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  • FinCEN, Federal Reserve Board Finalize Changes To Certain Bank Secrecy Act Definitions

    Consumer Finance

    On December 3, FinCEN and the Federal Reserve Board issued a final rule to amend the definitions of "funds transfer" and "transmittal of funds" under regulations implementing the Bank Secrecy Act. The agencies finalized the rule as proposed. The changes are intended to maintain the scope of the definitions following recent related amendments to the Electronic Fund Transfer Act, so as to avoid certain currently covered transactions being excluded from BSA requirements. The changes take effect January 3, 2014.

    Federal Reserve FinCEN Bank Secrecy Act

  • FHFA Holds Conforming Loan Limits Steady, Announces Overhauled Mortgage Insurance Master Policy Requirements

    Lending

    On November 26, FHFA announced that 2014 maximum conforming loan limits will remain at $417,000, unchanged from 2013. On December 2, FHFA announced that Fannie Mae and Freddie Mac soon will provide guidance to lenders and servicers regarding specific effective dates for new requirements under the entities’ aligned, overhauled mortgage insurance master policies, which guidance will include changes related to loss mitigation, claims, assurance of coverage, and information sharing. FHFA, Fannie Mae, and Freddie Mac anticipate that the master policies will go into effect in 2014, pending review and approval by state insurance regulators.

    Freddie Mac Fannie Mae Mortgage Origination Mortgage Insurance FHFA Loss Mitigation

  • HUD Extends Renewal Period For Certain Lenders And Mortgagees

    Lending

    On November 27, HUD issued Mortgagee Letter 2013-42, granting an extension of time to Title I and II lenders and mortgagees with a December 31, 2013 fiscal year end to submit required materials and fees for annual recertification. The letter notes that FHA-approved lenders and mortgagees with a fiscal year end of December 31, 2013 or later must use the Lender Electronic Assessment Portal (LEAP) to complete the annual certification process. Given that LEAP recertification functionality will not be deployed until after March 31, 2014, lenders and mortgagees with a fiscal year end of December 31, 2013 will be unable to access LEAP within the required timeframe, and instead will have until 30 days after the deployment of LEAP functionality to complete their annual certification.

    Mortgage Origination HUD FHA

  • Freddie Mac, Fannie Mae Update Short Sale, Deed-In-Lieu Of Foreclosure Requirements

    Lending

    On November 25, Freddie Mac issued Bulletin 2013-24 and Fannie Mae issued Servicing Guide Announcement SVC-2013-23, which revised numerous short sale and deed-in-lieu of foreclosure (DIL) requirements. The enterprises updated, among other things, eligibility requirements for exceptions to borrower documentation for short sales and DILs by (i) permitting a borrower whose mortgage debt has been discharged in a Chapter 7 bankruptcy to be eligible for an exception to documentation, regardless of FICO score; and (ii) removing mortgages that were originated as investment properties from eligibility for an exception to documentation. The enterprises also required servicers to: (i) submit a short sale or DIL recommendation for approval when the borrower’s cash reserves exceed $50,000; and (ii) delay, or ensure that foreclosure counsel delays, the next legal action in the foreclosure process when such servicers receive a first complete borrower response package (BRP) more than 37 days prior to a scheduled foreclosure sale date, and the evaluation results in an offer to proceed with a short sale or DIL. Finally, the enterprises revised the timeframes within which servicers are required to conduct an expedited review of a completed BRP and updated requirements relating to borrower appeals.

    Foreclosure Freddie Mac Fannie Mae Mortgage Servicing Short Sale Servicing Guide

  • Fannie Mae Announces Miscellaneous Servicing Policy Changes

    Lending

    On December 4, Fannie Mae issued Servicing Guide Announcement SVC-2013-24, which: (i) updates the modification terms for the “Cap and Extend Modification for Disaster Relief” to require servicers to set the interest rate to a fixed rate; and (ii) establishes the steps servicers must follow to determine borrowers’ modified payment terms. Fannie Mae encourages servicers to implement the new requirements immediately, but will not require them to do so until February 1, 2014. The announcement likewise requires, with immediate effect, that servicers update Form 582 (Lender Record Information) promptly after any change in previously-submitted information occurs. Finally, the announcement adds to the Servicing Guide glossary a definition for “seriously delinquent mortgage loan.”

    Fannie Mae Mortgage Servicing Servicing Guide

  • Multinational Oil Services Company Resolves FCPA, Sanctions, And Export Control Matter

    Financial Crimes

    On November 26, the DOJ announced that Weatherford International—a multinational oil services company—and certain of its subsidiaries agreed to pay approximately $250 million in fines and penalties to resolve FCPA, sanctions, and export control violations. The DOJ alleged in a criminal information that the company knowingly failed to establish an effective system of internal accounting controls designed to detect and prevent corruption, including FCPA violations. The alleged compliance failures allowed employees of certain of the company’s subsidiaries in Africa and the Middle East to engage in prohibited conduct over the course of many years, including both bribery of foreign officials and fraudulent misuse of the United Nations’ Oil for Food Program. The company entered into a deferred prosecution agreement, pursuant to which it must pay an approximately $87 million penalty, retain an independent corporate compliance monitor for at least 18 months, and continue to implement an enhanced FCPA compliance program and internal controls. The subsidiaries pleaded guilty to related specific acts of corruption, including those alleged in a separate criminal information. The DOJ alleged, among other things, that employees of certain subsidiaries engaged in at least three schemes to pay bribes to foreign officials in exchange for government contracts. In addition the parent company agreed to pay over $65 million and submit to compliance and monitoring requirements to resolve parallel SEC civil allegations that the company violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA.

