ABA Submits Recommendations for Housing Finance Reform May 24, 2017
As part of the banking industry’s continuing response to President Trump’s executive order outlining “core principles” for financial regulation, ABA submitted two white papers to the Treasury Department yesterday with recommendations for reforming current mortgage lending rules and regulations and the government-sponsored enterprises Fannie Mae and Freddie Mac.
ABA called for a full-scale review of current mortgage lending and servicing regulations, advocating for “careful fixes … to [ensure] that the laws are necessary, protective, effective, balanced and certain in their application.” Among the recommended changes were reforms to disclosure requirements, including the TILA-RESPA Integrated disclosure rules and the CFPB’s complex servicing rule.
In addition, the association made several recommendations that would expand responsible lending while maintaining consumer protections, such as allowing loans held in portfolio to qualify as Qualified Mortgages and raising the 43 percent debt-to-income standard for QM loans. Finally, ABA pointed out that many of the rules have caused confusion or uncertainties, particularly in regards to liability, and called on regulators to clarify existing rules and expand the availability of cure provisions across all mortgage-related regulations.
ABA also laid out nine principles for GSE reform, noting that “[t]he endpoint should be a reduced direct role of the federal government in mortgage finance.” As Congress considers the best way forward, ABA emphasized the importance of limiting the GSEs’ activities to a secondary market role of providing stability and liquidity to the primary mortgage market, and limiting taxpayer exposure to risk. At the same time, GSE reform should ensure equitable access to the secondary market for all lenders and the continuation of the To Be Announced market, allowing the sale of individual loans to the GSEs.
“A more robust private market for housing finance should be fostered and encouraged with an ultimate goal of a much smaller direct governmental role, and with that role focused on ensuring market stability, access to the capital markets for all originators, and as a safety valve in the event of market failure,” ABA said. Read the paper on mortgage lending. Read the paper on GSE reform. For more information, contact ABA's Bob Davis.
ABA Resources Available as Fiduciary Rule Effective Date Looms May 24, 2017
With the Department of Labor’s decision not to extend the effective date of its fiduciary rule, bankers must prepare to comply by June 9. Bankers may note that compliance begins at the end of the calendar day, at 11:59 p.m. local time on Friday, June 9. At that time, only the fiduciary rule itself and impartial conduct standards take effect; the best interest contract exemption and other exemptions do not apply until Jan. 1, 2018. During that intervening time, DoL has said it will not pursue claims against fiduciaries making good-faith efforts to comply with the rule.
ABA has working groups and resources to help bankers understand and implement the fiduciary rule, including a members-only white paper on bank IRA deposit programs prepared for ABA by the Morgan Lewis law firm. ABA staff will continue to work with DoL to revise the fiduciary rule to achieve full functionality and to facilitate compliance. Access fiduciary rule resources. For more information, contact ABA's Tim Keehan.
ABA Calls on CFPB to Examine Consumer Access to Remittance Services May 24, 2017
As the Consumer Financial Protection Bureau prepares to assess the effectiveness of its final rule governing remittance transfers, ABA in a comment letter yesterday called on the bureau to conduct an evidence-based assessment on whether the rule has preserved consumers’ access to remittance services.
The rule is intended to provide additional information to help consumers shop for remittances and establish error resolution procedures and protections. However, according to an ABA survey and other banker feedback, the rule has “restricted consumers’ access to remittances, increased fees for use of the service, and unnecessarily delayed remittance requests.” ABA added that there is “little evidence that the final rule has improved consumer decision-making or facilitated comparison shopping.”
ABA urged the bureau to examine whether consumers, including those in rural areas, have access to remittance transfer services; whether consumers are given information about remittance services that inform rather than confuse; and whether regulation of remittances is not unnecessarily burdensome to the financial institutions that provide this service.
In a separate joint letter with the Clearing House and the Consumer Bankers Association, ABA and BAFT -- ABA’s global transaction banking subsidiary -- also urged the CFPB to examine the effects of the rule from the perspective of both consumers sending remittances and the providers offering those services.
