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The U.S. Small Business Administration has published [89 FR 79734] in today's Federal Register a Direct Final Rule amending regulations governing SBA's 504 Loan Program for debt refinancing with expansion and debt refinancing without expansion. The changes will streamline the loan application process, expand eligibility criteria for small businesses borrowers, and make minor corrections. The amendments include: removing the 50% cap on debt refinance without expansion to conform with current legislation; raising the loan to value requirement on debt refinancing without expansion projects that include other business expenses to 90% and eliminating the cap on Eligible Business Expenses; aligning the “substantially all” standard for 504 debt refinancing with expansion so it is consistent with the debt refinancing without expansion standard of 75%; eliminating the 10% substantial benefit test on 504 debt refinancing with expansion and 504 debt refinancing without expansion on refinancing other government debt; and allowing certain “other secured debt” to be included as an Eligible Business Expense.

The rule will become effective November 15, 2024. SBA must receive comments on this direct final rule on or before October 31, 2024. If adverse comment is received, SBA will publish a timely withdrawal of the rule in the Federal Register.

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The Federal Housing Finance Agency yesterday announced a proposed rule on Unsecured Credit Limits for Federal Home Loan Banks.

The proposed rule would improve the FHLBanks’ ability to provide liquidity to members by aligning the treatment of interest-bearing deposit accounts (IBDAs) and other authorized overnight investments with the treatment of Federal Funds sales. This updated regulatory treatment would allow the FHLBanks to better manage and respond to the intraday liquidity needs of their members. The proposed rule also clarifies terms for the FHLBanks to determine limits on unsecured credit to counterparties.

The FHFA will accept public comments on the proposed rule for 60 days following its publication in the Federal Register.

The FHFA has announced it has updated the National Mortgage Database (NMDB®) Aggregate Statistics series to include new quarterly data on the loan performance of residential mortgages through the second quarter of 2024. The Agency also released a new interactive data visualization dashboard tool that enables users to more easily access the loan performance data.

Highlights of the quarterly data include—

• 0.1 percent of all outstanding mortgages were in the process of foreclosure, bankruptcy, or deed-in-lieu at the end of the second quarter of 2024. This level is unchanged from recent quarters and well below the high of 3.5 percent reached in the fourth quarter of 2010 and first quarter of 2011.
• An additional 0.6 percent of all outstanding mortgages were 90 days or more past due but not in a foreclosure, bankruptcy, or deed-in-lieu process. Louisiana (1.3%), Mississippi (1.1%), and the District of Columbia (1.1%) have the highest share of loans 90 days or more past due.
• 0.6 percent of all outstanding loans were in forbearance at the end of the second quarter of 2024. The metropolitan areas with the highest forbearance rates are Dallas-Plano-Irving, TX (5.3%), Louisville-Jefferson County, KY-IN (4.7%), and Houston-The Woodlands-Sugar Land, TX (3.7%).

The FDIC has issued guidance to help banks and facilitate recovery in areas of Georgia (FIL-68-2024) and Vermont (FIL-69-2024) affected by severe weather.

The FDIC his released a list of enforcement orders issued in August 2024.

• Comenity Bank, Wilmington, Delaware, and Comenity Capital Bank, Draper, Utah, each received an order to pay and agreed to pay a civil money penalty of $1 million after a finding, which the banks neither admit nor deny, that they engaged in unfair acts and practices in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act related to reward programs and the processing of automatic payments matters resulting from the conversion from an internal core system platform to an external core system platform.
• Removal and prohibition orders were issued to:
  • Sammy Sims, former CFO of Eastern International Bank, Los Angeles, California (use of bank funds to purchase life insurance for bank employees without their knowledge, for which his wife received compensations as insurance broker)
  • Debra L. Poulsen, former officer and director of Ericson State Bank, Ericson, Nebraska (failure to report to directors misconduct of which she was aware, including repeated violations of Nebraska's legal lending limit, unsafe and unsound overdrafts, etc.)
  • Jackie L. Poulsen, former president and director of Ericson State Bank, Ericson, Nebraska (underwriting loans without appropriate documentation or risk mitigation, making loans "vastly exceeding" Nebraska's lending limit, failing to obtain real estate appraisals, etc.)
  • Patricia Jean Niemeyer, former cashier and director of Ericson State Bank, Ericson, Nebraska (aiding and abetting the actions of Jackie Poulsen).
  • Robert S. Catanzaro, former CEO and director of Independence Bank, East Greenwich, Rhode Island, for failing to implement and supervise appropriate oversight and management practices over the bank's SBA Small Loan Advantage lending program, causing the bank to suffer over $1.7 million in losses.

