No overarching regulatory theme emerged last week, but enforcement actions involving credit card add-on products and the new mortgage servicing rules warrant the attention of banks engaged in those activities.
The full set of developments over the past week is as follows:
- Unemployment rate drops to 5.9% for September 2014.
- Bureau of Labor Statistics, Employment Situation – September 2014 available at http://www.bls.gov/news.release/empsit.nr0.htm.
- 6.2% was at one point Federal Reserve's threshold for changes in monetary policy.
- OCC reports improvement in conditions of national banks and federal savings associations in Southern District.
- Information available at http://www.occ.gov/news-issuances/news-releases/2014/nr-occ-2014-130.html.
Credit Cards – Add-On Products
- FDIC Consent Order on alleged unfair and deceptive practices in marketing and servicing payment protection add-on to credit cards (Sept. 29).
- Misrepresentations about payments and benefits.
- Inadequate disclosure of terms and conditions.
- In re Merrick Bank, available at https://www.fdic.gov/news/news/press/2014/pr14080.html.
- Remarks of CFPB Director Cordray at the Society for Financial Education and Professional Development (Sept. 29).
Insurance Companies – Federal Reserve Supervision
- Federal Reserve announces quantitative impact study to evaluate potential effects of new capital rules on insurance companies supervised by the Federal Reserve (i.e., systemically important companies) and savings and loan holding companies substantially engaged in insurance underwriting (Sept. 30).
- Materials available at http://www.federalreserve.gov/newsevents/press/bcreg/20140930a.htm.
- CFPB issues white paper, Manufactured-housing consumer finance in the United States(Sept. 30).
- Findings include:
- Majority of manufactured housing loans are considered "higher-priced mortgage loans" under TILA.
- Two out of three manufactured-home owners eligible for mortgages finance with more expensive personal property loans instead. Owner is eligible for mortgage if he or she owns land on which home sits.
- Personal property loan borrowers have fewer consumer protections than mortgage borrowers.
- One out of seven homes outside of a metropolitan area is a manufactured home.
- Manufactured-home owners are more likely to be older.
- Manufactured-home owners are more likely to have lower net worth.
- No recommendations for legislative or agency action.
- White paper available at http://www.consumerfinance.gov/reports/manufactured-housing-consumer-finance-in-the-u-s/.
- Findings include:
- Remarks of Federal Reserve Governor Powell on the paper "Government Debt Management at the Zero Lower Bound" (Sept. 30).
- Remarks available at http://www.federalreserve.gov/newsevents/speech/powell20140930a.htm.
- Remarks delivered as part of panel at Brookings Institution conference, "Debt Management in an Era of Quantitative Easing: What Should the Treasury and the Fed Do?"
- Materials available at http://www.brookings.edu/events/2014/09/30-debt-management-quantitative-easing-treasury-fed.
- FHA releases first chapter of handbook on FHA underwriting requirements.
- Handbook 4000.1, FHA Single Family Housing Policy Handbook, Title II Insured Housing Programs Forward Mortgages, Origination through Post-Closing/Endorsement, available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/whatsnew.
- CFPB consent order with Flagstar Bank for alleged violations of CFPB's new mortgage servicing rules on foreclosure relief (Sept. 29).
- Alleged violations.
- Borrower applications closed because of bank's excessive delays.
- Delays in approving or denying relief.
- Failure to alert borrowers to incomplete applications.
- Miscalculation of incomes.
- Denials for unspecified reasons.
- Misinformation to borrowers about appeal rights.
- Trial period "purgatory" for borrowers.
- $27.5 million in redress to borrowers.
- Prohibition on future violations.
- Prohibition on acquisitions of default servicing rights from third parties until bank demonstrates ability to comply with foreclosure relief rules.
- Outreach to affected borrowers.
- $10 million civil money penalty, paid to CFPB's Civil Penalty Fund.
- Order available at http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-flagstar-bank-for-violating-new-mortgage-servicing-rules/.
- Alleged violations.
- Pew Charitable Trust releases Fraud and Abuse Online: Harmful Practices in Internet Payday Lending (Oct. 2).
- OCC announces OCC guidance now applicable to federal thrifts, reaffirms application of interagency guidance, and rescinds certain OCC guidance (Oct. 1).
- Announcement and materials available at http://www.occ.gov/news-issuances/bulletins/2014/bulletin-2014-49.html.
- Remarks of Comptroller Curry before the National Bankers Association (Oct. 1).
- OCC "highly recommends that your bank conduct strategic planning as a means to identify who you are, what your strengths and weaknesses are, what you can realistically accomplish, and what success should look like for your institution."
- Remarks available at http://www.occ.gov/news-issuances/news-releases/2014/nr-occ-2014-131.html.
Too Big to Fail
- Federal Reserve announces quantitative impact study on potential effect of new capital rules on systemically important insurance companies (Sept. 30). See Insurance Companies – Federal Reserve Supervision above.
- MetLife requests hearing before FSOC to challenge preliminary designation as systemically important (Oct. 3).
Congressional Hearings – Upcoming
- None scheduled.
Congressional Hearings – Past Week
- Oct. 7
- Public meeting of OCC Minority Depository Institutions Advisory Committee.
- Oct. 9
- SEC closed Commission meeting.
- Oct. 16-17
- FDIC annual Consumer Research Symposium.
- Oct. 28-29
- OCC director workshops, Credit Risk and Risk Assessment, in Cleveland, OH.
- Nov. 5-6
- OCC director workshops, Compliance Risk and Credit Risk: A Director's Focus, in Kansas City, MO.
- Nov. 6
- FDIC Interagency CRA Workshop for Banks (Waukesha, WI).
Regulatory Comment Deadlines
- 60 days from publication in Federal Register – FDIC: changes to risk-based deposit insurance assessment system.
- Oct. 14 – SEC: references to credit ratings in money market rules.
- Oct. 22 – CFPB: HMDA reporting requirements.
- Oct. 28 – FHFA: housing goals for Fannie Mae and Freddie Mac.
- 60 days from publication in Federal Register – Federal Reserve: repeal of Regulation AA.
- 60 days from publication in Federal Register – Federal Reserve/OCC/FDIC: additions to CRA Q&As.
- Nov. 10 – SEC: circulation of price quotes of security-based swaps that may be purchased only by eligible contract participants not deemed an offer to sell.
- Nov. 12 – FHFA: FHLB membership to require 1% of assets in home mortgage loans.
- 60 days from publication in Federal Register – CFPB: definition of "larger participant" in nonbank auto lending market.
- Nov. 24 – Federal Reserve/OCC/FDIC/FHFA/Farm Credit Administration: margin requirements for uncleared swaps.
- Dec. 2 – CFTC: margin requirements for uncleared swaps for swap dealers and major swap participants.