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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.”
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.”
CFPB releases 2022 rural or underserved counties lists
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.
OCC formally rescinds CRA rule
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.
OCC launches DC REACh
On December 13, the OCC announced the launch of DC REACh , which expands the OCC’s Project REACh (Roundtable for Economic Access and Change) efforts to Washington, D.C. 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 DC 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 Washington, D.C.” According to remarks by acting Comptroller of the Currency Michael J. Hsu at the launch of DC REACh, the OCC “will be working with local community leaders and financial institutions to build paths towards entrepreneurship and affordable homeownership for District residents.”
OCC marks first anniversary of financial inclusion project
On July 15, the OCC marked the one-year anniversary of Project REACh, an initiative launched by the agency last year to promote greater financial inclusion of underserved populations. As previously covered by InfoBytes, Project REACh (Roundtable for Economic Access and Change) 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. While the project’s scope in its first year included a national workstream and a regional effort centered on Los Angeles, acting Comptroller Michael Hsu announced that Project REACh will soon expand its regional focus to Washington, D.C., Dallas, and Detroit in order “to replicate the success of the project’s national workstream.” In prepared remarks, Hsu emphasized that addressing economic inequality needs to be “transformational, not transactional,” pointing out that “the financial system can perpetuate inequality” as “traditional credit scores, traditional overdraft practices, and predatory lending make it expensive to be poor, while wealthy clients can borrow and access a wide range of financial services at lower cost.” Hsu explained that Project REACh’s structure and approach allows for collaborative problem identification and problem solving and creates opportunities for business and community representatives to incubate ideas and pilots “that can later be implemented on a broader scale than possible by any one institution.”
OCC launches Project REACh to help underserved populations access capital and credit
On July 10, the OCC launched an initiative to promote greater financial inclusion of underserved populations. Project REACh (Roundtable for Economic Access and Change) 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. REACh program participants will focus on “inherent policy and structural issues at the national and local levels” to expand financial inclusion, and convened on July 10 to discuss which financial inclusion projects to address.
CFPB issues interpretive rule on determining underserved areas
On June 23, the CFPB issued an interpretive rule to provide guidance for creditors and others involved in mortgage origination on the CFPB’s process for determining which counties and areas are considered “underserved” for a given calendar year. This interpretive rule supersedes certain parts of the official commentary to Regulation Z that became obsolete when HMDA data points were replaced or otherwise modified by the 2015 HMDA Final Rule. Lenders use the CFPB’s annual list of rural counties and rural or underserved counties when determining qualified exemptions to certain TILA regulatory requirements, such as “the exemption from the requirement to establish an escrow account for a higher-priced mortgage loan and the ability to originate balloon-payment qualified mortgages,” and use the CFPB’s Rural or Underserved Areas Tool to assess whether a rural or underserved area qualifies for a safe harbor under TILA’s Regulation Z. Under the interpretive rule, the CFPB will determine whether an area is considered “underserved” by counting first-lien originations from HMDA data from the preceding calendar year. The interpretive rule also discusses certain “covered transaction” exclusions that will not be counted related to (i) construction methods and total units; (ii) open-end lines of credit and reverse mortgages; (iii) business or commercial purposes; and (iv) demographic information where both the applicant’s and co-applicant’s ethnicity, race, sex, and age are all reported as “not applicable.” The interpretive rule is effective upon publication in the Federal Register.
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