Treatment of Financial Assets Transferred in Connection With a Securitization or Participation, 41422-41423 [2016-15019]
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41422
Federal Register / Vol. 81, No. 123 / Monday, June 27, 2016 / Rules and Regulations
E. Sloan, Counsel, Legal Division, (703)
562–6137.
E. For a loan amount less than
$12,862: 8 percent of the total loan
amount.
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SUPPLEMENTARY INFORMATION
I. Background
Subpart G—Special Rules Applicable
to Credit Card Accounts and Open-End
Credit Offered to College Students
Section 1026.52—Limitations on Fees
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52(b) Limitations on penalty fees.
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52(b)(1) General rule.
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52(b)(1)(ii) Safe harbors.
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2. * * *
i. * * *
D. Card issuers were permitted to
impose a fee for violating the terms of
an agreement if the fee did not exceed
$27 under § 1026.52(b)(1)(ii)(A), through
December 31, 2016. Card issuers were
permitted to impose a fee for violating
the terms of an agreement if the fee did
not exceed $37 under
§ 1026.52(b)(1)(ii)(B), through June 26,
2016, and $38 under
§ 1026.52(b)(1)(ii)(B) from June 27, 2016
through December 31, 2016.
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Dated: June 14, 2016.
Richard Cordray
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2016–14782 Filed 6–24–16; 8:45 am]
BILLING CODE 4810–AM–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 360
RIN 3064–AE38
Treatment of Financial Assets
Transferred in Connection With a
Securitization or Participation
Federal Deposit Insurance
Corporation (‘‘FDIC’’).
ACTION: Final rule.
AGENCY:
The FDIC is revising a
provision of its Securitization Safe
Harbor Rule, which relates to the
treatment of financial assets transferred
in connection with a securitization or
participation, in order to clarify a
requirement as to loss mitigation by
servicers of residential mortgage loans.
DATES: Effective July 27, 2016.
FOR FURTHER INFORMATION CONTACT:
George H. Williamson, Manager,
Division of Resolutions and
Receiverships, (571) 858–8199. Phillip
Lhorne on DSK30JT082PROD with RULES
SUMMARY:
VerDate Sep<11>2014
15:06 Jun 24, 2016
Jkt 238001
The FDIC, in its regulation codified at
12 CFR 360.6 (the ‘‘Securitization Safe
Harbor Rule’’), set forth criteria under
which, in its capacity as receiver or
conservator of an insured depository
institution, it will not, in the exercise of
its authority to repudiate contracts,
recover or reclaim financial assets
transferred in connection with
securitization transactions. Asset
transfers that, under the Securitization
Safe Harbor Rule, are not subject to
recovery or reclamation through the
exercise of the FDIC’s repudiation
authority include those that pertain to
certain grandfathered transactions, such
as, for example, asset transfers made
prior to December 31, 2010 that satisfied
the conditions (except for the legal
isolation condition addressed by the
Securitization Safe Harbor Rule) for sale
accounting treatment under generally
accepted accounting principles
(‘‘GAAP’’) in effect for reporting periods
prior to November 15, 2009 and that
pertain to a securitization transaction
that satisfied certain other requirements.
In addition, the Securitization Safe
Harbor Rule provides that asset transfers
that are not grandfathered, but that
satisfy the conditions (except for the
legal isolation condition addressed by
the Securitization Safe Harbor Rule) for
sale accounting treatment under GAAP
in effect for reporting periods after
November 15, 2009 and that pertain to
a securitization transaction that satisfies
all other conditions of the Securitization
Safe Harbor Rule (such asset transfers,
together with grandfathered asset
transfers, are referred to collectively as
Safe Harbor Transfers) will not be
subject to FDIC recovery or reclamation
actions through the exercise of the
FDIC’s repudiation authority. For any
securitization transaction in respect of
which transfers of financial assets do
not qualify as Safe Harbor Transfers but
which transaction satisfies all of its
other requirements, the Securitization
Safe Harbor Rule provides that, in the
event the FDIC as receiver or
conservator remains in monetary default
for a specified period under a
securitization due to its failure to pay or
apply collections or repudiates the
securitization asset transfer agreement
and does not pay damages within a
specified period, certain remedies can
be exercised on an expedited basis.
Paragraph (b)(3)(ii) of the
Securitization Safe Harbor Rule sets
forth conditions relating to the servicing
PO 00000
Frm 00012
Fmt 4700
Sfmt 4700
of residential mortgage loans. This
paragraph includes a condition that the
securitization documents must require
that the servicer commence action to
mitigate losses no later than ninety days
after an asset first becomes delinquent
unless all delinquencies on such asset
have been cured.
