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Weekly Rewind...News from Your Regulators

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CFPB Issues Consent Order for Unfair Actions

Consent Order – The CFPB is ordering a national bank to pay more than $2 billion in redress to consumers and a $1.7 billion civil penalty for legal violations across several of its largest product lines. The CFPB’s findings include: unlawful repossession of vehicles and bungled borrower accounts, improperly denied mortgage applications, illegally charged surprise overdraft fees, and unlawfully freezing consumer accounts and misrepresenting fee waivers.

CFPB Issues Penalty for Error Notice Violations

Consent Order – The CFPB ordered an international remittance transfer company to reimburse harmed consumers and pay a $700,000 penalty. The Order stated that the company did not refund fees when a sender properly submitted an error notice, stating that the recipient of the remittance transfer was unable to access the funds by the promised date, and the company neither accurately informed senders of their cancellation rights nor accurately disclosed the date funds would be available. In addition, it inaccurately described key terms of the remittance transfers and its disclosures did not meet the minimum font size requirements.

FDIC Enforcement Action

Enforcement Action – An Oregon bank has been penalized $425,000 by the FDIC for reportedly “entering into mortgage lead generation arrangements with the operator of a real estate website and the operator of an online loan marketplace that were used to facilitate and disguise referral payments for mortgage business,” making deceptive and misleading representations in pre-screened offers, and pulling credit reports without a legally permissible purpose on former clients.

NCUA Releases Simplified CECL Tool

Simplified CECL Tool - The NCUA released the December 2022 update of the Simplified CECL Tool. The update includes the latest life-of-loan, or Weighted Average Remaining Maturity factors, as well as minor enhancements. For most credit unions, CECL will become effective January 1, 2023. For credit unions that plan to use the Simplified CECL Tool, the December release can be used to determine the day-one adjustment to undivided earnings, as required by CECL implementation guidance. For these credit unions, the day-one adjustment will be recorded effective January 1, 2023, and will be reported in the March 2023 Call Report.

With this update and future quarterly updates of the Simplified CECL Tool, a credit union can use the Tool to estimate its allowance for credit losses on loans and leases. Quarterly updates will be provided so a credit union can incorporate them before its books are closed and before it submits the NCUA’s Call Report.

From the CFPB

For HMDA (Regulation C) reporting the exemption threshold is adjusted to increase to $54 million from $50 million. The adjustment is based on the 8.6 percent increase in the average of the CPI-W for the 12-month period ending in November 2022. Therefore, banks, savings associations, and credit unions with assets of $54 million or less as of Dec. 31, 2022, are exempt from collecting data in 2023.

CFPB Makes Adjustments for Inflation

For HOEPA, the annual adjustment will increase the threshold so that a loan will be considered high cost if points and fees exceed 5% of the total loan amount for loans $24,866 or more; or if the loan amount is less than $24,866, the points and fees exceed the lesser of 8% or $1,243.

For Qualified Mortgages: the thresholds for the spread between the APR and the APOR for 2023 will be:

· 2.25 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $124,331;

· 3.5 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $74,599 but less than $124,331;

· 6.5 or more percentage points for a first-lien covered transaction with a loan amount less than $74,599;

· 6.5 or more percentage points for a first-lien covered transaction secured by a manufactured home with a loan amount less than $124,331;

· 3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $74,599; or

· 6.5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $74,599.

Additionally, the thresholds for total points and fees in 2023 for all categories of QMs will be:

· 3 percent of the total loan amount of $124,331 or more;

· $3,730 for loan amounts from $74,599 and up, but less than $124,331;

· 5 percent of the total loan amount for loans of $24,866 and up, but less than $74,599;

· $1,243 for loans of $15,541 and up, but less than $24,866; and

· 8 percent of the total loan amount for loans less than $15,541.

FinCEN Issues Financial Trend Analysis

The FinCEN issued a Financial Trend Analysis on the financial activity of Russian oligarchs. The report focuses on trends seen in Bank Secrecy Act reports filed between March 2022 and October 2022 involving Russian oligarchs, high-ranking officials, and sanctioned individuals. The report also highlights the value of BSA data filed by regulated financial institutions.

From the Federal Reserve

The Federal Reserve Board and the Federal Deposit Insurance Corporation announced the 2023 updated asset-size thresholds used to define “small bank” and “intermediate small bank” under their Community Reinvestment Act (CRA) regulations. The definitions of small and intermediate small banks for CRA examinations will change as follows:

· Small bank means an institution that, as of December 31 of either of the prior two calendar years, had assets of less than $1.503 billion.

· Intermediate small bank means a small institution with assets of at least $376 million as of December 31 of both of the prior two calendar years and less than $1.503 billion as of December 31 of either of the prior two calendar years.

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