#2021-12, April 9, 2021

CFPB Rescinds Temporary Policy Statements on Pandemic Flexibility

The Consumer Financial Protection Bureau (CFPB) recently rescinded several temporary policy statements the agency had issued to provide banks and other financial institutions with additional flexibility to serve consumers during the pandemic.  The recissions, which were effective on April 1, include the following policy statements, among others:

• A statement that the CFPB would consider staffing and related resource challenges facing banks when conducing supervision and enforcement activities.
• A statement postponing quarterly Home Mortgage Disclosure Act reporting requirements.
• A policy statement postponing data submission requirements related to credit card and prepaid accounts required by TILA, Regulation Z and Regulation E.
• An April 1, 2020, statement on financial institutions’ reporting obligations under the Fair Credit Reporting Act and Regulation V during the pandemic.
• A May 13, 2020, statement providing flexibility for creditors to resolve billing errors during the pandemic. 

The Bureau also issued a revised bulletin on supervisory communications, replacing a 2018 bulletin which sought to distinguish Matters Requiring Attention and Supervisory Recommendations. The revised bulletin notes that “examiners will continue to rely on Matters Requiring Attention to convey supervisory expectations” and will no longer issue Supervisory Recommendations. It further states that “bureau examiners may issue MRAs with or without a related supervisory finding that a supervised entity has violated a Federal consumer financial law.”

To read more, click here.

CFPB Bulletin Calls on Mortgage Servicers to Assist Customers Exiting Forbearance

In related news, the CFPB also recently issued a compliance bulletin calling on mortgage servicers to “take all necessary steps now” to be prepared to work with customers exiting COVID-19 forbearance programs this fall.  This includes ensuring adequate staffing and resources in the coming months.

The bulletin notes that the Bureau will “closely monitor” servicers’ efforts as they engage with borrowers, respond to requests and process loss mitigation applications.  The agency stated that servicers should proactively contact borrowers in forbearance before the end of the forbearance period; work with borrowers to provide and secure information and documentation; ensure they are serving borrowers with limited English proficiency in compliance with ECOA and other laws; evaluate income fairly in accordance with Regulation B; handle inquiries promptly; and comply with foreclosure restrictions in Regulation X and other federal and state restrictions to prevent avoidable foreclosures.

To read more, click here.

SBA Issues Notice Regarding PPP Hold Codes and Error Messages

Last week, the Small Business Administration (SBA) issued a second procedural notice with new instructions for lenders to clear hold codes and error messages for Paycheck Protection Program (PPP) loans.  Under the notice, SBA clarified that the borrower must certify the information used to resolve the hold code or error message.

Specifically, lenders may resolve certain hold codes and error messages “by obtaining a written borrower certification along with supporting documentation of the type identified for each Hold Code or Compliance Check Error Message in the First Revised Hold Code Notice.” Once obtained, “the Lender may execute the updated certification within the Platform,” SBA said. “The Lender must retain the borrower’s written certification and supporting documentation in its file and must provide them to SBA as indicated in the Lender Certification.” Once the process is complete, the PPP platform will “automatically move the loan guaranty application to the next stage of loan processing.”

SBA also indicated it will remove error messages indicating a disqualifying criminal history or delinquent or defaulted federal student loan, based on changes announced by the Biden administration to expand PPP loan access. As we reported previously in the Washington Update, the Association joined 50 state banking associations on a letter calling on SBA to address the hold code and error message issue.

To read the procedural notice, click here.

FEMA Releases NFIP Pricing Methodology Changes

The Federal Emergency Management Agency (FEMA) recently released significant changes to the National Flood Insurance Program (NFIP) that revise the insurance pricing methodology and how a property’s flood risk is determined.  The new methodology, or “Risk Rating 2.0”, is designed to result in rates that are more equitable and more accurately reflect flood risk.

As part of the release, FEMA announced a phased approach to roll out the new rates. In Phase 1, new policies beginning Oct. 1, 2021, will be subject to the new rating methodology.  Existing policyholders eligible for renewal will be able to take advantage of immediate decreases in their premiums.  In Phase 2, all policies renewing on or after April 1, 2022, will be subject to the new methodology.

FEMA also posted state-by-state facts sheets outlining how the changes will affect policyholders each state. A comparison of the fact sheets showed that the new methodology is likely to have an uneven effect on states, with some states seeing rates increase, while others will see decreases.

To read more and access the state-specific fact sheets, click here.