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Regulatory Update March 2023: Unveiling Section 1071, Tackling Junk Fees, HUD Highlights & More

1 min read
Mar 1, 2023

Dive into this month's regulatory update as we explore the Section 1071 final rule, the Biden administration's ongoing battle against junk fees, key news from HUD, appraisal discrimination, and other financial services insights. Stay informed and ahead of the curve!

Significant Regulatory Updates in March 2023:

1071 Rule

The Consumer Financial Protection Bureau (CFPB) released the final version of the 1071 Rule concerning small business lending data collection. The notable differences from the proposed rule include phased implementation, a higher threshold for covered institutions, and the removal of visual observation for data collection.

"Junk Fees"

The Biden administration released a guide aimed at helping state legislatures and attorneys general combat so-called junk fees. The CFPB's latest Supervisory Highlights report also focuses on fees it deems "unlawful," including some overdraft fees.

HUD Updates

The Department of Housing and Urban Development (HUD) published a final rule that expands the maximum term of a post-default loan modification on FHA-insured mortgages to 480 months, up from 360, effective from May 8. Additionally, HUD reinstated the 2013 Discriminatory Effects Standard, emphasizing that unlawful discrimination under the Fair Housing Act does not have to be intentional - proving a discriminatory effect (disparate impact) is enough if a lender can’t justify a substantial, legitimate, and nondiscriminatory reason for a policy that led to discriminatory effects.

Appraisal Discrimination

The CFPB and the Department of Justice (DOJ) have shown interest in a lawsuit over discriminatory appraisals, filing a statement that relying on discriminatory third-party appraisals can violate the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA). The lawsuit involves a black family in Baltimore who alleged their loan application was denied due to a severely undervalued appraisal. After the family "whitewashed" their home, the appraisal value increased by 60 percent.

Other Financial Services News

Other updates include the NCUA's final Subordinated Debt Rule, SEC proposed rules for cybersecurity risk management, the Fair Hiring in Bank Act, a proposal by the Conference of State Bank Supervisors on mortgage industry licensing standards, and a $17 million civil money penalty against a former Wells Fargo executive and director involved in the company’s fraudulent account opening scheme. Watch the video embedded above for the details. 

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