ICBA News, sponsored by QwickRate—ICBA Supports Mortgage-Servicer Exemptions

Advocacy
ICBA Supports Exemptions from Mortgage-Servicer Rules
ICBA said it is encouraged that the Consumer Financial Protection Bureau’s final rules establishing new mortgage-servicing rules recognize the sound practices of community bank servicers. The bureau exempted servicers that service 5,000 or fewer mortgage loans, though ICBA strongly advocated a servicing threshold of at least 10,000 mortgages.

The CFPB exempted small servicers from certain rules requiring servicers to create and maintain new general servicing policies and procedures, to issue monthly statements that would include considerably more information than most community banks already provide, to avoid charging for “force-placed” insurance, and to follow specified loss-mitigation procedures for mortgage loans secured by a borrower’s principal residence, among other guidelines.

Community banks will have to comply with interest-rate adjustment notices for adjustable-rate mortgages. ICBA is particularly concerned that servicers will be required to deliver the notices between 210 and 240 days prior to the first payment due after the first rate adjustment. They also must provide a notice between 60 and 120 days before payment at a new level is due when a rate adjustment causes the payment to change.

The association will continue reviewing the final rule and looks forward to continuing to work with the CFPB to address community banking concerns with ongoing rulemaking. Read More from CFPB. Read ICBA Release.

Advocacy
ICBA Backs Dallas Fed Plan on Too-Big-To-Fail
ICBA said it strongly supports Federal Reserve Bank of Dallas President and CEO Richard Fisher’s call to restructure too-big-to-fail financial institutions to reduce risks to the financial system. Fisher said that overly complex financial firms should be restructured into multiple business entities and that only their resulting commercial banking operations would benefit from the safety net of federal deposit insurance and access to the Federal Reserve’s discount window.

Fisher noted in his speech that while the vast majority of U.S. banks are subject to failure, the nation’s 12 largest megabanks are not due to their size and complexity. The result is limited market discipline and greater risk, even while these institutions enjoy the benefits of the federal safety net, he said.

ICBA said it strongly supports efforts to address the problem of too-big-to-fail because community banks will thrive and best serve their communities and customers in a truly free market. The too-big-to-fail problem has a direct impact on Main Street community banks and their customers by providing large institutions with lower funding costs and a dominant market share, the association said. Read ICBA Release.

Regulation
Agencies Finalize New Appraisal Standards
The federal banking agencies released a final rule establishing new standards for “higher-priced mortgage loans” that the FDIC had previously approved. For mortgages with an annual percentage rate that exceeds the average prime offer rate by a specified percentage, the final rule requires creditors to obtain appraisals meeting certain specified standards, provide applicants with a notification regarding the use of the appraisals, and give applicants a copy of the written appraisals used.

The rule defines loans as higher-priced if the APR exceeds the APOR by 1.5 percent for a first-lien or conforming loans, 2.5 percent for first-lien jumbo loans and 3.5 percent for subordinate loans. “Qualified mortgages” are exempted from the final rule, as are loans secured by a new manufactured home, mobile home, boat or trailer; loans to finance initial construction of a dwelling; and loans with maturities of 12 months or less that are bridge loans for a dwelling that will be a principal dwelling. Vacation or second homes are also exempt.

In its Oct. 15 comment letter, ICBA urged regulators to exclude from the rule mortgages held in portfolio of $250,000 or less as permitted by Title XI of the Financial Institutions Reform, Recovery and Enforcement Act. Regulators did not include the exemption, noting that Congress did not expressly limit the application of the requirement.

However, regulators did adopt an exemption for higher-priced mortgage loans secured in rural areas as defined in the recent Consumer Financial Protection Bureau ability-to-repay and escrow final rules. These loans will be exempt from appraisal requirements designed to target flipping.

This final rule is effective on Jan. 18, 2014.

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Regulation
OCC Mutuals Committee Holds First Meeting
The Office of the Comptroller of the Currency Mutual Savings Associations Advisory Committee held its first meeting last week. The MSAAC provides advice to the comptroller of the currency about mutual savings associations, evaluates the condition of mutual savings associations, and assesses regulatory changes that may ensure the health and viability of mutuals. At its first meeting, the MSAAC discussed the status of the mutual savings association industry and current topics of interest to the industry. Read More About Committee.

