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The CFPB has releases issue 33 of its Supervisory Highlights report. The findings in this report cover select examinations regarding mortgage servicing completed from April 1 through December 31, 2023.

The report indicates that examiners continue to find supervised mortgage servicers assessing junk fees, including unnecessary property inspection fees and improper late fees. Additionally, examiners found that mortgage servicers engaged in other unfair, deceptive, and abusive acts or practices (UDAAP) such as sending deceptive loss mitigation eligibility notices to consumers. Mortgage servicers also violated several of Regulation X’s loss mitigation provisions.

The Labor Department announced yesterday that it has issued a final rule that expands overtime pay protections by increasing the salary thresholds required to exempt a salaried bona fide executive, administrative or professional employee from federal overtime pay requirements.

Effective July 1, 2024, the salary threshold will increase to the equivalent of an annual salary of $43,888 and increase to $58,656 on Jan. 1, 2025. The July 1 increase updates the present annual salary threshold of $35,568 based on the methodology used by the prior administration in the 2019 overtime rule update. On January 1, 2025, the rule’s new methodology takes effect, resulting in the additional increase. In addition, the rule will adjust the threshold for highly compensated employees. Starting July 1, 2027, salary thresholds will update every three years, by applying up-to-date wage data to determine new salary levels.

HUD has announced it has published [89 FR 30850] in this morning's Federal Register a final rule with a Federal Flood Risk Management Standard (FFRMS) to help communities prepare for and reduce flood damage. This rule aims to protect communities from flood risk, heavy storms, increased frequency of severe weather events and disasters, changes in development patterns, and erosion.

The final rule implements the FFRMS required by Executive Order 13690 (1/30/2015) by updating two of HUD’s regulations: Part 55, Floodplain Management and Protection of Wetlands and Part 200, Minimum Property Standards. This rule strengthens standards by increasing elevations and flood proofing requirements of properties in areas at risk of flooding, where federal funds are used to develop or provide financing for new construction within the now defined FFRMS floodplain. It also applies to substantial improvement to structures financed through HUD grants, subsidy programs, and applicable multifamily programs. The update to Minimum Property Standards only applies to FHA-insured new construction within the 100-year floodplain.

The Department of Defense's Military Lending Act website includes a notice that the MLA’s next system release (version 5.19) is scheduled for Thursday, April 25, 2024. MLA v 5.19 will include updates to the password requirements check list and error messages to increase clarity and create a better user experience. It will also include additional security and accessibility enhancements. The MLA website will not be available from 6:00 P.M. until 9:00 P.M. PDT [9:00 P.M. until midnight EDT] while the updates are performed.

HUD has announced that the Federal Housing Administration has updated its policies for wind and named storm insurance coverage required for multifamily properties financed with an FHA-insured mortgage, as part of HUD’s broader work to address rising insurance costs.

Effective immediately, the FHA is increasing the maximum permissible wind or named storm deductible to the greater of $50,000 or five percent of the insurable value per location, up to a maximum amount of $475,000 per occurrence. Previous MAP Guide policy prohibited this deductible from exceeding the greater of $50,000 or one percent of the insurable value for any insured building up to a maximum amount of $250,000.

The OCC has published the spring 2024 edition of the Interest Rate Risk Statistics Report. The report presents interest rate risk data gathered during examinations of OCC-supervised midsize and community banks and federal savings associations. The report provides statistics on interest rate risk exposures and risk limits for different midsize and community bank populations, including

• all OCC-supervised midsize and community banks with reported data
• banks by asset size
• banks by charter type
• minority depository institutions

The publication is intended as a resource for the industry, examiners, and the public.

The OCC has released a list of recent enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with them. Actions taken against national banks and federal savings associations include:

• A Formal Agreement with First FS & LA of Lorain (Lorain, Ohio) for unsafe or unsound practices, including those related to the failure of the board of directors and bank management to develop and implement an appropriate strategic plan; appropriately manage and control liquidity and interest rate risks; implement effective Bank Secrecy Act (“BSA”) /Anti-Money Laundering internal controls; and appoint a BSA Officer with the requisite skills and expertise to oversee the BSA program, and the bank’s violation of law, rule, or regulation, including a violation relating to conducting ongoing customer due diligence.
• A Cease and Desist Order against Heritage Bank, N.A. (Spicer, Minnesota), for unsafe or unsound practices, including those related to capital adequacy, capital and strategic planning, credit review, ongoing monitoring of the credit portfolio, liquidity and liquidity management practices, and the allowance methodology.
• A Formal Agreement with Minnstar Bank, N.A. (Lake Crystal, Minnesota), for unsafe or unsound practices, including those related to concentrations of credit, credit underwriting and administration, appraisals, allowance for credit losses, strategic planning, incentive compensation, capital planning, and liquidity risk management, and violations of law, rule, or regulation, including those relating to loans to executive officers, lending limits, and appraisals.

Actions against institution-affiliated parties included:

• An Order of Prohibition and for payment of a $40,000 civil money penalty (CMP) against Norman Desembrana, former operations senior manager at the Philadelphia, Pennsylvania, lockbox facility of Wells Fargo Bank, N.A., Sioux Falls, South Dakota, for concealing a significant backlog of unprocessed customer checks.
• An Order of Prohibition and for payment of a $300,000 CMP against Gary Judd, former chairman and CEO, Sterling Bank and Trust, FSB, Southfield, Michigan, for failing to appropriately oversee the bank’s operation of its Advantage Loan Program or supervise bank insiders involved in the implementation of the Advantage Loan Program.
• An Order of Prohibition and for payment of a $400,000 CMP against Scott Seligman, an institution-affiliated party of Sterling Bank and Trust, FSB, Southfield, Michigan, for participating in the operation of the Advantage Loan Program, contributing to a poor compliance culture at the bank, and pressuring bank employees to quickly underwrite Advantage Loan Program loans.
• An Order of Prohibition against Jackie M. Snider, former AVP at a Sulphur, Oklahoma, branch of Vision Bank, N.A., Ada, Oklahoma, for misappropriating at least $95,430 via the diversion of funds from customers’ accounts and taking efforts to conceal such misappropriation.
• An Order of Prohibition against John Edmonds, former VP at JPMorgan Chase Bank N.A., Columbus, Ohio, based on his conviction for commodities fraud and conspiracy to commit wire fraud, commodities fraud, commodities price manipulation, and spoofing.
• An Order of Prohibition against Christian Trunz, former executive director at JPMorgan Chase Bank N.A., Columbus, Ohio, based on his conviction for spoofing and conspiracy to commit spoofing.

FinCEN has announced it has issued a Financial Trend Analysis focusing on patterns and trends identified in Bank Secrecy Act data linked to Elder Financial Exploitation (EFE), or the illegal or improper use of an older adult’s funds, property, or assets. FinCEN examined BSA reports filed between June 15, 2022 and June 15, 2023 that either used the key term referenced in FinCEN’s June 2022 EFE Advisory or checked “Elder Financial Exploitation” as a suspicious activity type. This amounted to 155,415 filings over this period indicating roughly $27 billion in EFE-related suspicious activity.

Financial institutions began filing BSA reports featuring the advisory’s key term on the same day that FinCEN published its 2022 advisory. FinCEN has continued to receive EFE BSA reports, averaging 15,993 per month between June 15, 2023, and January 15, 2024. Banks have submitted the vast majority of EFE-related BSA filings.

EFE typically consists of two subcategories: elder scams and elder theft. Elder scams, identified in approximately 80% of the EFE BSA reports that FinCEN analyzed, involve the transfer of money to a stranger or imposter for a promised benefit that the older adult does not receive. In elder theft, identified in approximately 20% of the reports, an otherwise trusted person steals an older adult’s assets, funds, or income. Among other conclusions, FinCEN’s analysis revealed that most elder scam-related BSA filings referenced “account takeover” by a perpetrator unknown to the victim; that adult children were the most frequent elder theft-related perpetrators; and that illicit actors mostly relied on unsophisticated means to steal funds that minimize direct contact with financial institution employees.

The Federal Housing Finance Agency has released its annual Housing Mission Report, describing the activities taken by Fannie Mae and Freddie Mac and the Federal Home Loan Banks in 2023 to promote access to financing for affordable, sustainable, and equitable housing and targeted economic development.

On Tuesday, the Federal Housing Finance Agency sent to the Federal Register a notice of a proposed new product from Freddie Mac to begin purchasing certain single-family closed-end second mortgages.

Freddie Mac proposes to purchase closed-end second mortgages on properties for which it already holds the first mortgage. FHFA has determined this to be a new product that merits public notice and comment about whether it is in the public interest. The FHFA invites interested parties to provide written feedback on the proposed new product. Comments may be submitted via the FHFA’s website or by email to RegComments@fhfa.gov.

Once the Federal Register publishes the notice, a statutory 30-day comment period begins. After that 30-day period has ended, FHFA has a statutory 30-day period to make a final decision as to whether to approve the proposed new product.