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Financial Services Law Insights and Observations

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  • Illinois reissues and extends several Covid-19 executive orders

    State Issues

    On April 2, Illinois Governor JB Pritzker issued Executive Order 2021-06, which extends several previous executive orders through May 1, 2021 (previously covered here, hereherehereherehere, and here). Among other things, the order extends: (i) Executive Order 2020-07 regarding in-person meeting requirements, (ii) Executive Order 2020-23 regarding actions by individuals licensed by the Illinois Department of Financial and Professional Regulation engaged in disaster response, (iii) Executive Order 2020-25 regarding garnishment and wage deductions (previously covered here), (iv) Executive Order 2020-30 regarding residential evictions (previously covered here), and (v) Executive Order 2020-72 regarding the residential eviction moratorium (previously covered here and here).

    State Issues Covid-19 Illinois Licensing Debt Collection Evictions Mortgages

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  • CFPB rolls back last year’s Covid-19 flexibilities

    Federal Issues

    On March 31, the CFPB rescinded, effective April 1, the following policy statements, which provided temporary regulatory flexibility measures to help financial institutions work with consumers affected by the Covid-19 pandemic:

    • A March 26, 2020, statement addressing the Bureau’s commitment to taking into account staffing and related resource challenges facing financial institutions related to supervision and enforcement activities.
    • A March 26, 2020, statement postponing quarterly HMDA reporting requirements. (Covered by InfoBytes here.)
    • A March 26, 2020, statement postponing annual data submission requirements related to credit card and prepaid accounts required under TILA, Regulation Z and Regulation E. (Covered by InfoBytes here.)
    • An April 1, 2020, statement on credit reporting agencies and furnishers’ credit reporting obligations under the Fair Credit Reporting Act and Regulation V during the Covid-19 pandemic. The Bureau notes that the rescission “leaves intact the section entitled “Furnishing Consumer Information Impacted by COVID-19” which articulates the CFPB’s support for furnishers’ voluntary efforts to provide payment relief and that the CFPB does not intend to cite in examinations or take enforcement actions against those who furnish information to consumer reporting agencies that accurately reflect the payment relief measures they are employing.” (Covered by InfoBytes here.)
    • An April 27, 2020, statement affirming that the Bureau would not take supervisory or enforcement action against land developers subject to the Interstate Land Sales Full Disclosure Act and Regulation J for delays in filing financial statements and annual reports of activity. (Covered by InfoBytes here.)
    • A May 13, 2020, statement providing supervision and enforcement flexibility for creditors to resolve billing errors during the pandemic. (Covered by InfoBytes here.)
    • A June 3, 2020, statement providing temporary flexibility for credit card issuers regarding electronic provision of certain disclosures during the Covid-19 pandemic in accordance with the E-Sign Act and Regulation Z. (Covered by InfoBytes here.)

    The rescission also withdraws the Bureau as a signatory to the April 7, 2020, Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (covered by InfoBytes here), and the April 14, 2020, Interagency Statement on Appraisals and Evaluations for Real Estate Related Financial Transactions Affected by the Coronavirus (covered by InfoBytes here).

    Additionally, the Bureau issued Bulletin 2021-01 announcing changes to how it communicates supervisory expectations to institutions. Bulletin 2021-01 replaces Bulletin 2018-01 (covered by InfoBytes here), which previously created two categories of findings conveying supervisory expectations: Matters Requiring Attention (MRAs) and Supervisory Recommendations (SRs). Under the revised Bulletin, the Bureau notes that examiners “will continue to rely on [MRAs] to convey supervisory expectations” but will no longer issue formal written SRs, as the agency believes that MRAs will more effectively convey its supervisory expectations. The Bulletin further states that “Bureau examiners may issue MRAs with or without a related supervisory finding that a supervised entity has violated a Federal consumer financial law.”

