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Week of May 20 |
CFPB issues final list of rural, under-served counties
Friday, the Consumer Financial Protection Bureau (CFPB) issued a final rule clarifying the Bureau's escrow rule. The final rule amends an existing rule that provides protections regarding assessments of consumers' ability to repay as well as prepayment penalties on certain “higher-priced” mortgage loans.
The Bureau also released a final list of rural and under-served counties to use in conjunction with the regulation. The bureau noted that since the methods for determining rural and underserved status were not changed from its proposed rule, the final list is identical to the preliminary list that the CFPB posted on March 12.
The following 52 Oklahoma counties made the list:
Adair, Alfalfa, Atoka, Beaver, Beckham, Blaine, Caddo, Carter, Choctaw, Cimarron, Coal, Cotton, Craig, Custer, Delaware, Dewey, Ellis, Garfield, Garvin, Grant, Greer, Harmon, Harper, Haskell, Hughes, Jackson, Jefferson, Johnston, Kay, Kingfisher, Kiowa, Latimer, Love, McCurtain, McIntosh, Major, Marshall, Mayes, Murray, Noble, Nowata, Okfuskee, Pittsburg, Pontotoc, Pushmataha, Roger Mills, Seminole, Texas, Tillman, Washita, Woods and Woodward.
Creditors may rely on the final list as a safe harbor to determine whether a county is rural or underserved for loans made from June 1, 2013, through Dec. 31, 2013, according to the Bureau. A list of qualifying counties for 2014 will be posted later.
The escrow rule goes into effect June 1 and establishes a temporary provision to ensure existing protections remain in place for higher-priced mortgage loans until the expanded provisions take effect in January 2014. It also extends the required duration for escrow accounts on higher-priced mortgage loans from one year to a minimum of five years.
Importantly, the rule exempts from its requirements such loans made by certain small creditors that operate predominately in rural or underserved counties included on the list of Oklahoma counties noted above.
During the rulemaking process for these clarifications, the Bureau received many comments suggesting major changes to the rural and underserved definitions and related provisions. The OBA filed one of these comments and focused on the differences between smaller community banks and the customers they serve with the rest of the nation's larger banks and urban areas.
According to the Bureau, these comments were outside the scope of the narrow technical changes the rule was proposing. (emphasis added) However, the Bureau says it plans to finalize the proposed rule the Bureau issued concurrently with the Ability to Repay/QM Rule in January very soon, and it will address questions of further flexibility for small institutions.
Click here to read the final rule.
Luetkemeyer pushes regulatory relief bill
Rep. Blaine Luetkemeyer (R-Mo.) has introduced a significant regulatory relief bill – H.R. 1750 – to help community banks, and we're asking other members of the House Financial Services Committee – like Oklahoma Congressman Frank Lucas – to support this effort.
Among other things, H.R. 1750 would provide the following areas of relief:
- exempts banks under $10 billion from the escrow requirements of Section 1461 of Dodd-Frank;
- exempts all banks from the annual privacy notice requirements if the bank's policies and practices have not changed from the last disclosure notice;
- requires the Securities and Exchange Commission to conduct a cost-benefit analysis of any new or amended accounting principle that shows the benefits to investors significantly outweighs its costs;
- exempts banks under $10 billion from the annual management assessment of internal controls required by Sarbanes-Oxley;
- expands the regulatory “safe harbor” for Qualified Mortgages by exempting banks under $10 billion from the QM standards for any loan originated by the institution and kept in portfolio for at least 3 years;
- exempts small servicers (service less than 20,000 mortgage loans per year) certain provisions of RESPA;
- establishes the appraiser qualification threshold established in FIRREA at $250,000;
- ACH transactions – no receiving depository is required to verify that the entry is not a prohibited transaction if originating entity has warranted that it has complied with the OFAC sanctions program.
Credit union business lending bill reintroduced in Senate
Thursday, Sen. Mark Udall (D-Colo.) reintroduced a bill to raise the member business-lending cap for certain credit unions from 12.25 percent to 27.5 percent of total assets. S. 968 is virtually the same bill that Udall introduced in the last Congress.
A companion bill – H.R. 588 – has been introduced in the House, and bankers have been asked to express their opposition to it by using the ABA's click-through system.
