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Friday, October 24, 2014

Agencies Release Proposed Flood Insurance Rule

Five federal regulatory agencies have approved a joint notice of proposed rulemaking to amend regulations pertaining to loans secured by property located in special flood hazard areas. The proposed rule would implement provisions of the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) relating to escrowing flood insurance payments and the exemption of certain detached structures from the mandatory flood insurance purchase requirement. HFIAA amends the escrow provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 (the Biggert-Waters Act).

The proposed rule would require regulated lending institutions to escrow premiums and fees for flood insurance for loans secured by residential improved real estate or mobile homes that are made, increased, extended or renewed on or after January 1, 2016, unless the regulated lending institution or a loan qualifies for a statutory exception.

In addition, the proposed rule would require institutions to provide borrowers of residential loans outstanding on January 1, 2016, the option to escrow flood insurance premiums and fees. The proposal includes new and revised sample notice forms and clauses concerning the escrow requirement and the option to escrow.

Finally, the proposal would eliminate the requirement to purchase flood insurance for a structure that is a part of a residential property located in a special flood hazard area if that structure is detached from the primary residential structure and does not also serve as a residence.

Comments will be due 60 days after the rule is published in the Federal Register, which is expected shortly.

Read more.

The Week Ahead: October 27 - 31

  • Comments Due FRS: FRS - Interagency guidance regarding unfair or deceptive practices and proposal to repeal Regulation AA, Unfair or Deceptive Acts or Practices Read more.
  • Meeting:Federal Deposit Insurance Corporation
    Read more.
  • Workshop OCC: Risk Assessment and Credit Risk
    Read more.
  • FCC Announcement:FCC Announces Mobile Device Protection Tutorial Read more.
  • Workshop OCC: Risk Assessment and Credit Risk
    Read more.
  • Comments Due CFPB:Proposed Amendments to Home Mortgage Disclosure Rules (HMDA, Regulation C) Read more.
All times in Eastern Standard Time. See future events on the Dodd-Frank Calendar.

Big Data is transforming the world, and agriculture stands to be among the most transformed. Are ag bankers ready for this new, big data world? Are the big times going to continue to roll? Omaha, Nebraska will be the setting for Big Times Demand Big Data - the epicenter of the great American agricultural boom of the 21st Century. Our planning committee is working to bring the best qualified, most expert speakers on agricultural finance to help you and your colleagues sort it all out.

Fed, FDIC, OCC Release 2015 Stress Test Scenarios

The Federal Reserve released the three economic and financial market scenarios that it will use in the next round of stress tests for the nation’s 31 largest financial institutions, one of which will be participating for the first time. The three scenarios -- baseline, adverse and severely adverse -- include 28 variables such as unemployment, exchange rates, prices and interest rates.

Under the baseline scenario, the economy would experience moderate expansion. That would include, among other things, real gross domestic product increasing a little under 3 percent a year, unemployment falling to 5.25 percent by the end of 2017, normalization of Treasury yields and steadily growing housing prices.

Under the severely adverse scenario, the country would plunge into a severe recession. That would include real GDP declining 4.5 percent and equity prices falling 60 percent by the end of 2015, unemployment peaking at 10 percent in 2016 and housing prices plummeting 25 percent during the scenario period.

Banks with $50 billion or more in assets are subject to the stress tests as part of the Fed’s Comprehensive Capital Analysis and Review program. Of the 31 participating banks, six with large trading operations will participate in an additional test of reactions to a global market shock, and eight banks will be required to incorporate a counterparty default scenario. Capital plans are due to the Fed by Jan. 5, 2015.

The FDIC and OCC also released stress-test scenarios today applicable to banks with more than $10 billion in assets.

Read the Fed’s announcement.
Read the Fed’s scenarios.
Read the FDIC’s guidance.
Read the OCC’s guidance.

Thursday, October 23, 2014

ABA to Host Fiduciary Responsibility Briefing

ABA and Fiduciary & Investment Risk Management Association (FIRMA) will host a briefing titled Fiduciary Responsibilities for Boards of Directors and Executives in Wealth and Asset Management. This live briefing will provide clear guidelines and directions for fiduciary responsibility and governance for every financial institution and will also highlight conflict-of-interest risk management and awareness.

The briefing will be held on Thursday, November 20 from 2:00 p.m. to 3:30 p.m.

Read more and register.

CFPB Issues Mortgage Servicing Compliance Bulletin

The CFPB is issuing a compliance bulletin and policy guidance entitled ``Compliance Bulletin and Policy Guidance--Mortgage Servicing Transfers'' in light of potential risks to consumers that may arise in connection with transfers of residential mortgage servicing rights. This will replace the bulletin on mortgage servicing transfers issued in February.

Read the bulletin and policy guidance.

Clearing House to Develop Real-Time Payments System

The Clearing House, a bank-owned association that operates the largest private ACH network in the U.S., announced that it and its member banks will, over the next several years, develop a real-time payments system to meet customers’ expectations. The newer platform is intended to replace the fast but not real-time technologies on which today’s clearing system is based.

Features of this system will include direct person-to-person payments, immediate notification of funds availability and transfer, lower costs than other payment options and greater control over cash flow for cash-constrained customers, the Clearing House said. To enhance security and privacy, payments will be routed with one-time “tokens” so that account information is not compromised.

“The digital economy moves in real time and our customers expect us to keep pace,” said Clearing House Chairman Richard Davis, who is chairman, president and CEO of U.S. Bancorp, Minneapolis. “We will work with the industry to build a real-time payment infrastructure, which will enable consumers to pay and get paid securely and conveniently.”

Read more.