IBAT was pleased to have the opportunity to attend a reception last week honoring Ann Worthy upon her retirement from the Federal Reserve Bank of Dallas. The IBAT Board expressed its appreciation to Ann in aresolution presented at the event.
“Ann Worthy has done an amazing job as the head of bank supervision for the Dallas Fed,” said Steve Scurlock, IBAT Executive Vice President. “She has been accessible, willing to deal candidly on a variety of issues and has unfailingly accepted our multiple invitations to speak at IBAT programs. I have very much appreciated the relationship we’ve all enjoyed with this exemplary public servant and wish her the very best in retirement.”
According to a survey recently released by ICBA, community bankers find new rules and requirements to be the biggest barrier to making residential mortgage loans. The survey found that 9% of banks are considering an exit from this line of lending based on these obstacles. Other findings show that nearly 80% of respondents have increased the number of staff dedicated to lending compliance during the past five years.
IBAT conducted a mortgage survey last year that found similar results - more than 8% of respondents stopped making residential mortgage loans while nearly 50% limited the types of residential mortgages loans they make.
In a statement before the U.S. House of Representatives Committee on Financial Services, Federal Housing Finance Agency Director Mel Watt said that his agency received 1,300 comments on its proposed rule that, if adopted, would require each FHLB member to maintain the following to retain FHLB membership:
- at least 1% of its assets in long-term home mortgage loans; and
- at least 10% of its assets in residential mortgage loans.
Currently, there is a one-time test at the time of application. Among the comments the agency received was IBAT’s comment letter (filed September 22, 2014) that opposes the proposed changes. Director Watt also addressed guarantee fees, Fannie Mae and Freddie Mac goals, Housing Trust and Central Magnet Fund funding, certain super priority lien programs and risk to the enterprises as well as supervision and regulatory activities related to FHLBanks.
While others proposed relief to the CFPB's definition of ‘rural areas’ in its mortgage rules based on county lines, IBAT proposed an out-of-the-box solution that CFPB staff told us got its attention in 2013. IBAT’s proposed solution points out that a definition of rural areas based on counties will always be flawed and instead offered an alternative definition based on the Census Bureau’s definition of urbanized areas. Over the last year and a half, IBAT has presented this solution in a comment letter, at several meetings with CFPB staff and during a banker meeting in Dallas with CFPB Director Cordray. On January 29, 2015, the CFPB issued proposed rules which include a definition of rural areas that is undeniably based on the rural definition IBAT consistently and doggedly presented to the CFPB.
Rather than starting from scratch, the CFPB’s proposed definition of rural areas adds to the current definition. The proposed rule would expand the definition of a rural area to include census blocks that are not in an urban area as defined by the Census Bureau. If you are a small creditor, this means that in determining whether you make at least 50% of your first-lien mortgages in rural or underserved areas - thus qualifying for certain exemptions from the mortgage rules - loans made in ‘rural areas’ of counties that the CFPB does not designate as rural areas will count as loans in rural areas toward reaching that 50% threshold. Click here for a map of Texas’ CFPB-designated rural counties. If you are a small creditor making at least 50% of your first-lien mortgage loans in a county that is designated as rural, this rule wouldn’t affect you - except that you could expand your lending into rural areas of counties not designated rural without affecting your exemption.
Also of importance, the CFPB is proposing to:
- expand the definition of small creditor from 500 first-lien mortgage loans to 2,000 mortgage loans excluding loans held in portfolio. (IBAT supports this.)
- include the asset of the creditor’s mortgage originating affiliates in calculating whether a creditor is under the $2 billion limit for small creditor status. (IBAT does not support this.)
- extend the expiration of the temporary extension under which eligible small creditors are currently able to make balloon-payment Qualified Mortgages and balloon-payment high-cost mortgages regardless of where they operate from January 10, 2016 to April 1, 2016. (IBAT supports a permanent extension.)
While most of this is good news, IBAT has and will continue to insist that none of this is necessary because loans held in portfolio should be exempt from the Dodd-Frank expansion of the already onerous mortgage rules. The comments here are preliminary as IBAT continues to digest this proposal in preparing to submit comments.
