FDIC Issues Revised Scenarios for 2017 Stress Tests

On February 13, the FDIC released revised economic scenarios for use by certain financial institutions with total consolidated assets of more than $10 billion for 2017 stress tests. According to a statement from the agency, the previously released scenarios contained incorrect historical values for the BBB corporate yield in 2016. The Fed and OCC, with whom the FDIC works develop and distribute the scenarios, also issued revised data.

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FTC Returning $436,000 to Consumers Scammed in Non-Existent Money-Lending Scheme

On February 17, the FTC announced that it is mailing checks to 2,031 consumers who lost money as part of a business opportunity scheme that cheated consumers out of more than $7 million. The compensation follows a 2013 complaint filed by the Commission focused on 20 individuals and eight companies who, according to the Commission’s allegations, “falsely claimed consumers would earn up to $3,000 per month by referring small businesses to the defendants to obtain an average loan or cash advance of $20,000, and that they could operate a profitable business from their home.”  The defendants were charged with engaging in unlawful conduct by: (i) falsely claiming consumers would earn substantial income; (ii) repeatedly calling consumers who told them not to call, often times using obscenities and threats, as well as calling numbers listed on the National Do Not Call Registry; and (iii) failing “to provide specific information to help consumers evaluate a business opportunity…and making earnings claims without substantiation,” in violation of the FTC’s Business Opportunity Rule.

The FTC obtained judgments and settlements in 2015 totaling over $7.3 million, and banned 18 defendants from similar telemarketing activities.

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CFPB Seeks Comments on New Initiative Intended to Increase Transparency in Student Loan Servicing Market

On February 16, the CFPB announced a request for comments on an information collection plan titled “Student Loan Servicing Market Monitoring.” The proposed plan will collect student loan data from the largest student loan servicers in order to provide the Bureau “with a broader and deeper look into the student loan market, with a focus on key areas that might put consumers . . . at risk.” Key areas of examination will be: (i) the total size of the student loan market; (ii) borrowers who seek to repay their loans based on how much money they have (Income-Driven Repayment plans); (iii) borrowers who face the greatest risk of default; and (iv) borrowers with private student loans who experience financial distress. Comments must be submitted on or before April 17, 2017.

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Fannie Mae Reports Earnings of $5 Billion for Fourth Quarter; $12.3 Billion for 2016

On February 17, Fannie Mae announced that it had reported net income of $5 billion for the fourth quarter of 2016 and $12.3 billion for fiscal year 2016. These figures exceeded previous earnings of $3.2 billion for the third quarter of 2016 and $11.0 billion for fiscal year 2015. According to a company statement, “fair value gains in the fourth quarter of 2016 were due primarily to increases in longer-term interest rates positively impacting the value of the company’s risk management and mortgage commitment derivatives.” The fourth quarter 2016 net income, while higher than in the third quarter, was “partially offset by a shift to a provision for credit losses in the fourth quarter compared with a benefit for credit losses in the third quarter.” Fannie attributed its year-over-year net income increase to “a higher benefit for credit losses and lower foreclosed property expense” and “[l]ower fair value losses in 2016 compared to 2015.”

Following the strong results, Fannie said it would pay a $5.5 billion dividend to the U.S. Treasury in March, bringing its total dividend payments to $159.9 billion since it entered federal conservatorship in 2008.

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CFPB Releases Second Webinar on New HMDA Rule

On February 14, the CFPB announced the availability of a second Webinar on the New Home Mortgage Disclosure Act (HMDA) Rule (amending Regulation C), a Rule that was itself finalized in late 2015 but that is predominantly not effective until January 1, 2018, or later. The new Webinar, with audio and closed-captioning over a slide-deck, focuses solely on identifiers and other “data points,” including the race and ethnicity of an applicant or borrower, which must be collected under the New HMDA Rule. In August 2016, the CFPB released an initial Webinar on the same Rule, covering a broader range of topics and without the focus on data points in the newer Webinar.

In addition, the Bureau has now made available a one-page chart to summarize the options a financial institution has for collecting and reporting ethnicity and race information under current Regulation C, Regulation C effective January 1, 2018, and the Bureau’s Official Approval Notice (issued on September 23, 2016). All of the above-mentioned resources and many more related materials (such as an unofficial transcript we prepared of the initial Webinar) can also be found in BuckleySandler’s HMDA Resource Center.

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