    Federal Issues CFPB Covid-19 Agency Rule-Making & Guidance Data Collection / Aggregation Mortgages HMDA Credit Cards Prepaid Cards TILA Examination Supervision Consumer Finance

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  • FFIEC releases 2020 HMDA data

    Federal Issues

    On March 31, the CFPB announced the release of the 2020 HMDA loan application register (LAR) data. The LAR data, available on the Federal Financial Institutions Examination Council’s HMDA Platform, contains modified loan-level information on approximately 4,400 HMDA filers. The Bureau also announced plans to produce the 2020 HMDA data “in other forms to provide users insights into the data, including a nationwide loan-level dataset,” which “will provide all publicly available data from all HMDA reporters, aggregate and disclosure reports with summary information by geography and lender,” and allow users to create custom datasets and reports. The Bureau also stated that it will publish a Data Point article highlighting key trends in the annual data.

    Federal Issues CFPB HMDA Mortgages FFIEC

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  • Court rules incomplete loss mitigation application does not carry foreclosure protections

    Courts

    On March 19, the U.S. District Court for the Northern District of Ohio granted a mortgage lender’s motion for summary judgment, rejecting allegations that it had violated RESPA and Regulation X in handling plaintiffs’ loss mitigation application. The plaintiffs executed a promissory note and mortgage with the lender in 2017 and then initiated a loss mitigation application the following year. To complete the loss mitigation application process, the lender requested documents and information from the plaintiffs. The lender filed a foreclosure action after informing the plaintiffs that “required documents ‘remain outstanding.’” The plaintiffs filed suit, alleging the lender mishandled their loss mitigation application by, among other things, (i) failing to exercise reasonable diligence in obtaining documents and information to complete the loss mitigation application; (ii) failing to provide “the correct notices regarding the receipt of documents or with notice of a reasonable date by which Plaintiffs were required to submit additional documents to complete the loss mitigation application”; (iii) failing to evaluate the complete loss mitigation application for all available loss mitigation options within 30 days; (iv) requesting documents already received or impossible to obtain; and (v) filing a foreclosure action against the plaintiffs even though the loss mitigation application was either complete or facially complete.

    The court disagreed, ruling that the lender “did not violate RESPA or Regulation X in either the handling of Plaintiffs’ loss mitigation application or in filing foreclosure litigation against Plaintiffs” because, among other things, “[t]here is no genuine issue of material fact that Plaintiffs did not comply with [the lender’s] request for additional information” and that “a complete, or even facially complete, loss mitigation application was not pending in this matter at the time of the filing of the foreclosure action.” As such, because an incomplete loss mitigation application does not carry foreclosure protections, the filed foreclosure action was not improper, the court wrote.

    Courts RESPA Regulation X Loss Mitigation Mortgages

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  • FFIEC releases 2021 HMDA reporting guide

    Agency Rule-Making & Guidance

    On March 30, the FDIC issued FIL-21-2021 announcing the Federal Financial Institutions Examinations Council’s issuance of the 2021 edition of the “Guide to HMDA Reporting: Getting It Right!” The guide applies to HMDA data collected in 2021 that will be reported to supervisory agencies by March 1, 2022, and includes (i) a summary of responsibilities and requirements; (ii) directions for assembling the necessary tools; and (iii) instructions for reporting HMDA data. According to the announcement, the 2021 edition provides information to assist with HMDA compliance in the event of a merger or acquisition, as well as updates to the appendices that reflect amendments to Regulation C made by a CFPB final rule published last year (covered by InfoBytes here). The final rule increased the permanent threshold from 25 to 100 loans starting July 1, 2020, for both depository and nondepository institutions, and also increased the permanent threshold for collecting and reporting data about open-end lines of credit from 100 to 200. The latter change, however, will not take effect until January 1, 2022, when the current temporary threshold of 500 open-end lines of credit expires.

