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FHFA Increases Conforming Loan Limits for 2018
On November 28, the FHFA announced that it will raise the maximum conforming loan limits for mortgages purchased in 2018 by Fannie Mae and Freddie Mac from $424,100 to $453,100. The announcement marks the second 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 $679,650. For a county-specific list of the maximum loan limits in the U.S., click here.
CFPB Fines Large Bank for Alleged Student Loan Servicing Issues
On November 21, the CFPB announced it had entered into a consent order with a large national bank over allegations that the bank engaged in unfair and deceptive practices in violation of the Consumer Financial Protection Act of 2010 (CFPA) related to its student loan servicing activities. The order, which the bank consented to without admitting or denying the findings, asserts that for the student loan accounts it was servicing, the bank (i) misrepresented information to borrowers about tax benefits; (ii) failed to refund interest and fees inaccurately charged; (iii) misstated minimum monthly payment amounts in bills; and (iv) failed to provide required information when denying co-signer release requests. In addition to imposing a civil money penalty, the CFPB’s order requires the bank to pay restitution to certain consumers and implement certain policies.
CFPB Releases Report on Consumers’ Overdraft Experiences
On November 21, the CFPB released a report summarizing findings from a qualitative study about consumers’ experiences with overdraft programs. The study consisted of one-on-one interviews by telephone with 88 individual consumers from May 2014 through June 2014 (the report does not comment on the three-year gap between the interviews and the release). According to the CFPB, the study was not designed to identify systematic trends but instead to provide an in-depth review of consumers’ experiences. The report concluded that consumers need a wide range of educational resources to support the varying experiences and perceptions they have with overdraft services. For example, the report notes that while some consumers commented on unexpected overdraft fees after miscalculating the timing of transaction processing, others noted their intentional use of overdraft options to make purchases or pay bills. The CFPB encouraged financial educators to develop their own overdraft resources with the awareness that consumers may use and interpret programs in varying ways and provided a list of CFPB resources available for use.
Otting Sworn in as Comptroller of the Currency; Pushes for Regulation Review
On November 27, Joseph M. Otting was sworn in as the next Comptroller of the Currency following Senate confirmation on November 16. Otting commented in a statement prepared for his swearing-in that he understands “as a career banker” the value and importance of “effective supervision” as well as “the challenges bankers face as they work to meet customer needs while coping with unnecessary regulatory burden that makes it more difficult and complicated than necessary.” Otting asserted that in order for regulations to be effective, modifications must be made as the nation’s needs change. Otting’s stated priorities include “enhancing the value of national bank and federal savings association charters, reducing unnecessary burden, and promoting economic opportunity while maintaining the safety and soundness of the federal banking system.”
CFPB Reports on Financial Institution Outreach to Limited English Proficient Consumers
On November 22, the CFPB released a report focusing on ways financial institutions can expand and improve services to Limited English Proficient consumers (LEP consumers) who often face challenges related to language access and financial literacy. According to findings in the report, LEP consumers often have trouble accessing and interpreting financial products and services, as well as difficulty completing financial documents, managing bank accounts, resolving problems, and accessing financial education. The Bureau’s report—which is compiled from information gathered in interviews with financial institutions, trade associations, nonprofit advocacy groups, and federal agencies, as well as secondary research—presents five common approaches used in the industry to address issues facing LEP consumers: (i) assessing the language needs of consumers; (ii) offering centralized technical support for translation and interpretation initiatives; (iii) developing systems to ensure accuracy of translations and interpretations; (iv) providing training for staff and contractors to ensure language and cultural competencies; and (v) offering platforms to interact with LEP consumers.
The report follows the November 16 release of the CFPB’s final version of its Language Access Plan designed to continue efforts to provide non-English speaking persons access to its own programs and services, including offering translated consumer-facing brochures and handling complaints from consumers in multiple languages. (See previous InfoBytes coverage here.)
