Top Story Lending Related

The NCUA has announced its barring of three individuals from participating in the affairs of any federally insured depository institution.

• Tracy Mikulencak, a former employee of A+ Federal Credit Union, Austin, Texas, agreed to the issuance of a prohibition order following a finding that she fraudulently took funds out of her own teller drawer, the Georgetown branch’s vault, and member accounts, defrauding the credit union and its members of $325,708.
• Javier DeJesus Narciso, a former employee of Merced School Employees Federal Credit Union, Merced, California, was issued a prohibition notice based on his conviction on one count of grad theft and embezzlement in connection with his employment
• Philip Brian Topping, a former employee of New Pilgrim Federal Credit Union, Birmingham, Alabama, was issued a prohibition notice based on his conviction on on one count of theft and embezzlement in connection with his employment

The OCC has released a list of CRA performance evaluation ratings made public by the OCC during the month of June. Of the 21 institutions listed, 14 received ratings of Satisfactory.

Six of the institutions received a rating of Outstanding. We congratulate each of them:

• Dollar Bank, Federal Savings Bank, Pittsburgh, Pennsylvania
• Falcon National Bank, Foley, Minnesota
• First National Bank Alaska, Anchorage, Alaska
• First National Community Bank, New Richmond, Wisconsin
• Home Federal Savings and Loan Association Bamberg, South Carolina
• Webster Bank, National Association, Stamford, Connecticut

American Commercial Bank & Trust, National Association, Ottawa, Illinois, received a Needs to Improve rating.

The FDIC has issued Financial Institution Letters with guidance to help financial institutions and facilitate recovery in areas of Iowa and New Mexico.

• FIL-37-2024, addressing institutions in areas of New Mexico (Mescalera Tribe; Lincoln and Otero Counties) affected by the South Fork Fire and Salt Fire on June 17, 2024, and continuing
• FIL-38-2024, addressing institutions in areas of Iowa (Clay, Emmet, Lyon, Sioux, and Plymouth Counties) affected by severe storms, flooding, straight-line winds, and tornadoes on June 16, 2024, and continuing

The CFPB and the FHFA have announced their publication of updated loan-level data for public use collected through the National Survey of Mortgage Originations (NSMO). The data also provide updated mortgage performance and credit information for a nationally representative sample of mortgage borrowers from 2013 to 2021.

Since 2014, FHFA and CFPB have sent quarterly surveys to borrowers who recently obtained mortgages. These surveys gather feedback on borrowers’ experiences during the mortgage process, their perceptions of the mortgage market, and their future expectations. Yesterday’s release adds one additional year of new mortgage data through 2021. It also features data on three new survey questions first asked of mortgage borrowers in 2021:

• When asked about appraisal satisfaction, 70 percent of respondents reported being very satisfied with their property appraisal, 23 percent reported being somewhat satisfied, and 6 percent were not at all satisfied.
• When questioned on their willingness to move from their primary residence, 50 percent of respondents reported being unwilling to move, 20 percent were unsure about moving, 25 percent were willing and able to move, and 5 percent were willing but unable to move.
• When prompted to select from a list of factors important to borrowers choosing a mortgage lender/broker, 8 percent of respondents selected accommodations for people with disabilities as an important factor in their choice.

On Friday, FinCEN announced a proposed rule to strengthen and modernize financial institutions’ anti-money laundering and countering the financing of terrorism (AML/CFT) programs. While financial institutions have long maintained AML/CFT programs under existing regulations, this proposed rule would amend those regulations to explicitly require that such programs be effective, risk-based, and reasonably designed, enabling financial institutions to focus their resources and attention in a manner consistent with their risk profiles. Effective, risk-based, and reasonably designed AML/CFT programs are critical for protecting national security and the integrity of the U.S. financial system. The proposed amendments are based on changes to the Bank Secrecy Act (BSA) as enacted by the Anti-Money Laundering Act of 2020 (AML Act) and are a key component of Treasury’s objective of building a more effective and risk-based AML/CFT regulatory and supervisory regime.

This proposed rule would:

• amend the existing program rules to explicitly require financial institutions to establish, implement, and maintain effective, risk-based, and reasonably designed AML/CFT programs with certain minimum components, including a mandatory risk assessment process
• require financial institutions to review government-wide AML/CFT priorities and incorporate them, as appropriate, into risk-based programs, as well as provide for certain technical changes to program requirements
• promote clarity and consistency across FinCEN’s program rules for different types of financial institutions

The proposal also articulates certain broader considerations for an effective and risk-based AML/CFT framework as envisioned by the AML Act. For example, through its emphasis on risk-based AML/CFT programs, the proposed rule seeks to avoid one-size-fits-all approaches to customer risk that can lead to financial institutions declining to provide financial services to entire categories of customers. Friday’s proposal is consistent with a key recommendation in Treasury’s De-risking Strategy, which recommended proposing regulations to require financial institutions to have reasonably designed and risk-based AML/CFT programs supervised on a risk basis and taking into consideration the effects of financial inclusion. Finally, the proposed rule would encourage financial institutions to modernize their AML/CFT programs where appropriate to responsibly innovate, while still managing illicit finance risks.

