On March 18, the Fed, FDIC and OCC requested comment on proposed revisions to “Interagency Questions and Answers Regarding Community Reinvestment.” The Q&As provide guidance on the Community Reinvestment Act regulations. The proposed amendments would: (i) clarify how the agencies consider activities that benefit a statewide or regional area that includes an institution’s assessment area; (ii) provide guidance on investments in nationwide funds; (iii) clarify the consideration of certain community development services; (iv) address the treatment of qualified investments to organizations that use only a portion of the investment to support a community development purpose; and (v) clarify that community development lending should be evaluated so that it has a positive, neutral or negative effect on the large institution lending test rating. Comments are due within 60 days after publication in the Federal Register. Interagency Release.
Fed
Agencies Issue Updated Leveraged Lending Guidance
On March 21, the Fed, FDIC and OCC released updated supervisory guidance on leveraged lending which covers transactions characterized by a borrower with a degree of financial leverage that significantly exceeds industry norms. The guidance applies to financial institutions supervised by the agencies that engage in leveraged lending activities and focuses on: (i) establishing a sound risk-management framework; (ii) underwriting standards; (iii) valuation standards; (iv) pipeline management; (v) reporting and analytics; (vi) risk rating leveraged loans; (vii) participants; and (viii) stress testing. Joint Release.
Fed Proposed Rule on Systemically Important Financial Market Utilities
On February 26, the Fed issued a proposed rule that would amend Regulation HH to set out the conditions and requirements for a Federal Reserve Bank to open and maintain accounts for and provide financial services to financial market utilities designated as systemically important by the FSOC. Comments must be submitted within 60 days of publication in the Federal Register. Fed Release. Proposed Rule.
Amendments to Fed and OCC Foreclosure Consent Orders
On February 28, the OCC and the Fed released amendments to their consent orders against 13 mortgage servicers for deficient practices in mortgage loan servicing and foreclosure processing. The amendments memorialize the previously announced agreements with the mortgage servicers and require them to provide $9.3 billion in payments and other assistance (including loan modifications and forgiveness of deficiency judgments) to borrowers. Joint Release.
Fed Extends Comment Period for Prudential Standards Rule
On February 22, the Fed extended, until April 30, the comment period on a proposed rule to implement the enhanced prudential standards and early remediation requirements under Sections 165 and 166 of the Dodd-Frank Act for foreign banking organizations and foreign nonbank financial companies supervised by the Fed. Comments were originally due by March 31. Fed Release.
Fed Announces Release Dates for Results of Supervisory Stress Tests and CCAR
On January 28, the Fed announced that results from the supervisory stress tests under the Dodd-Frank Act will be released on March 7, and the related results from the Comprehensive Capital Analysis and Review (CCAR) will be released on March 14. The Dodd-Frank Act supervisory stress test results will include data such as capital ratios, revenue and loss estimates under a severely adverse scenario and assuming a common set of capital actions that is used in the analysis of all of the firms. Fed Release.
Joint Rule on Appraisals for Higher-Priced Mortgage Loans
On January 18, the Fed, CFPB, FDIC, FHFA, NCUA and OCC issued a joint final rule, effective January 18, 2014, which establishes new appraisal requirements for “higher-priced mortgage loans”. For these loans, the rule requires creditors to: (i) use a licensed or certified appraiser who prepares a written appraisal report based on a physical visit of the interior of the property and (ii) disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report. Joint Release. Final Rule.
Independent Foreclosure Review Settlement
On January 7, the OCC and the Fed announced a settlement with 10 mortgage servicing companies which includes cash payments to eligible borrowers and other assistance, such as loan modifications and forgiveness of deficiency judgments. The settlement relates to mortgage servicers operating under enforcement actions issued in April 2011 by the OCC, the Fed, and the OTS. Joint Release.
Fed Proposed Rules on U.S. Operations of Foreign Banks
On December 14, 2012, the Fed proposed rules on the oversight of U.S. operations of foreign banks. The proposed rules would require foreign banking organizations with a significant U.S. presence to create an intermediate holding company over their U.S. subsidiaries, which would help facilitate consistent and enhanced supervision and regulation of the U.S. operations of these foreign banks. Foreign banks would also be required to maintain stronger capital and liquidity positions in the U.S. Fed Release.
Fed Summarizes Changes to Consolidated Supervision of Large Financial Institutions
On December 17, 2012, the Fed summarized changes made in recent years to its program for consolidated supervision of large financial institutions. Fed Release.