    Agency Rule-Making & Guidance FDIC FFIEC HMDA CFPB Regulation C Mortgages

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  • HUD approves settlement resolving alleged lending discrimination

    Federal Issues

    On March 19, HUD released a Conciliation Agreement between an individual consumer and a mortgage lender to resolve allegations that the lender violated the Fair Housing Act by denying the consumer’s loan for a group home for persons with disabilities. The lender denied any discriminatory behavior, and agreed to resolve the complaint by (i) paying the consumer $125,000; (ii) implementing additional training for employees, including home mortgage consultants, managers, and underwriters; and (iii) ensuring its policies comply with the Fair Housing Act.

    Federal Issues HUD Enforcement Fair Lending Fair Housing Act Mortgages

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  • FHA: Temporary endorsement of mortgages under forbearance will expire March 31

    Federal Issues

    On March 23, FHA issued a reminder regarding the upcoming expiration of the temporary guidance concerning endorsement processes for mortgages where a borrower was granted a forbearance related to the Covid-19 pandemic prior to the loan being endorsed for FHA insurance. As previously covered by InfoBytes, the temporary guidance—announced last June in Mortgagee Letter (ML) 2020-16—granted mortgagees the ability to submit a mortgage for insurance endorsement involving a borrower who is experiencing financial hardships due to the Covid-19 pandemic, provided the mortgagee “executes a two-year partial indemnification agreement.” The temporary guidance was last extended in ML 2020-45, and is set to expire March 31.

    Federal Issues FHA Mortgages Forbearance Covid-19 HUD

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  • FDIC announces Louisiana disaster relief

    Federal Issues

    On March 15, the FDIC issued FIL-18-2021 to provide regulatory relief to financial institutions and help facilitate recovery in areas of Louisiana affected by winter storms. The FDIC acknowledged the unusual circumstances faced by institutions affected by the winter storms and suggested that institutions work with impacted borrowers to, among other things, (i) extend repayment terms; (ii) restructure existing loans; or (iii) ease terms for new loans to those affected by the severe weather, provided the measures are done “in a manner consistent with sound banking practices.” Additionally, the FDIC noted that institutions “may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery,” and that the FDIC will consider institutional relief from certain filing and publishing requirements.

    Federal Issues FDIC Disaster Relief Mortgages CRA

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  • FHA removes LIBOR benchmark for adjustable-rate HECMs

    Federal Issues

    On March 11, FHA issued Mortgagee Letter (ML) 2021-08 announcing changes for adjustable interest rate home equity conversion mortgages (HECMs) as the market transitions away from LIBOR. Among other things, ML 2021-08 (i) removes approval for using the LIBOR index for adjustable interest rate HECMs; and (ii) approves the use of the Secured Overnight Financing Rate (SOFR) index, permitting “mortgagees to commingle index types for newly originated annual adjustable interest rate HECMs when establishing the expected average mortgage interest rate using the U.S. Constant Maturity Treasury” and SOFR index. ML 2021-08 also states that LIBOR-based HECMs must close on or before May 3 to be eligible for FHA insurance.

    Find continuing InfoBytes coverage on LIBOR here.

    Federal Issues HUD FHA Mortgages HECM LIBOR SOFR

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  • Agencies propose new flood insurance Q&As

    Federal Issues

    On March 11, the FDIC, OCC, Federal Reserve Board, NCUA, and the Farm Credit Administration issued a notice and request for public comment on 24 proposed interagency questions and answers regarding the 2019 private flood insurance rule (covered by InfoBytes here). The new Q&As supplement interagency questions and answers proposed last year (covered by InfoBytes here), which were intended to reduce compliance burdens for lenders related to flood insurance laws. The new Q&As are designed to help lenders comply with private flood insurance provisions found in the Biggert-Waters Flood Insurance Reform Act of 2012, and address mandatory and discretionary acceptance of private flood insurance policies by lenders if such insurance is required. Comments on the proposed additions to the interagency Q&As are due 60 days after publication in the Federal Register.

    Federal Issues FDIC OCC Federal Reserve Farm Credit Administration NCUA Flood Insurance Mortgages

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