Banking Law Update

CFPB Issues Bulletin On ECOA Risks In Indirect Auto Lending

2013-04-24T17:55:14Z

The Consumer Financial Protection Bureau (“CFPB”) recently issued a compliance bulletin warning financial institutions that they may face potential liability as indirect lenders for fair lending violations in the process of making indirect loans through automobile dealerships (the “Bulletin”). Indirect auto lending is a process where an automobile dealership will typically collect credit information from a consumer seeking financing and then forward the information to prospective lenders....

CFPB Issues Small Entity Compliance Guide on Ability-to-Repay and Qualified Mortgage Rule

2013-04-12T18:48:19Z

The Consumer Financial Protection Bureau (“CFPB”) recently issued a Small Entity Compliance Guide on the Ability-to-Repay and Qualified Mortgage Rule (the “Rule”). The Rule was issued under Dodd-Frank. The Guide provides an overall summary of the Rule and discusses application of the Rule in a Q&A format. The CFPB issued the final rule on January 10, 2013, with an effective date of January 10, 2014.

Federal Agencies Publish Guidance on Leveraged Lending

2013-04-10T19:01:39Z

The FDIC, Federal Reserve, and OCC have issued joint guidance on the practice of leveraged lending (the “Guidance”). Although definitions of “leveraged lending” vary, generally speaking the practice involves the making of loans to highly-leveraged commercial borrowers or the making of loans to borrowers for the purpose of buyouts, acquisitions, or capital distributions.

Executive Compensation Reporting After Dodd-Frank

2013-04-03T20:05:03Z

Financial institutions are subject to numerous rules governing compensation, including a number we have discussed in prior blog entries. Among the new regulatory developments arising from Dodd-Frank are new disclosure requirements with respect to compensation paid to executives who work at SEC-reporting companies. One example is the “say-on-pay” rule promulgated by the Securities and Exchange Commission (“SEC”), which is already impacting SEC-reporting financial institutions. Additional requirements are already in the SEC’s pipeline. Greg Fryer and Gabriel Weiss, members of Verrill Dana's Securities Law Group, have written an article on recent developments in executive compensation disclosures under Dodd-Frank, applicable to SEC-reporting institutions. In their article, Executive Compensation Reporting After Dodd-Frank: Where We Came From and Where We Are Heading, the authors discuss the evolution of executive compensation reporting requirements and a look at additional future complexities that will be coming down the road.

Regulators Issue Final Rule For Higher-Priced Mortgage Appraisals

2013-03-28T21:28:57Z

The OCC, Federal Reserve, CFPB, FDIC, FHFA, and NCUA recently issued notice of a Final Rule establishing new appraisal requirements for “higher-priced mortgage loans” (HPMLs). The Final Rule is being implemented under the Federal Truth in Lending Act and was required under Dodd-Frank. We discussed an earlier proposed version of the rule last November. Whether a consumer mortgage loan is an HPML generally depends on if the interest rate exceeds 1.5% or 2.5% over prime (depending on principal amount) for a first-lien residential mortgage, or 3.5% over prime for a subordinate-lien residential mortgages. There are a number of significant exclusions from requirements under the Final Rule, for example, for property located in “rural counties” and for property acquired from servicemembers.

CFPB Issues Guidance on Transfers of Residential Mortgages to Third-Party Servicers

2013-03-18T21:29:47Z

The Consumer Financial Protection Bureau (“CFPB”) recently issued guidance regarding its expectations for when residential mortgage loans are transferred to mortgage servicers and subservicers (the “Guidance”). Servicing transfers of mortgages and mortgage portfolios are a common practice, with mortgage lenders outsourcing servicing duties (such as loan payment collection and processing) to a third-party vendor.

FDIC to Host Webinar on Federal Guarantee Programs Supporting Export Lending to Small Businesses

2013-03-18T20:32:52Z

The FDIC has announced that it will host a webinar titled Opportunities for Community Banks – Federal Guarantee Programs that Support Export Lending to Small Business. The Webinar will take place on Thursday, April 18, 2013, from 3:00 to 4:00 pm (ET).

The Webinar will discuss federal loan guarantee programs designed to support lending to small businesses engaged in the exporting of goods. Representatives from the USDA, SBA, and Export-Import Bank will provide overviews of their respective programs. Interested parties must register for the webinar by April 12.

Verrill Dana Attorneys Co-Author a Chapter of ABA's New Book: The Law of Guaranties

2013-02-22T20:30:29Z

The American Bar Association Business Law Section recently published a new book, The Law of Guaranties: A Jurisdiction-by-Jurisdiction Guide to U.S. and Canadian Law. The Maine chapter is co-authorized by Verrill Dana attorneys Mark K. Googins and Alistair Y. Raymond, and Christopher J. Devlin, a former Verrill Dana attorney and now Senior Counsel in the Investments Division of UNUM Group. The book serves as a resource for commercial lenders and attorneys on the law of guaranties in various jurisdictions across the United States and Canada. For more information about this book, including information on how to purchase it, please visit the American Bar Association website.

New Forms Required by FCRA for Background Checks on Current and Potential Employees

2013-02-20T23:02:07Z

As of January 1, 2013, employers who obtain background checks on employees and job applicants from consumer reporting agencies were required to utilize revised notices and disclosures under the Fair Credit Reporting Act. For more information and links to the revised documents, refer to a Client Alert written by Tawny Alvarez, an attorney in our Labor and Employment Law Group, which was recently posted to the Group’s blog.

CFPB Issues Final Rules Governing MLO Compensation Restrictions and Other Requirements under Regulation Z

2013-02-15T19:42:29Z

The Consumer Financial Protection Bureau (“CFPB”) recently issued a final rule (the “Final Rule”) implementing restrictions on mortgage loan originator (“MLO”) compensation under Regulation Z (Truth in Lending), along with additional interpretive guidance. These restrictions, which prohibit MLO compensation based on mortgage loan terms, or “proxies” for such terms, were mandated under the Dodd-Frank Act. In a number of prior blogs, we discussed the CFPB’s evolving guidance on these restrictions. One issue of particular interest was whether profit-based retirement and bonus plans would be prohibited under the rationale that profit serves as a “proxy” for certain loan terms such as interest rate (a view taken by Federal Reserve staff members when the rule was first introduced).