Patience is a virtue, and that makes Fed-head Janet Yellen a most virtuous central banker, indeed. We learned, following the FOMC’s annual pre-Super Bowl huddle, that the Committee would be exercising much of the aforementioned patience as it tackles the thorny question of just when to start raising interest rates. With the removal of its near-institutionalized “considerable time” reference, many observers feel that the Committee is running interference for a rate hike later this year. While citing concerns about below-target inflation, the members seem blissfully unaware that the average price for a ticket to the Big Game is over $8,000. American. The statement released following the conclave described growth as “solid,” and that’s an upgrade from "moderate."
Ready to start spending your 2015 technology budget? Dell's sale is still going on!
Dell’s starting the year with a bang! Current discounts include:
- 40% off Latitude Laptops;
- 40% off Optiplex Desktops;
- 40% off Precision Workstations; and
- 35% off PowerEdge Servers.
Each of these special discounts are available until January 31, but IBAT member savings are available from Dell all year long. On average, IBAT members enjoy savings of approximately 30% on each order.
Ordering is easy: visit Dell's website or contact Bryan Horten, IBAT’s Strategic Account Manager, at 512-942-9120 to order. As a reminder, whenever ordering Dell equipment please be sure to include the unique Dell/IBAT link number GS126658178.
The offer is valid for IBAT member banks and bank employees. Please pass on this email, or download the flyer and post it somewhere in the bank where everyone can see it.
For orders of more than five units, please reach out to Bryan Horten at Bryan_K_Horten@Dell.com or 512-942-9120.
*Non-transferable. Save 40% on the list price on any Latitude Laptop, Optiplex Desktop and Precision Workstation and 35% on any PowerEdge Server. Offer is not combinable with other offers, discounts or coupons. Limit of five promotional items per customer. Only valid on purchases made through the Dell Small Business.
The Consumer Financial Protection Bureau (CFPB) finalized two minor modifications to a mortgage disclosure rule that will go into effect on August 1, 2015. These changes to the “know before you owe” mortgage disclosure forms will allow lenders more time - up to three business days instead of the same day - to send updated loan estimates after a consumer locks in an interest rate and will also expand disclosure requirements when a mortgage is for new home construction. The loan estimate form for new home construction mortgages will now include additional space for lenders to inform borrowers that a revised loan estimate for loans involving new construction could take more than 60 days to settle.
The updated forms are intended to better consumer understanding, aid comparison shopping and help prevent closing table surprises for consumers. This new rule will combine overlapping requirements from the Real Estate Settlement Procedures Act and the Truth in Lending Act into a single, consolidated mortgage disclosure regime.
Abound Resources recently released its 2015 Annual Insights Survey of Bank Executives, and the results were encouraging. While there are still major concerns about regulatory burdens, 66% of respondents feel either somewhat or very optimistic about 2015. Findings also show fraud and information security is the largest current fear. Additionally, CEOs and executives are more focused on efficiency improvement than they have been in past years. According to the survey, the top technology priority is to drive more efficiencies.
The full survey can be downloaded here. Abound Resources will also hold a free, 30-minute webinar on February 3, 2015 at 10 a.m. CT that discusses the survey findings in depth. Registration is now open.
The Supreme Court of the United States heard Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, which poses a fundamental question about the 1968 Fair Housing Act that outlawed discrimination on the basis of race in housing decisions. In the case currently before the court, Dallas-based nonprofit group The Inclusive Communities Project alleges that the Texas Department of Housing and Community Affairs is using a federal tax break to build affordable housing only in high-poverty minority neighborhoods. The group argued that this denies minorities access to affordable housing in communities where they would have access to better schools and other opportunities.
This ruling on disparate impact can be used in fair housing cases and will impact how mortgage lenders set guidelines for approving loan borrowers. Disparate impact has become controversial with housing industry groups, and Republicans have vocally stated their belief that it is a legal overreach and a negative impact on the housing market. However, the Housing and Urban Development Department finalized a rule in February 2013 that would allow the use of disparate impact as a tool to combat lending discrimination. A decision is expected by the time the court’s term ends in June.
In an attempt to clarify what meets the definition of ‘brokered deposit,’ the FDIC released guidance that consolidated previous interpretive letters and a 2011 study into a 15-page FAQ document.
This is important because the amount of brokered deposits can affect what institutions pay in insurance assessments.
