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Last week, on November 23, the FHFA announced that it will raise the maximum conforming loan limits for mortgages purchased by Fannie Mae and Freddie Mac in 2017 from $417,000 to $424,000. The announcement marks the first time FHFA has increased the baseline loan limit since 2006. In high-cost areas, such as Los Angeles, New York, San Francisco, and Washington, D.C., the maximum loan limit will be $636,150. Meanwhile, limits rose in all but 87 counties in the country. View the list of counties seeing increases here.
Comptroller Curry Discusses Importance of Effective Supervision Before Clearing House Annual Conference
In prepared remarks delivered on November 30 before The Clearing House Annual Conference in New York City, Comptroller of the Currency Thomas J. Curry discussed lessons from the 2008 financial crisis. Curry noted that he was “often disappointed how quickly some forget the lessons of more recent events, particularly what brought the financial system to the cliff in 2008 and what has put our banks and our economy on much firmer ground since.” His remarks emphasized the value of strong capital, the need for ample liquidity, and the importance of effective supervision.
In discussing capital, Curry noted that since the beginning of 2009, there has been a $700 billion increase in common equity capital. Such levels would allow the 33 largest bank holding companies to be well capitalized and continue lending even under the most severe scenario used by the banking agencies’ stress tests. He cautioned, however, that “[w]eakening the ratio through special exclusions only undermines our original intent and weakens the protection against excessive leverage.” Comptroller Curry similarly noted that the Liquidity Coverage Ratio and the proposed Net Stable Funding Ratio complement each other to push covered banks to hold ready resources to meet short-term cash outflows and to shift to more stable, longer-term funding.
On the subject of supervision, Curry noted the importance of “holistic supervision based on the CAMELS rating system.” He also added that while a periodic reassessment of banking laws and regulations is appropriate, “we must never settle for ‘light-touch’ supervision.” And, in concluding, Curry stressed that community banks and their examiners, in order to “remain strong and healthy,” need to “focus on strategic risk, rising credit risk from stretching for yield while relaxing underwriting standards, expansion of new technologies, and compliance issues.”
On November 29, the OCC announced the release of a revised Bank Premises and Equipment booklet of the Comptroller’s Handbook. The revised booklet, which replaces the booklet of the same title issued in March 1990, applies to examinations of all national banks and federal savings associations engaged in the acquisition, management, and disposal of bank premises and equipment. According to the accompanying OCC Bulletin, the revised booklet incorporates updated statutory and regulatory citations and revised examination procedures since the integration of the Office of Thrift Supervision into the OCC in 2011. The bulletin explains that the booklet also replaces the "Investment in Bank Premises" booklet of the Comptroller’s Licensing Manual and the "Fixed Assets" section of the former Office of Thrift Supervision Examination Handbook.
CFPB Monthly Complaint Snapshot Spotlights Debt Settlement, Check Cashing, and Other Financial Services Complaints
On November 29, the CFPB released Volume 17 of its monthly complaint snapshot reports on consumer complaints stemming from financial services that fall outside of the Bureau’s major complaint categories. The “other financial services” covered in the report include debt settlement, check cashing, money orders, and credit repair. To date, the CFPB has handled approximately 1,035,200 complaints nationally across all products. As reported in the current snapshot: (i) Debt collection was the most-complained-about financial product or service in October; (ii) Student loan complaints showed the greatest increase—108 percent—of any product or service over the three-month period of August to October; and (iii) Alaska, New Mexico, and Missouri experienced the greatest year-to-year complaint volume increases from August to October 2016 period versus the same time period 12 months before. The current report also highlighted a trend in complaints coming from Oklahoma and the Oklahoma City metro area.
On December 1, the CFPB published an updated version of the Mortgage Servicing Small Entity Compliance Guide on its "Mortgage Servicing Implementation & Guidance" webpage. The updated guide incorporates amendments made to mortgage servicing provisions in Regulation X and Regulation Z by the 2016 Mortgage Servicing final rule. Most provisions of the 2016 Mortgage Serving final rule take effect on October 19, 2017. However, the provisions relating to successors in interest and the provisions relating to periodic statements for borrowers in bankruptcy will not take effect until April 19, 2018.
On November 30, the Fed announced the release of its annual report on debit card transactions in 2015. The report is the fourth in a series to be published every two years pursuant to Section 920 of the Electronic Fund Transfer Act (EFTA). As in prior years, the 2015 report reflected that issuers’ costs of authorizing, clearing, and settling debit card transactions (excluding issuer fraud losses) varied greatly across respondents. Data compiled in the report estimates that debit-card fraud losses to all parties (merchants, cardholders, and issuers) increased by 44 percent from 2013 to an estimated total of $2.41 billion in 2015. The median covered issuer had average fraud prevention and data security costs of 1.9 cents per transaction.
On November 22, the U.S. government filed a superseding indictment against a Macau real estate developer and his assistant in connection with their alleged involvement in an international bribery scheme. The superseding indictment included new charges that both men violated the FCPA in connection with alleged payments to then-UN ambassadors from Antigua and the Dominican Republic in exchange for official actions to benefit the defendants’ real estate company. The bribery charges contained in the original October 2015 indictment concerned only domestic bribery charges brought under 18 U.S.C. § 666, and not the FCPA.
It is not clear why the U.S. government chose to add the FCPA charges now as opposed to bringing them in the original indictment. First, there did not appear to be any FCPA jurisdictional hurdles in the original indictment. Moreover, one of the alleged bribe recipients named in both the original indictment and superseding indictment – the then-UN ambassador from Antigua – is and always was a “foreign official” under the FCPA. The UN has been designated a public international organization, and individuals associated with these organizations are “foreign officials” under the FCPA.
Full D.C. Circuit Orders PHH to Respond to CFPB's Petition for En Banc Review, Invites U.S. Solicitor General to Provide Views
On November 23, the full D.C. Circuit ordered PHH to respond to the CFPB's petition for en banc review of the October 2016 three-judge panel decision in PHH Corp. v. CFPB. The CFPB’s November 18 petition challenged, among other things, the conclusion by the majority of the panel that the CFPB's structure was unconstitutional and that, to remedy this defect, the Director must be removable at will by the President. PHH’s response, which is due by December 8, would not have been permitted without the court’s order. Similarly, the CFPB is not permitted to file a reply unless ordered by the court. Importantly, the en banc court also “invited” the U.S. Solicitor General “to file a response to the petition” to “express the views of the United States.” Although there is no deadline for this response, the invitation allows the Solicitor General to respond before the change in administration, which may be significant because the Dodd-Frank Act does not allow the CFPB to petition the Supreme Court for review without the approval of the Attorney General (12 USC § 5564(e)).
On November 22, FHFA announced that Fannie Mae and Freddie Mac’s caps for multifamily lending will remain at $36.5 billion for 2017. The determination was based on the agency’s projection that the overall size of the multifamily finance market will remain roughly the same as it was in 2016. Multifamily loans in designated affordable and underserved segments will remain excluded from the caps.
The FDIC published a Notice of an Interim Final Rule and Request for Comment in the November 22 edition of the Federal Register. The new rule amends FDIC regulations in accordance with requirements set forth in the FOIA Improvement Act of 2016. The new rule also codifies changes brought about by prior amendments that had already been incorporated into agency practice. To meet the Act’s statutory deadline, the interim rule was adopted without prior notice and comment and became effective immediately upon publication on November 22. Comments on the interim rule are due on January 23, 2017, after which the FDIC will remove the interim designation.