The groups called on the CFPB to continue to permit banks to provide estimates of third-party fees and exchange rates rather than actual fees and rates in cases where obtaining exact data is not feasible; to exclude from the rule transfers in excess of a certain dollar amount and those providing funds onto prepaid cards; to modify disclosure requirements and cancellation and resend rights; and to make changes to the rule’s error resolution provisions to hold the sender responsible for transaction costs resulting from sender error. Read ABA's letter. Read the ABA/BAFT letter. For more information, contact ABA's Jonathan Thessin.
Take Action: Call Your House Member TODAY on Durbin May 17, 2017
The House leadership is currently considering when to bring the CHOICE Act, which includes significant regulatory relief for banks, to the House floor for votes and whether there is enough support for its provision repealing the Durbin debit interchange amendment.
Retailers are in full grassroots mode, urging lawmakers to condition their support for the bill on removal of the Durbin repeal provision. We need bankers to push back hard by calling their representatives’ offices TODAY and expressing strong opposition to any attempt to remove the Durbin repeal from the CHOICE Act.
Call your Member of Congress by entering your contact information here. The system will call you and connect you to your lawmaker’s office.
FS-ISAC Monitoring Ransomware Attack; No Financial Sector Impacts Yet Reported May 16, 2017
A massive ransomware cyber attack spread around the world on Friday, affecting more than 230,000 computers in about 150 countries, according to news reports over the weekend. Users of infected computers received a message that their files had been encrypted and that they should pay a ransom in bitcoin in order to decrypt their files.
Through its membership in the Financial Services Information Sharing and Analysis Center, ABA is closely monitoring the attack. As of Sunday, there were no known effects on the U.S. financial services sector. Friday's attack, labeled "WannaCry," exploits known vulnerabilities for which patches are available. Institutions and individuals that had not recently updated their software or who were running unsupported versions of software were vulnerable.
ABA encourages all banks to become FS-ISAC members to receive the latest updates on cyber threats to the financial industry. ABA has also produced several resources to help banks and their customers -- in particular business clients -- understand ransomware and respond should they become victims of an attack. View ABA resources on ransomware. For more information, contact ABA's Doug Johnson.
Free Article Highlights Top Risk Trends for 2017 May 16, 2017
In the latest free article from the ABA Banking Journal, associate editor Monica C. Meinert examines top risk management trends for banks in 2017. With interest rates now on the rise, new regulatory leadership in Washington and evidence of more relaxed underwriting standards at the top of the credit cycle, risk managers have their hands full.
Offering highlights from a recent ABA briefing, Meinert covers key risk trends in credit, interest rate, liquidity, operational compliance, reputation and strategic risk. Jason Painley, chief risk officer for Park National Bank, and University of Maryland finance professor Clifford Rossi offer their insights on challenges from the new Current Expected Credit Loss accounting model, changing deposit behavior, evolving underwriting standards and change management in compliance, among other topics.
Ultimately, Painley says, bankers must be prepared to buckle up and brace themselves for the unprecedented pace of change. “The velocity of change in strategic risk is something we need to be thinking about. It might not be a gradual change -- it might be a very steep, upward-sloping curve in terms of the way this plays out." Read the article. Download the briefing recording.
HUD Seeks Industry Feedback on Regulatory Burden May 16, 2017
Implementing the president’s executive orders on regulatory reform, the Department of Housing and Urban Development today requested public and industry feedback on HUD regulations that may be outdated, ineffective or unnecessarily burdensome. Comments are due by June 14.
In identifying regulations that should be repealed, replaced or modified, commenters are asked to describe in what ways they eliminate jobs or inhibit job creation, are outdated, impose costs exceeding their benefits or are inconsistent with regulatory reform priorities or other existing rules. HUD also sought feedback on any of its regulations that have been overtaken by technological developments and requested information for commenters on their total compliance costs for HUD regulations. Read more.
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