Compliance Briefing for Wednesday, November 25, 2020

To access specific issuances, go to our Top Stories section, where you'll find links to all the relevant documents.
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Navy FCU settles OD fees class action suit for $16M
The CreditUnionTimes reports the Navy Federal Credit Union will settle a class action suit for $16 million that will reimburse an estimated 700,000 current and former members who were charged fees for overdrafts.

An Alexandria, Virginia, U.S. District Court judge has issued a preliminary approval for the settlement in Lambert v. Navy Federal Credit Union, with final approval expected in March. The suit was brought by Ruby Lambert in January 2019 after she was charged a second $29 NSF fee when a $96 check on her account was presented a second time after it was bounced to her insurance company. Although Lambert acknowledged that Navy Federal was allowed to charge her a single NSF fee, she argued in court documents that the credit union breached terms of member account agreements when it charged her a second NSF fee for the same insurance check payment.

Lambert's suit was dismissed in August 2019 because Navy Federal's account agreement gave the CU a contractual right to charge an NSF fee each time an NSF check is presented. Lambert appealed to the U.S. District Court for the Eastern District of Virginia. Navy Federal and Lambert's lawyers agreed to settle the suit.

The $16 million cash fund will pay for $5.2 million in attorney fees, a $5,000 "service award" for Lambert, and millions in NSF fee reimbursements for an estimated 700,000 current and former Navy Federal members who were assessed a second or third NSF fee for a single payment transaction that was rejected because of insufficient funds in their accounts from January 28, 2014, to October 27, 2020. Navy Federal will separately pay all settlement administration costs.

Money Mules Moving Illicit Proceeds from COVID-19-Related Crimes
[Blog]
With millions of dollars stolen from consumers in the first half of 2020 through COVID-19-related fraud scams, criminals are exploiting money mules to launder the illicit proceeds. Learn more about sophisticated mule schemes during the pandemic, and why a consolidated fraud and AML platform is essential to fight back.
— Verafin

JPMorgan Chase Bank pays $250M for lax controls
The OCC has announced it has issued a Consent Order to JPMorgan Chase Bank, National Association (Columbus, Ohio) to pay a $250 million civil money penalty, based on the bank's failure to maintain internal controls and internal audit over its fiduciary business.

For additional information and a link to the Consent Order, see "OCC hits JPMorgan Chase with $250M CMP" in the BankersOnline Penalty pages.

OCC issues proposed CRA General Performance Standards
The OCC is inviting comment on a notice of proposed rulemaking regarding the Community Reinvestment Act's (CRA) general performance standards. The OCC published a final rule in June 2020 to strengthen and modernize the agency's regulations under the CRA to encourage banks to engage in more activities to serve the needs of their communities, particularly low- and moderate-income and other historically underserved communities.

The proposal released yesterday provides the OCC's proposed approach to determine the CRA evaluation measure benchmarks, retail lending distribution test thresholds, and community development minimums under the general performance standards set forth in the 2020 final rule. The proposal also explains how the OCC would assess significant declines in CRA activities levels in connection with performance context following the initial establishment of the benchmarks, minimums, and thresholds. Finally, the proposed rule would make clarifying and technical amendments to the 2020 final rule.

Comments on the proposal will be accepted for 60 days following publication in the Federal Register.

FHFA announces conforming loan limits for 2021
The Federal Housing Finance Agency has announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2021. In most of the U.S., the 2021 maximum conforming loan limit (CLL) for one-unit properties will be $548,250, a 7.4 percent increase from $510,400 in 2020.

For areas in which 115 percent of the local median home value exceeds the baseline CLL, the maximum loan limit will be higher than the baseline loan limit. The Housing and Economic Recovery Act establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a "ceiling" on that limit of 150 percent of the baseline loan limit. Median home values generally increased in high-cost areas in 2020, driving up the maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $822,375 (150 percent of $548,250).

Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $822,375 for one-unit properties.

As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum CLL will be higher in 2021 in all but 18 counties or county equivalents in the U.S.

House prices still climbing
The FHFA has also announced U.S. house prices rose 3.1 percent in the third quarter of 2020, up 7.8 percent from the third quarter of 2019—the fastest year-over-year rate of appreciation since 2006. FHFA's seasonally adjusted monthly index for September was up 1.7 percent from August.

HUD launches Recovery House Program
HUD Secretary Carson has announced the publication of the Notice for HUD's pilot Recovery Housing Program (RHP). The program was authorized by the SUPPORT Act to provide stable, temporary housing to individuals in recovery from a substance use disorder.

RHP is funding 25 grantees, 24 states and the District of Columbia, whose age-adjusted rate of drug overdose deaths was above the national overdose mortality rate. The RHP Notice provides state grantees the flexibility to carry out activities directly or pass funds through to local governments in rural and urban areas throughout the state. Therefore, grantees can streamline the use of RHP funds, particularly by nonprofits and other subrecipients that currently administer residential programs for persons in recovery from a substance use disorder.

We'll be back on Monday
There will be no Daily Compliance Briefing published tomorrow or Friday, as we here at BankersOnline celebrate Thanksgiving. Our next Compliance Briefing should appear in your in-box on Monday, November 30. We wish all of you a Happy and safe Thanksgiving.









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