Archive for November 13, 2009
Federal Bank Regulators Issue Final Rule on Risk Weights of Modified Mortgage Loans
Federal bank and thrift regulators have issued a final rule providing that mortgage loans modified under the U.S. Department of the Treasury’s Home Affordable Mortgage Program (HAMP) will generally retain the risk weight appropriate to the mortgage loan prior to modification.
The final HAMP rule is the same as the interim final rule issued on June 30, 2009, with one modification. The final rule clarifies that mortgage loans whose HAMP modifications are in the trial period, and not yet permanent, qualify for the risk-based capital treatment contained in the rule.
The final rule will take effect 30 days after publication in the Federal Register, which is expected shortly.
FTC Further Delays Enforcement of Red Flags Rule
To the surprise of no one, on October 30, 2009, Congress requested, and the Federal Trade Commission (FTC) approved, a further delay of enforcement of the Red Flags Rule (the Rule). This time, enforcement of the Rule is delayed until June 1, 2010. This enforcement delay provides creditors additional time to develop and implement written identity theft prevention programs required by the Rule.
Developed under the Fair and Accurate Credit Transaction Act of 2003, the Rule has a surprisingly wide application to any business that bills customers after providing goods or services. This includes many health care providers, construction companies and merchants who offer Retail Installment Sales Contracts, for example. If such “creditors” have “covered accounts” (as defined in the Rule), they must adopt an identity theft prevention program. The program must be designed to identify, detect, and respond to patterns, practices, or specific activities – known as “red flags” – that might indicate identity theft.
A full copy of the FTC’s October 30, 2009 press release is available here.
FDIC Announces Final Rule for Prepaid Assessments: Exemption Applications Due by December 1st
On November 12, 2009, the FDIC adopted a final rule amending the assessment regulations to require insured depository institutions to prepay their quarterly risk-based assessments for the fourth quarter of 2009, and for all of 2010, 2011, and 2012. The pre-paid assessments are due on December 30, 2009, together with each financial institution’s risk-based assessment for the third quarter of 2009.
The FDIC anticipates that the amount most institutions will pay on December 30th will be substantially higher than typical quarterly deposit insurance assessments. Accordinly, financial institutions should prepare now to make sure adequate funds are available to make the pay the assessment.
Other important aspects of the rule are as follows:
