Lending Updates

LSTA Publishes Term SOFR Concept Document

09/07/21

On August 25, the LSTA published its Term SOFR Concept Document (the “Term SOFR Concept Document”)[1]—the latest addition to its suite of SOFR-based Concept Documents.

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ARRC Formally Recommends Term SOFR

08/02/21

As expected, on July 28, 2021, the Alternative Reference Rates Committee (ARRC) formally recommended the CME’s SOFR Term Rate.  The SOFR Term Rate is known in advance of the related interest period and provides an indicative, forward-looking measurement of SOFR based on market expectations implied from leading derivatives markets.  In this respect, the SOFR Term Rate functions in a manner similar to today’s LIBOR rates.  In contrast, the Daily Simple SOFR or Daily Compounded SOFR used for interest periods beyond overnight can only be determined in arrears.  The SOFR Term Rate thu

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Latest Milestone in LIBOR Replacement Passed

07/28/21

This past Monday, July 26, marked passage of the most recent major milestone in the replacement of LIBOR as the benchmark USD interest rate.  Following the recommendation of the CFTC’s Market Risk Advisory Committee (MRAC) Interest Rate Benchmark Reform Subcommittee, on July 26, 2021 interdealer brokers replaced trading in LIBOR linear swaps with SOFR linear swaps.  This switch is a precursor to the recommendation of SOFR term rates.  The switch does not apply to trades between dealers and their non-dealer customers.

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FHFA Releases Policy Statement On Fair Lending

07/15/21

On July 1, the Federal Housing Finance Agency (FHFA) released a Policy Statement on its commitment to comprehensive fair lending oversight of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks (collectively, “regulated entities”).  The FHFA addressed its position on:  (i) monitoring and information gathering; (ii) supervisory examinations; and (iii) administrative en

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CFPB and Georgia AG Settle With Debt-Relief Company

07/07/21

On June 29, the CFPB and the Georgia Attorney General’s Office settled with a debt-relief and credit-repair company and its owners for allegedly deceiving consumers into hiring the company to lower or eliminate credit-card debts and improve consumers’ credit scores.  The complaint alleges that the plaintiffs’ use of telemarke

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DFS Settles with Indirect Auto Lenders to Resolve Fair Lending Violations

07/07/21

On June 29, NYDFS announced that two New York-charted banks engaging in indirect auto lending will pay civil money penalties for violating New York’s fair lending law for engaging in practices that resulted in members of protected classes paying higher interest rates that were not based on creditworthiness.  In particular, NYDFS asserts that the practice of allowing “dealer markup” in setting retail interest rates resulted in statistically significant differences in pricing, disadvantaging Hispanic and

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CFPB Issues Summer 2020 Supervisory Highlights

07/07/21

On June 29, the CFPB released its summer 2021 Supervisory Highlights.  The findings of the report, which cover examinations that generally were completed between January 1, 2020 to December 31, 2020, are issued to “help institutions and the general public better understand how the Bureau examines institutions for compliance with Federal consumer financial law.”

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Immediate Enactment Of Juneteenth As A Federal Holiday Will Have Significant Impact On Mortgage Lenders And Other Consumer Lenders

06/18/21

On June 17, 2021, President Biden signed Senate Bill 475 into law, making “Juneteenth” a federal holiday. Because June 19th (tomorrow) falls on a Saturday this year, the day will be observed by federal government offices on June 18, 2021 (today).

This new law, revising the list of federal holidays in the U.S. Code, will affect consumer credit lenders’ operations. It is important for lenders to review their processes to determine how this new holiday will impact their operations.

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CFPB Issues Mortgage Servicing FAQs

06/15/21

The CFPB recently released new FAQs regarding the Mortgage Servicing Rule and Regulation X and Regulation Z relating to escrow account guidance and analysis.

Putting it Into Practice:  Some key takeaways include the following:

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CFPB Issues FAQs on Electronic Fund Transfers

06/08/21

On June 4, the CFPB issued eight updated FAQs to the unauthorized transfer and error resolution provisions under the Electronic Fund Transfer Act  (EFTA) and Regulation E.  Highlights from the FAQs include the following:

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