CFPB Publishes Notices and Requests for Comment Concerning Collection of Consumer Complaints
On November 28, the CFPB published two notices of its intention to obtain OMB approval to continue its existing consumer complaint collection activities using its “Consumer Response Intake Form” and “Generic Information Collection Plan for Consumer Complaint and Information Collection System (Testing and Feedback).” According to the CFPB, use of the forms allows for electronic complaint submission on the Bureau’s website and streamlines the complaint process for consumers. Comments on the agency’s notices (CFPB-2017-0035 and CFPB-2017-0036) must be received by December 28, 2017.
OFAC Expands North Korean Sanctions
On November 21, the day after President Trump placed North Korea back on the list of State Sponsors of Terrorism, the Treasury Department’s Office of Foreign Assets Control (OFAC) imposed additional sanctions in an action to “disrupt North Korea’s illicit funding of its unlawful nuclear and ballistic missile programs.” The sanctions were issued against one individual, 13 entities, and 20 vessels pursuant to Executive Order 13810 and Executive Order 13722. The sanctioned entities have commercial ties to North Korea or operate transportation networks in the country, and the sanctioned individuals are “involved in the exportation of workers from North Korea, including exportation to generate revenue for the Government of North Korea.” All property held by the sanctioned individuals and entities within U.S. jurisdiction was frozen, and transactions between the sanctioned individuals and entities and Americans are also “generally prohibited.”
See here for previous InfoBytes coverage on North Korean sanctions.
Court Denies Restraining Order Preventing Mulvaney’s Appointment
On November 28, Judge Timothy Kelly denied a request by Leandra English, who was appointed Deputy Director of the CFPB by Richard Cordray on the same day as his resignation, for a temporary restraining order preventing the President from appointing anyone other than English as Acting Director and preventing Mick Mulvaney from serving as the Acting Director (see previous InfoBytes coverage for details).
English’s counsel, in remarks to reporters outside the courtroom, stated they may seek an appeal, may move for a preliminary injunction, or may move for an expedited final decision on the merits.
FinCEN Issues $8 Million Penalty to California Club Card for Willful Violation of Anti-Money Laundering Controls
On November 17, the Financial Crimes Enforcement Network (FinCEN) announced that it had assessed an $8 million civil money penalty against a California card club company for “willfully violating” the Bank Secrecy Act (BSA) from 2009 to 2017. According to FinCEN, the company failed to establish and maintain an operational anti-money laundering program and failed to detect and timely report many suspicious transactions. FinCEN asserts that during the eight-year period, the company failed to file any Suspicious Activity Reports regarding loan sharking and other criminal activities being conducted through the company that were the subject of a 2011 state and federal law enforcement raid. Additionally, the company allegedly failed to implement sufficient internal controls to monitor risks associated with gaming practices that allowed customers to co-mingle and pool bets with anonymity.
The penalty assessment does not reflect consent by the company, and the company may elect to contest the penalty by not paying within the allotted time period.
OFAC Penalizes Credit Card Issuer for Violations of Cuban Assets Control Regulations
On November 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it had reached a $204,277 settlement with a U.S. financial institution for alleged violations of the Cuban Assets Control Regulations (CACR). The settlement involves actions taken by an international credit card company which, at the time of the apparent violations, was a wholly owned subsidiary of an entity that was itself 50 percent owned by the U.S. financial institution. According to the announcement, between 2009 and 2014, credit cards that the company issued to over 100 corporate customers were used to make purchases in Cuba or otherwise involved Cuba. OFAC asserts that the company failed to implement controls to prevent this even though it had policies and procedures in place to review transactions for compliance with CACR.
In determining the settlement amount, OFAC considered that (i) employees within the company had reason to know of the conduct that led to the alleged violations; (ii) none of the entities involved appeared to appreciate the risk that the credit cards might be used in Cuba; (iii) at the time they occurred, the actions resulted in harm to the US sanctions program objectives; (iv) the U.S. financial institution is a large and sophisticated financial entity; and (v) during the investigation, the entities provided “verifiably inaccurate or incomplete, including material omissions.” OFAC also considered the fact that the entities voluntarily self-disclosed the alleged violations and the U.S. financial institution took “swift and appropriate remedial action” upon discovery.
OFAC recently announced updates to CACR, covered by InfoBytes here.