    Separately, the parent company entered into an agreement with the Treasury Department’s Office of Foreign Assets Control (OFAC) and a deferred prosecution agreement with the DOJ, as well as an agreement with the Department of Commerce, to resolve alleged sanctions and export controls violations. Collectively, those agreements require the company to, among other things, pay $100 million in penalties and fines—inclusive of a $91 million settlement with OFAC—and undergo external audits of its efforts to comply with the relevant U.S. sanctions law for calendar years 2012, 2013, and 2014. Those payments resolve allegations, described in part in another DOJ criminal information, that the company and certain subsidiaries exported or re-exported oil and gas drilling equipment to, and conducted business operations in, sanctioned countries—including Cuba, Iran, Sudan, and Syria—without the required U.S. Government authorization.

    FCPA SEC DOJ Sanctions OFAC Export Controls

  • FTC To Host Consumer Privacy Seminars

    Privacy, Cyber Risk & Data Security

    On December 2, the FTC announced a series of seminars to be held in 2014 dedicated to the privacy implications of: (i) mobile device tracking—tracking consumers in retail and other businesses using signals from their mobile devices; (ii) alternative scoring products—using predictive scoring to determine consumers’ access to products and offers; and (iii) consumer-generated and controlled health data—information provided by consumers to non-HIPAA covered websites, health applications, and devices. The first two topics will be examined in forums held in Washington, DC on February 19, 2014 and March 19, 2014, respectively. Details for the third event have not been finalized.

    FTC Privacy/Cyber Risk & Data Security

  • Second Annual CFPB Ombudsman Report Recommends Exam Changes

    Consumer Finance

    On December 3, the CFPB Ombudsman’s Office submitted its second annual report to the Director of the CFPB. The report contains an update on the systemic recommendations made last year and new recommendations stemming from the Ombudsman’s review of (i) how the CFPB shares information, (ii) caller experience with the CFPB contact center, and (iii) the supervisory examination process. The Ombudsman’s recommendations relate primarily to further standardizing and clarifying what a financial entity may expect throughout the examination lifecycle and to ensuring industry and consumer access to CFPB information in a consistent and timely manner. According to the Ombudsman, the Bureau was receptive to all suggestions and feedback.

    Specifically, the Ombudsman recommended that the CFPB cite to the examination manual in written communications to examinees; describe at the onset what the financial entity can expect to receive at the end of the examination process; provide updates on examination status at regular intervals after the onsite portion of examinations; and better inform financial entities about the methods available for elevating examination concerns. The Ombudsman also recommended that the CFPB add a digest to all updates to consumerfinance.gov, along with more user-friendly subscription “sign up” options; maintain a public events calendar and announce events with consistent minimal lead time; make basic information about the CFPB speaker request process more accessible; and explain to consumers contacting the CFPB contact center that providing an email address will result in consumer complaint notifications solely via email.

    In addition, the report summarizes and identifies trends in the individual inquiries submitted to the Ombudsman during the review period. The majority of inquiries related to the consumer-complaint process, and more than half of the consumer complaints received concerned mortgages. The report also addresses growth within the Ombudsman’s Office since last year and the Ombudsman’s external outreach efforts and internal dialogue with CFPB leaders across divisions and offices.

    CFPB Examination Nonbank Supervision Bank Supervision

  • CFPB Announces Arbitration Field Hearing

    Consumer Finance

    On December 2, the CFPB announced a field hearing on arbitration to be held in Dallas, Texas on Thursday, December 12. The event, which is open to members of the public who RSVP, will feature remarks from CFPB Director Richard Cordray, as well as testimony from consumer groups and industry representatives.

    The CFPB has made policy announcements in connection with field hearings in the past and may release findings related to the arbitration study it commenced in early 2012. The CFPB expanded its arbitration review this year with a proposal to survey credit card holders and by exercising its authority under Dodd-Frank Act Section 1022 to order some companies to provide template consumer credit agreements.

    Under Section 1028 of the Dodd-Frank Act, any exercise of rulemaking authority regarding arbitration agreements must be based on a finding—consistent with the study conducted—that the regulation is “in the public interest and for the protection of consumers.” While the CFPB may not yet be prepared to conduct a rulemaking on the use of such agreements, it is expected to begin releasing at least some results of its ongoing study.

    CFPB Arbitration

  • Latest CFPB Rulemaking Agenda Adds Some New Initiatives, Updates Timelines For Others

    Consumer Finance

    On December 3, the CFPB released its fall 2013 rulemaking agenda, part of the broader government Unified Agenda initially published last week. The CFPB’s latest agenda pushes back the timelines on several key initiatives, but offers relatively few new initiatives. One notable exception is that the CFPB  included planned activities related to a potential rule on overdraft products, which will build off of the CFPB’s overdraft white paper released earlier this year.

    The CFPB agenda also indicates that the Bureau plans additional activities related to the mortgage rules issued earlier this year and updated throughout the year. For example, the agenda states the CFPB will consider additional guidance that would facilitate the development of automated underwriting systems for purposes of calculating debt-to-income ratios in connection with qualified mortgage determinations. Also, as expected, the CFPB plans to conduct further analysis to consider possible amendments to the definitions of "rural" and "underserved" for purposes of certain exemptions from the mortgage rules.

    With regard to timelines, for example, “prerule activities” related to the eventual HMDA rule have again been delayed, with no public action expected before February 2014. Similarly, a proposed rule related to GPR prepaid cards now is expected no sooner than May 2014. The CFPB also promised to return to its prior efforts to streamline and modernize regulations that it inherited from other agencies, including the Gramm-Leach-Bliley Act's annual privacy notice requirements.

    CFPB Agency Rule-Making & Guidance

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