ABA President and CEO and former Oklahoma Gov. Frank Keating said in response to the bill's introduction:
“We believe it is wrong to permit credit unions to use their tax subsidies to cherry-pick loans that tax-paying community banks would gladly make. Credit unions have enormous opportunity and flexibility under current law to meet the needs of their small business customers without any changes in their congressionally mandated lending limit.”
Biggert-Waters ready to increase flood insurance rates
The National Flood Insurance Program reauthorization contained last year in the Biggert-Waters Flood Insurance Reform Act of 2012 includes rate increases that are likely to have a significantly negative impact on homeowners across the country. Frankly, bankers may not have realized that these increases are on the way or their significance.
Click here to refresh your recollection by reading the interagency guidance.
Sen. Mary Landrieu (D-La.) has introduced an amendment to halt these rate increases until FEMA conducts an affordability study and there is sufficient time to act on whatever results may have been suggested. Even one of the authors of the original legislation – Ranking Member Maxine Waters (D-Calif.) has recognized that the implementation of this bill is not what she intended.
We will be asking Sens. Coburn and Inhofe to support Landrieu's efforts.
Kovacevich casts blame for 2008 financial crisis
Friday, Richard Kovacevich, former chairman and CEO of Wells Fargo & Co., appeared on Bloomberg TV for an interview about the causes of the 2008 financial crisis and other matters. Without naming names, he blamed 20 institutions, half of which he said were savings and loans and half of which were investment (not commercial) banks.
Kovacevich also holds these institutions responsible for the current financial services environment, but he also said the low interest rates that are a part of the Federal Reserve's Quantitative Easing (QE) programs. These low interest rates make “us fat cats” wealthier while hurting more than 70 percent of Americans who are unable to generate any return on their savings accounts, according to the former Wells Fargo CEO.
As we have often noted, and as Oklahoma community bankers know instinctively, more than 7,000 banks across the country "did nothing wrong" and are "being punished" for the sins of others according to Kovacevich. Again, this is something that Oklahoma bankers know instinctively.
Senate panel approves Perez nomination
Thursday, the Senate Health, Education, Labor and Pensions Committee approved the nomination of Tom Perez to be labor secretary. The voted was approved along party lines and now goes to the full Senate for consideration.
Perez currently serves as assistant attorney general in the Justice Department's Civil Rights Division. His primary job is to oversee the department's fair lending enforcement efforts. Perez brought controversy to his service in the Justice Department because of actions he took in 2010 to persuade the City of St. Paul, Minn., to drop an appeal to the U.S. Supreme Court that challenged the use of the “disparate impact” theory to establish unintended discriminatory action.
This theory is being used extensively against commercial banks to hold them responsible for “discriminating” against a protected class of borrowers when there was no intent to do so and the conclusion comes simply as a result of analyzing statistics. Bankers across the country are urging their U.S. senators to vote against Perez's confirmation and Oklahoma bankers are asked to do the same.
OBA education corner ...
The 2013 OBA convention is in our rear-view mirrors, but that doesn't mean seminars and webinars simply stop! Pat close attention to the following:
- RE Lending Compliance: Application to Closing Seminar, May 29-30, Oklahoma City — This program traces a residential loan transaction from the first contact with the customer to final collection. The focus is on the steps in the lending process and what must be done during each step to comply with ALL the Federal compliance laws, rules and regulations. At each phase of the entire process the disclosure and reporting requirements of regulations are discussed.
- Fair Lending Seminar, May 23, Oklahoma City — Fair lending violations are getting a lot of attention from examiners and from the Department of Justice. Violations can be very expensive and the damage to the reputation of the financial institution can be devastating. In several recent cases, in addition to monetary damages, cures have included requirements to improve the compliance management system.
- Creating and Maintaining Credit Discipline, May 23, webinar — Most problem loans involve some breach of discipline in principle, policy, procedure or judgment. This program provides an understanding of the critical components of strong and positive credit culture.
Also, make sure and take note of the OBA's Annual Washington Visit. The dates for this year's trip have been set for Sept. 8-10 and attendees will be staying at the Mayflower Hotel. Look for registration information in early June on OBA.com, and if you have any questions in the meantime, contact Adrian Beverage!