#2023-28, December 1, 2023

U.S. Treasury Issues Final Rule for Treasury Check Returns, Effective Friday, December 1, 2023

The U.S. Treasury recently issued a final rule holding financial institutions liable if canceled Treasury checks are paid without taking “reasonable efforts” to ensure checks are authentic.

Among the changes included in the final rule is the definition of “reasonable efforts” as outlined below:

“The final rule amends the definition of “reasonable efforts” found at 31 CFR 240.2 to include a requirement that financial institutions wait for check return information within the time periods set out by Regulation CC to help verify that a Treasury check is valid ^[2] and authentic. It is also making conforming changes to 31 CFR part 240 to require that financial institutions ensure a Treasury check has not been canceled before making the funds associated with that check available for withdrawal.

In those instances where a financial institution has taken reasonable efforts but check return information for a POC on a properly presented check is not transmitted to the financial institution prior the funds availability timeframe specified in Regulation CC, the financial institution would not be liable for releasing the funds associated with the Treasury check. While Fiscal Service expects this circumstance to be uncommon, it understands that compliance with Regulation CC requires the release of the funds within certain timeframes, and thus under the final rule a financial institution will not be liable for a POC due to complying with Regulation CC.”

For more information on the U.S. Treasury final rule click the links below:

• Federal Register :: Indorsement and Payment of Checks Drawn on the United States Treasury
• A Guide to Regulation CC Compliance (federalreserve.gov)
• Regulators tighten liability standards for Treasury check returns | ABA Banking Journal

FDIC Issues Final Rule to Recover Loss to Deposit Insurance Fund (DIF)

The FDIC Board of Directors recently approved a final rule that would “implement a special assessment to recover the loss to the Deposit Insurance Fund (DIF) associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank.”

According to the FDIC, no banking organizations with total assets under $5 billion will pay a special assessment. The special assessment will be collected with the first quarterly assessment period of 2024.

To read more about the final rule, click here. 

Federal Housing Administration (FHA) Seeks Feedback on 203(k) Rehabilitation Mortgage Insurance Program Changes

Earlier this week, the FHA unveiled changes to the 203(k) Rehabilitation Mortgage Insurance Program. According to the FHA, the proposed changes include:

• Increasing the maximum allowable rehabilitation costs for the Limited 203(k) program from $35,000 to $50,000 ($75,000 in high-cost areas) to address increased costs associated with repairs.
• Allowing 203(k) Consultant Fees to be included in the financed mortgage amount for the Limited 203(k) program, as is currently permissible in the Standard 203(k) program.
• Increasing the allowable rehabilitation period for the Standard 203(k) program from six months to 10 months, and for the Limited 203(k) program from six months to seven months, to account for longer repair and rehabilitation timeframes common for more complex projects.
• Increasing the allowable initial draw amount to include up to 75 percent of material costs, versus the 50 percent permitted under the existing policy, so the borrower can make payment to a supplier or manufacturer.
• Updating the 203(k) Consultant Fee schedule, including a streamlining of and substantial increases for, allowable fees for preparation of work write-ups and architectural exhibit reviews. FHA is also proposing increases to the maximum amount for other allowable fees, including the Draw Inspection Fee and the Change Order Request Fee. Proposed fee increases are designed to appropriately compensate Consultants for their role and incent more Consultants to participate in the program.

For more information on the proposed changes, see the links below:

• Proposed Changes to Section 203(k) Program
• Feedback Response Worksheet

Email completed worksheet to sffeedback@hud.gov. 

FDIC, OCC Release 2024 Community Reinvestment Act (CRA) Exam Schedules

Earlier this week, the FDIC and the OCC issued the lists of institutions scheduled for a Community Reinvestment Act examination during the first and second quarters of 2024.

FDIC CRA 2024 Exam Schedule
OCC CRA 2024 Exam Schedule

FHFA Releases FHLBank System at 100: Focusing on the Future Report

The FHFA recently released its FHLBank System at 100: Focusing on the Future report. The report takes a full look at the history of the FHLBank system with an eye toward ensuring “the FHLBanks remain well positioned to meet the needs of their members and the communities they serve.” MBA is still reviewing the report in its entirety and will provide members with important updates when available. A letter from the Council of Federal Home Loan Banks is also included here for your review.

To review the FHFA press release, click here.
To review the Report, click here.
To review a FHLBank Fact Sheet, click here. 

Consumer Financial Protection Bureau Unveils CRA State Laws Summary

The CFPB recently released a report that analyzed and summarized several states’ community reinvestment acts, which included Massachusetts. The CFPB report “focuses on state CRA laws that provide an affirmative obligation for financial institutions to meet the lending, services, and/or investment needs of their communities” and summarizes “key factors of each of these laws, organizes them into ten issue groups, and identifies five findings that inform how states could consider establishing reinvestment obligations.”

Click here to read the report