CDFI Certification Pause
The U.S. Department of Treasury recently announced that, “In order to complete preparations needed to deploy the new CDFI Certification Application and reporting tools, the CDFI Fund will pause acceptance of new CDFI Certification Applications and requests for Target Market modifications for a period of six months beginning on October 1, 2022. The CDFI Fund will resume accepting new CDFI Certification Application submissions and requests for Target Market modifications on April 3, 2023. The new CDFI Certification Application will be in effect at this time for those organizations applying for CDFI Certification. Existing CDFIs will have a one-year grace period to comply with the new CDFI Certification criteria.
During the blackout period, CDFIs will be required to be in a state of good standing with respect to their Certification status. To facilitate this process, the CDFI Fund will review all currently pending CDFI Certification Applications and Target Market modification requests (as well as all new Applications and Target Market modification requests) submitted before October 1, 2022, by April 3, 2023. Organizations either in the process of applying for CDFI Certification or that intend to do so in the near future will have until 11:59 p.m. ET on September 30, 2022 to submit CDFI Certification Applications or Target Market Modification Applications through the CDFI Fund’s Awards Management Information System (AMIS).”
On August 10, the CDFI Fund will be holding an informational conference call for those CDFIs that are currently in a Certification cure period related to the submission of a 2021 or 2022 Annual Certification and Data Collection Report (ACR).
To assist CDFIs currently in a Certification cure period, or those awaiting a determination as to whether they will be placed in a cure period, the CDFI Fund is conducting a live conference call on August 10, 2022. The call will provide general information on how CDFIs can satisfy the terms of a cure and resolve Certification deficiencies during the coming CDFI Certification Application blackout period. The CDFI Fund strongly encourages the participation of a representative from any CDFI currently in a Certification cure period.
Information for this August 10 conference call can be found here.
Commercial Real Estate Loan Workouts & Accommodations
The National Credit Union Administration (NCUA) recently announced the opportunity to provide comment on a policy statement concerning commercial real estate (CRE) loan accommodations and workouts.
The proposed policy statement can be found here and is open for a 60 day comment period.
The policy statement would be an update to a 2009 statement on the same topic to incorporate recent policy guidance on loan accommodations and accounting developments for estimating loan losses.
The proposed Statement addresses supervisory expectations with respect to a financial institution’s handling of loan accommodations and loan workouts on matters including (1) risk management elements, (2) classification of loans, (3) regulatory reporting, and (4) accounting considerations.
The agencies proposed to add a new section on short-term loan accommodations; information about changes in accounting principles since 2009; and revisions and additions to examples of CRE loan workouts.
In addition to welcoming comments to the proposed statement, the agencies also include several questions on which they are seeking feedback – including:
Article of Interest – Technology behind rising fraud
In case you missed it, be sure to check out this recent article in CUInsight from MaryAnne Colucci, from Envisant. As credit unions are well aware, there is a lot of fraud going on. This article discusses the tools fraudsters are using and what all this means for credit unions.
CFPB Notification Letter – Auto lending and SCRA
The Consumer Financial Protection Bureau (CFPB) recently issued a notification letter jointly with the Department of Justice concerning – auto lending and leasing protections for servicemembers, which can be found here.
This letter serves as a reminder of federal protections that exist for servicemembers and their families – review the letter and make sure your processes are compliant.
The CFPB and DOJ provide reminders on vehicle repossession protections, early vehicle lease terminations, and auto loan interest rate benefits.
Recent CFPB Enforcement Actions
The CFPB has issued a number of enforcement actions against a variety of entities recently. Here is a run down of the July enforcement actions.
U.S. Bank – ordered to pay $37,500,000 in civil money penalty. Among the findings listed in the Order, the CFPB found that in response to sales pressure or to obtain incentive rewards, bank employees opened deposit accounts, submitted applications for and issued credit cards, and opened lines of credit linked to deposit accounts without consumers’ knowledge and consent. This in turned caused violations of TILA, FCRA, TISA, and the Consumer Financial Protection Act of 2010.
Trident Mortgage Company, LP – in its complaint, the CFPB alleges that Trident, from at least 2015 through 2019, engaged in a pattern or practice of unlawful discrimination against applicants and prospective applicants, on the basis of race, color, or national origin, including by redlining majority-minority neighborhoods in the Philadelphia Camden-Wilmington, PA-NJ-DE-MD Metropolitan Statistical Area (Philadelphia MSA), and engaging in acts and practices directed at prospective applicants that would discourage prospective applicants from applying for credit.
Some of the practices that the CFPB cites included Trident’s practice of locating and maintaining nearly all its offices and all its loan officers in majority-white neighborhoods, and avoiding having offices in, or having loan officers serve, majority-minority areas. Trident also concentrated its outreach, advertising, and marketing in majority-white neighborhoods and avoided marketing to majority-minority areas.
Hyundai Capital America – the consent order found that the company repeatedly furnished consumer information to consumer reporting agencies that contained systemic errors that the company knew of but was ineffective in fixing or, in some instances, failed to fix. Thus, the company furnished millions of consumer tradelines to CRAs containing inaccuracies. It repeatedly failed to promptly correct and update these inaccurate tradelines in the data it furnished to CRAs.
Interestingly, the company identified a number of the systemic issues causing the inaccuracies in a March 2013 audit. It hired an outside consulting firm and undertook a project to make changes to its credit report furnishing logic required to align its system of record with the Metro 2 data format so that the company would furnish correct tradeline information. Unfortunately, the logic changes failed to address or resolve some of the issues identified in the 2013 audit, and created new, additional problems for the loan and lease portfolios.
Bank of America – consent order requires the bank to pay the CFPB $100 million civil penalty. The OCC concurrently issued an order against the Bank separately fining it $125 million.
This consent order stems from the bank’s practices in investigating notices of errors from an unemployment insurance benefit prepaid debit cardholder – the bank had contracts with 12 states to deliver unemployment insurance and other government benefit payments to consumers through prepaid debit cards and accounts.
Initially, upon receiving a notice of error from an unemployment insurance benefit prepaid debit cardholder concerning alleged unauthorized EFTs, the bank would conduct an investigation that could include, among other steps: comparing the location of the transaction with the consumer’s residence or habitual transactions; accessing ATM camera footage (if the alleged unauthorized activity occurred at a Respondent ATM); and contacting the cardholder for further information.
Following a surge in notices of error filed by unemployment insurance benefit prepaid debit cardholders nationwide throughout the summer of 2020 (COVID), the bank changed its practices for investigating unemployment insurance benefit prepaid debit cardholder notices of error. Under its new strategy, implemented September 28, 2020 for all of its state unemployment insurance benefit prepaid programs, the bank only ran cardholders’ notices of error concerning alleged unauthorized EFTs through its newly developed automated Fraud Filter.
Between September 28, 2020, and June 8, 2021, for notices of error submitted by unemployment insurance benefit prepaid debit cardholders concerning alleged unauthorized EFTs that met any of the three indicators used by Respondent’s Fraud Filter, along with determining no error had occurred, Respondent froze or, after March 17, 2021, blocked the consumer’s prepaid debit card account.
Populus Financial Group d/b/a ACE Cash Express - in its complaint, the CFPB alleges that the company engaged in unfair, deceptive, and abusive acts or practices by concealing the option of a free repayment plan to consumers who indicated that they could not repay their short term, high-cost loans originated by ACE. By doing so, ACE generated at least $240 million in reborrowing fees and kept consumers in unaffordable cycles of debt.
As always, DakCU members may contact Amy Kleinschmit with any compliance related questions.
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