The Federal Housing Finance Agency reports it has published its 2024 second quarter data for the Uniform Appraisal Dataset (UAD) Aggregate Statistics and introduced new condominium data as part of the UAD Aggregate Statistics. This is the first publicly available data drawn from condominium appraisal records and complements the existing data for single-family homes.

The current release includes data drawn from more than five million condominium appraisal records from 2013 through the second quarter of 2024. Condominium appraisal aggregate statistics may be grouped by property or neighborhood characteristics and geographic levels (national, state, and Metropolitan Statistical Area). FHFA plans to include condominium data in quarterly releases of the UAD Aggregate Statistics on an ongoing basis.

The OCC has expanded the reach of its earlier announcement allowing banks in the path of Hurricane Helene to close. Yesterday, the OCC issued a proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks to close offices in areas of North Carolina, South Carolina and Virginia affected by Hurricane Helene, if they are affected by potentially unsafe conditions as a result of the storm.

The Federal Reserve Board published in the September 25, 2024, Federal Register final rules amending Regulations A and D to reflect the 50 basis point reduction in interest rates announced last week.

• Regulation A: 89 FR 78221, effective September 25, 2024, and applicable from September 19, 2024.
• Regulation D: 89 FR 78222, effective September 25, 2024, and applicable from September 19, 2024.

The amendments will be posted to BankersOnline Regulations pages shortly.

The Federal Housing Finance Agency has announced it has revised the Agency's proposal to amend the Suspended Counterparty Program (SCP). The SCP regulation requires a regulated entity to report to FHFA if an individual or institution that it does business with has committed certain types of misconduct within the prior three years. It also authorizes FHFA to order its regulated entities to cease doing business or refrain from entering into new business with certain counterparties. Final suspension orders are published on FHFA’s website.

FHFA is publishing this re-proposal after considering issues that commenters had raised about the original proposed rule, issued in July 2023. This includes distinguishing between misconduct that poses material risk to the safety and soundness of the regulated entities from behavior with de minimis impact.

Specifically, the re-proposal would:

• Authorize the suspension of business between a regulated entity and a counterparty whose misconduct resulted in a federal prohibition order or a civil money penalty above a specific threshold; and
• Authorize the suspension of business between a regulated entity and a counterparty that has committed criminal or civil misconduct related to the management or ownership of real property.

Comments on the re-proposed rule will be accepted for 60 days following its publication in the Federal Register.

Publication and comment period update: Published 10/1/2024 at 89 FR 79785 in the Federal Register, with a comment period of 62 days, ending 12/02/2024

The FDIC has issued FIL-66-2024 with steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Illinois affected by severe storms, tornadoes, straight-line winds, and flooding from July 13 to July 16, 2024. Cook, Fulton, Henry, St. Clair, Washington, Will and Winnebago Counties are currently included as affected areas. That list may change. Check FEMA's website at https://www.fema.gov/disaster/4819/designated-areas for any updates.

The FDIC also issued FIL-67-2024 to provide regulatory relief to financial institutions and facilitate recovery in areas of Connecticut — including Fairfield, Litchfield, and New Haven Counties — affected by a severe storm, flooding, landslides, and mudslides on August 18 and 19, 2024. Any updates to that list of counties will be posted to FEMA’s website at https://www.fema.gov/disaster/4820/designated-areas.