options they need and is a crucial step towards ensuring a more inclusive economy for all.” 

    State Issues State Regulators NYDFS Consumer Finance Underserved Overdraft Fees New York

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  • OCC launches Dallas REACh

    On March 28, the OCC announced the launch of Dallas REACh, which expands the OCC’s Project REACh (Roundtable for Economic Access and Change) efforts to Dallas, Texas, representing the agency’s fourth regional effort. As previously covered by InfoBytes, in 2020, the OCC launched this initiative to promote greater financial inclusion of underserved populations. According to the OCC, Project REACh brings together leaders from the banking industry, national civil rights organizations, and various businesses and technology organizations who will identify and reduce barriers to accessing capital and credit. The OCC further noted that Dallas REACh “will organize and initiate formal efforts to reduce financial barriers that include low rates of affordable homeownership, poor access to capital for minority-owned and small businesses, and underinvestment into trusted community institutions, such as minority depository institutions.” According to remarks by acting Comptroller of the Currency Michael J. Hsu at the launch of Dallas REACh, the agency is “excited to expand our efforts into the Dallas community, supporting local leaders, banks, and businesses as they discuss needs and work to address impediments to financial inclusion.”

    Bank Regulatory Federal Issues OCC Underserved Texas Consumer Finance

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  • OCC launches financial inclusion initiative in Detroit

    On February 15, the OCC announced the launch of Detroit REACh, marking the agency’s third expansion of Project REACh (Roundtable for Economic Access and Change). As previously covered by InfoBytes, the OCC launched the initiative in 2020 to promote greater financial inclusion of underserved populations and bring together leaders from the banking industry, national civil rights organizations, and various businesses and technology organizations to identify and reduce barriers to accessing capital and credit. The OCC further noted that “Detroit REACh will organize and initiate formal efforts to promote greater access to affordable homeownership, enhance small business financing, and expand access to credit for economically disadvantaged and underserved communities in Detroit.”

    Bank Regulatory Federal Issues OCC Consumer Finance Underserved

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  • CFPB releases 2022 rural or underserved counties lists

    Agency Rule-Making & Guidance

    Recently, the CFPB released its annual lists of rural counties and rural or underserved counties for lenders to use when determining qualified exemptions to certain TILA regulatory requirements. In connection with these releases, the Bureau also directed lenders to use its web-based Rural or Underserved Areas Tool to assess whether a rural or underserved area qualifies for a safe harbor under Regulation Z.

    Agency Rule-Making & Guidance CFPB Underserved TILA Regulation Z

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  • OCC formally rescinds CRA rule

    Agency Rule-Making & Guidance

    On December 14, the OCC issued a final rule rescinding its 2020 Community Reinvestment Act Rule (2020 Rule) and replacing it with a rule based largely on the prior rules adopted jointly by the federal banking agencies in 1995, as amended (1995 Rules). (See also OCC Bulletin 2021-16.) According to the OCC, the “action is intended to facilitate the ongoing interagency work to modernize the CRA regulatory framework and promote consistency for all insured depository institutions.” As previously covered by a Buckley Special Alert, the 2020 Rule was intended to modernize the regulatory framework implementing the CRA and provided for at least a 27-month transition period for compliance based on a bank’s size and business model, among other things.

    In September, the OCC solicited comments on a proposal to rescind the 2020 Rule (NPRM) and issued a series of frequently asked questions discussing the rulemaking process and providing a general timeline on the transition from the 2020 Rule (covered by InfoBytes here and here). The FAQs addressed questions including concerns related to the transition period for tracking activities that qualify under the 2020 Rule but would not qualify should the 1995 Rules be reinstated. The OCC announced that after reviewing transition issue comments received on the NPRM, the final rule had been adopted largely without modification. The final rule carries a compliance date of January 1, 2022, for all national banks and federal and state savings associations, with the exception of the final rule’s public file and public notice provisions, which have a delayed compliance date of April 1, 2022. According to the OCC, transitioning back to the 1995 Rules should carry a limited burden as the June 2020 Rule had only been partially implemented.

    The OCC further noted that “strategic plans approved under the June 2020 Rule may remain in effect” but that “these plans must comply with the provisions of the final rule, as applicable.” Also, since the final rule stipulates that a bank’s record of helping to meet the credit needs of its assessment area(s) will be taken into consideration, “provisions in strategic plans that include goals for activities outside a bank’s assessment area(s) will no longer be applicable, and the OCC will no longer evaluate these activities when assessing the bank’s performance.” Additionally, the OCC stated that the new rule is intended to limit the CRA burden on banks, bank communities, and examiners while ensuring that insured depository institutions can “meet the credit needs of their entire communities, including low- and moderate-income [] neighborhoods,” consistent with safe and sound operations.

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

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