Regulation
Treasury, IRS Issue Rules on Offshore Tax Evasion
Treasury and the IRS issued final regulations implementing the information reporting and withholding tax provisions under the Foreign Account Tax Compliance Act. Enacted by Congress in 2010, the provisions are designed to combat tax evasion by targeting non-compliant U.S. taxpayers using foreign accounts. These regulations include a step-by-step process for U.S. account identification, information reporting and withholding requirements for foreign financial institutions, other foreign entities, and U.S. withholding agents.

Payments
Fed To Study Nation’s Use of Checks
The Federal Reserve’s Retail Payments Office announced plans to conduct a study to determine the volume and composition of electronic and check payments in the United States. The 2013 Federal Reserve Payments Study consists of three survey efforts commissioned to estimate the annual number, dollar value and composition of retail noncash payments in the United States. Previous studies have revealed significant changes in the U.S. payments system over time, including a continuing decline in the use of checks and growing use of electronic payments.

Regulation
Regulators Settle with HSBC for $249M
HSBC joined the agreement recently announced by regulators for deficient practices in mortgage servicing and foreclosure processing at several large banks. HSBC will pay $249 million in cash payments and other assistance to help mortgage borrowers. With the addition of HSBC, nearly 4.2 million borrowers will receive a total of $3.6 billion in cash compensation with an additional $5.7 billion to be provided for mortgage assistance.

Bank Failures
Regulators Close Minnesota Bank
Regulators closed 1st Regents Bank in Andover, Minn., and entered into a purchase-and-assumption agreement with First Minnesota Bank in Minnetonka, Minn. As of Sept. 30, 1st Regents Bank had approximately $50.2 million in total assets and $49.1 million in total deposits. The FDIC estimates that the cost to the Deposit Insurance Fund will be $10.5 million. 1st Regents Bank is the second FDIC-insured institution to fail in the nation this year. Read More from FDIC.

ICBA News
ICBA, Travelers Pay Policyholder Dividend
ICBA announced that more than 1,200 member community banks will share a $3.36 million policyholder dividend resulting from their participation in the Travelers SelectOne® ICBA insurance program during the 2011 program year. It is the 11th consecutive dividend that participating member banks have received through their participation in the program. More than one in three ICBA members participates in the program. Read ICBA Release.

Rates
Mortgage Rates Mostly Flat
Freddie Mac said mortgage rates were largely unchanged last week from the week before. Rates on 30-year fixed-rate mortgages averaged 3.38 percent, down from 3.40 percent the previous week and 3.88 percent a year ago. Rates on 15-year FRMs averaged 2.66 percent, the same as last week and down from 3.17 percent last year.

Education
ICBA Webinar This Week on 2013 Investment Portfolio
Since January 2012, interest rates have essentially run in place, but don't be fooled into thinking that nothing has changed. The Fed has pushed further into the future the period that it expects to be on hold, it is employing another round of quantitative easing and housing seems to have turned the corner on recovery. All this is occurring while banks have grown their investment portfolios to record size. An ICBA webinar scheduled for will review the key metrics of the bond market and will describe ways in which community banks are producing reasonable returns out of well-structured portfolios. Learn More.

Products and Services
Read the January Issue of BankInsurance.com News
In the January issue of BankInsurance.com News from Michael White Associates, find out the surprising satisfaction ratings customers are giving small community banks and life insurers. Also learn where long-term care riders are gaining traction and which growing and falling income and expense categories are driving an uptick in earnings. Read More.

Products and Services
Webinar: Today’s Best Practices for Compliance Mailers
ICBA Preferred Service Provider Pitney Bowes is presenting a free webinar to help community bankers ensure that they are up-to-date on all aspects of physical mail best practices as they relate to HIPAA, Gramm-Leach-Bliley, Sarbanes-Oxley, and state insurance regulations. Topics include compliance mailer industry trends, outsourcing best practices, and insourcing best practices for mitigating compliance risks. The webinar will be held at 1 p.m. (Eastern time) this Thursday. Register Now.