FinCEN's proposal was prepared in consultation with the Federal Reserve Board, the OCC, the FDIC, and the NCUA in order to collectively issue proposed amendments to their respective BSA compliance program rules for the institutions they supervise.

Written comments on FinCEN’s proposed rule must be received on or before 60 days following its publication in the Federal Register.

• Proposed Rule
• Fact Sheet
  

The FDIC has released a list of enforcement orders issued in May 2024 against FDIC-supervised financial institutions and individuals formerly or currently affiliated with such institutions.

Flood Insurance Violations:

• Oriental Bank, San Juan, Puerto Rico, was assessed a civil money penalty of $447,125
• Spring Valley Bank, Wyoming, Ohio, was assessed a $1,500 civil money penalty

Cease and Desist or Consent Orders:

• Old Glory Bank, Elmore City, Oklahoma
• Forbright Bank, Potomac, Maryland
• Community Bank and Trust - West Georgia, LaGrange Georgia
• Thread Bank, Rogersville, Tennessee
• TNBANK, Oak Ridge, Tennessee
• Union County Savings Bank Elizabeth, New Jersey
• California Business Bank, Irvine, California

Orders against individuals:

• Justin L. Holt, former SVP and loan officer at Bank of Tyler, Tyler, TX (now known as UBank, Huntington, TX), received a personal consent order and order to pay a $25,000 civil money penalty after a finding that he repeatedly caused the disbursement of loan funds on a construction loan without properly documenting the disbursements and without requiring or verifying progress or completion of construction per bank policy, thus resulting in a dissipation of loan proceeds by the borrower; and misrepresented the status of such construction in an effort to obscure those actions.
• Hector Hugo Gutierrez Jr., formerly affiliated with Branch Banking and Trust Company (now Truist Bank, Charlotte, North Carolina) was issued a prohibition order.
• Yvonne Han, affiliated with 1st Colonial Community Bank, Collingswood, New Jersey, was issued a personal consent order

The CFPB has posted a Bureau Blog article announcing the Bureau's release of its Fair Lending Annual Report to Congress describing the Bureau's actions against unlawful discrimination and for advancing access to fair credit in calendar year 2023.

The OCC has reported on the performance of first-lien mortgages in the federal banking system during the first quarter of 2024.

The OCC Mortgage Metrics Report, First Quarter 2024 showed that 97.4 percent of mortgages included in the report were current and performing at the end of the quarter, an increase from 97.2 percent in fourth quarter 2023, and a decrease from 97.6 percent a year ago.

The percentage of seriously delinquent mortgages—mortgages that are 60 or more days past due and all mortgages held by bankrupt borrowers whose payments are 30 or more days past due—decreased from the previous quarter and has trended down since the first quarter of 2022.

Servicers initiated 7,408 new foreclosures in the first quarter of 2024, a decrease from the previous quarter and from a year earlier.

The Federal Reserve Board yesterday announced that the results of its annual bank stress test showed that while large banks would endure greater losses than last year's test, they are well positioned to weather a severe recession and stay above minimum capital requirements. Additionally, the Board published aggregate results from its first exploratory analysis, which will not affect bank capital requirements.

The Board's stress test is one tool to help ensure that large banks can support the economy during downturns. The test evaluates the resilience of large banks by estimating their capital levels, losses, revenue and expenses under a single hypothetical recession and financial market shock, using banks' data as of the end of last year. The individual results from the stress test inform a bank's capital requirements to help ensure a bank could survive a severe recession and financial market shock.

The Board also conducted an exploratory analysis, including two funding stresses to all banks tested and two trading book stresses to only the largest and most complex banks. The exploratory analysis is distinct from the stress test, exploring additional hypothetical risks to the broader banking system.

The two funding stresses include a rapid repricing of deposits, combined with a more severe and less severe recession. Under each element, large banks would remain above minimum capital requirements in aggregate, with capital ratio declines of 2.7 percentage points and 1.1 percentage points, respectively. Under the two trading book stresses, which included the failure of five large hedge funds under different market conditions, the largest and most complex banks are projected to lose between $70 billion and $85 billion. The results demonstrated that these banks have material exposure to hedge funds but that they can withstand different types of trading book shocks.

The FHFA has reported the U.S. house prices rose in April, up 0.2 percent from March, according to its seasonally adjusted monthly House Price Index (HPI). House prices rose 6.3 percent from April 2023 to April 2024. The previously reported 0.1 percent price increase in March was revised downward to 0.0 percent.

For the nine census divisions, seasonally adjusted monthly price changes from March 2024 to April 2024 ranged from -0.2 percent in the West South Central and Middle Atlantic divisions to +1.4 percent in the East South Central division. The 12-month changes were all positive, ranging from +3.0 percent in the West South Central division to +8.5 percent in the New England and Middle Atlantic divisions.

“U.S. house prices continued to rise in April,” said Dr. Anju Vajja, Deputy Director for FHFA’s Division of Research and Statistics. “However, the appreciation rate slowed in April amid a slight rise in both mortgage rates and housing inventory. The housing market in general began to show some signs of normalization.”