Industry experts say the new guidance on identifying, accepting, and reporting brokered deposits will make it easier for institutions to tell what is and what is not brokered. This new guidance shows the FDIC is taking a conservative and strict interpretation of what it considers a brokered deposit.
IBAT Chairman John Jay, along with Chris Williston and Steve Scurlock, made the trek to Washington, D.C. last week to meet with key players as the 114th Congress gets underway. Commissioner Charles Cooper was also in attendance at a number of the meetings, which is always appreciated.
In addition to very cordial and productive meetings with “the new guys” - Congressmen Babin, Hurd and Ratcliffe - we also had frank and candid discussions with a number of the members of the House Financial Services Committee from both Texas and elsewhere who will play vital roles in moving positive legislation for community banking. We also had the opportunity to discuss community banking issues, logistics and timing with senior staff of both the House Financial Services and Senate Banking Committees.
“The time for action on community banking issues is now,” said Chris Williston, IBAT President and CEO. “There is a tremendous amount of legislation needed to fix the numerous challenges facing the community bank sector, and our hope is that many of these can be addressed early in the 114th Congress. With that said, our hope at this juncture is to quickly move legislation that will allow community banks to make in-portfolio mortgage loans without the expensive and counterintuitive impediments added by a mountain of new regulation.”
IBAT is grateful for the continued cooperative efforts we have with ICBA to effect meaningful and timely regulatory burden relief and looks forward to working with this Congress to achieve some long-overdue changes in an unsustainable regulatory environment.
With the cleanup from the inaugural festivities still in progress, newly sworn in Lt. Governor Dan Patrick named the members of 14 committees (reduced from 18 in the last Legislature).
While certainly all committees do important work, several are particularly important to our activities representing your interests as community bankers. Tyler Senator Kevin Eltife was named Chairman of the Committee on Business and Commerce with Brandon Creighton of Conroe as Vice Chair. This committee deals with virtually all banking-related issues, and we look forward to working with these two longtime supporters of community banking. We are also pleased to see two more very capable and supportive senators named to the top spots of the important Committee on Finance - Jane Nelson (Flower Mound) takes over as the Chair with Chuy Hinojosa (McAllen) as Vice Chair.
Also significant was a change in the rules long sought by Lt. Governor Patrick to decrease the number of votes required to bring legislation to the Senate floor. Without getting into details, as those who might be interested in this manner of minutiae are likely already aware, the “magic number” has decreased from 2/3 (21 if all are in attendance) to 3/5, or 19. Interestingly, Republicans now hold 20 of the 31 seats.
On the other side of the Texas Capitol, House members turned in their requests for committee spots last week. We anticipate that committees will be named over the next several weeks, and the pace of this session will accelerate significantly.
The Bank CEO Network will host the 12th Annual Community Bank Directors’ Conference on March 19-20, 2015 at the Omni Mandalay Hotel at Las Colinas in Irving, Texas. Conference topics, which are oriented towards educating outside directors and CEOs about community banks, comprise the most current and pertinent issues troubling community banks. The conference agenda can be found here.
In addition, attendees and their guests are welcome to attend the Singer/Songwriter Pickin’ Party on Thursday night, March 19, when Hall of Fame songwriters will entertain with their songs and tell the stories behind their music. If any of your bank directors would like to attend the conference, please complete the online registration. For additional information regarding conference fees, CPE credit and cancelation policy, click here.
Looks like the Swiss are still making headlines, but this time it’s on the sports page. Switzerland’s national hero, Roger Federer, was ousted in the early going of the Australian Open Tennis Championship by little-known Andreas Seppi, a native of Bolzano, Italy. Signor Seppi, however, was not the week’s biggest Italian newsmaker. European Central Bank President Mario Draghi’s announcement on Thursday that the ECB would embark upon an aggressive bond-buying program may have been anti-climactic, but was nonetheless newsworthy. Although this latest step in European efforts to spur growth and avoid deflation was widely expected, the magnitude of the effort was a surprise to many. News of the planned €1 trillion ($1.14 trillion) in sovereign bond purchases was a boon to credit and equity markets, but sent the value of the Euro plunging. ECB spokesmen were quick to squash rumors that Bill Belichick had been called in as a deflation consultant.