In January, 2013, the Consumer
Financial Protection Bureau (‘‘CFPB’’)
adopted mortgage loan servicing
requirements that became effective on
January 10, 2014. One of the
requirements, set forth in Subpart C to
Regulation X, at 12 CFR 1024.41, in
general prohibits a servicer from
commencing a foreclosure unless the
borrower’s mortgage loan obligation is
more than 120 days delinquent. This
section of Regulation X also provides
additional rules that, among other
things, require a lender to further delay
foreclosure if the borrower submits a
loss mitigation application before the
lender has commenced the foreclosure
process and requires a lender to delay
a foreclosure for which it has
commenced the foreclosure process if a
borrower has submitted a complete loss
mitigation application more than 37
days before a foreclosure sale.1
II. The Proposed Rule
While the Securitization Safe Harbor
Rule does not define what constitutes
action to mitigate losses, the preamble
to the notice of proposed rulemaking
that accompanied an earlier amendment
to the Securitization Safe Harbor Rule
stated, ‘‘action to mitigate losses may
include contact with the borrower or
other steps designed to return the asset
to regular payments, but does not
require initiation of foreclosure or other
formal enforcement proceedings.’’ 2
Accordingly, it should be unlikely that
the 90-day loss mitigation requirement
of the Securitization Safe Harbor Rule
would conflict with the foreclosure
commencement delays mandated by the
CFPB under Regulation X. However, as
there may be circumstances where
commencement of foreclosure is the
only available and reasonable loss
mitigation action, the FDIC recently
issued a notice of proposed rulemaking
(the ‘‘NPR’’) to amend the Securitization
Safe Harbor Rule to clarify that the
documents governing a securitization
transaction need not require an action
prohibited by Regulation X in order to
satisfy the loss mitigation conditions for
safe harbor. The NPR was published in
the Federal Register on November 25,
2015 with a 60-day comment period.3
1 See
12 CFR 1024.41(f) and (g).
FR 27471, 27479 (May 17, 2010).
3 80 FR 73680 (November 25, 2015).
2 75
E:\FR\FM\27JNR1.SGM
27JNR1
Federal Register / Vol. 81, No. 123 / Monday, June 27, 2016 / Rules and Regulations
No comments were received by the
FDIC in response to the NPR.
III. The Final Rule
Having received no comments on the
NPR, the FDIC is adopting the
amendment set forth in the NPR as a
final rule (the ‘‘Final Rule’’).
Specifically, § 360.6(b)(3)(ii)(A) is being
revised to include language stating that
the loss mitigation action requirement
thereunder ‘‘shall not be deemed to
require that the documents include any
provision concerning loss mitigation
that requires any action that may
conflict with the requirements of
Regulation X . . .’’
IV. Policy Objective
One of the FDIC’s general policy
objectives is to facilitate regulatory
compliance and ease regulatory burden
by ensuring that regulations are clear
and consistent with other regulatory
initiatives. In particular, the objective of
this rulemaking is to harmonize the
residential loan servicing condition of
the Securitization Safe Harbor Rule with
the CFPB’s loan servicing requirements.
Adopting the Final Rule accomplishes
that objective.
V. Administrative Law Matters
A. Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act (44 U.S.C. 3501, et seq.)
(‘‘PRA’’), the FDIC may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
Office of Management and Budget
(‘‘OMB’’) control number. The
amendment set forth in the Final Rule
would not revise the Securitization Safe
Harbor Rule information collection
(OMB No. 3064–0177) or create any new
information collection pursuant to the
PRA. Consequently, no submission will
be made to the Office of Management
and Budget with respect to the PRA.
Lhorne on DSK30JT082PROD with RULES
B. Regulatory Flexibility Act
5 U.S.C. 603, 604 and 605.
VerDate Sep<11>2014
15:06 Jun 24, 2016
D. Plain Language
Section 722 of the Gramm-LeachBliley Act (Pub. L. 106–102, 113 Stat.
1338, 1471) requires the Federal
banking agencies to use plain language
in all proposed and final rules
published after January 1, 2000. The
FDIC has sought to present the Final
Rule in a simple and straightforward
manner.
List of Subjects in 12 CFR Part 360
Banks, Banking, Bank deposit
insurance, Holding companies, National
banks, Participations, Reporting and
recordkeeping requirements, Savings
associations, Securitizations.
For the reasons stated above, the
Board of Directors of the Federal
Deposit Insurance Corporation amends
12 CFR part 360 as follows:
Jkt 238001
require that the servicers apply industry
best practices for asset management and
servicing. The documents shall require
the servicer to act for the benefit of all
investors, and not for the benefit of any
particular class of investors, that the
servicer maintain records of its actions
to permit full review by the trustee or
other representative of the investors and
that the servicer must commence action
to mitigate losses no later than ninety
(90) days after an asset first becomes
delinquent unless all delinquencies
have been cured, provided that this
requirement shall not be deemed to
require that the documents include any
provision concerning loss mitigation
that requires any action that may
conflict with the requirements of
Regulation X (12 CFR part 1024), as
Regulation X may be amended or
modified from time to time.
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Dated at Washington, DC, this 21st day of
June, 2016.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2016–15019 Filed 6–24–16; 8:45 am]
BILLING CODE P
SMALL BUSINESS ADMINISTRATION
PART 360—RESOLUTION AND
RECEIVERSHIP RULES
13 CFR Parts 109, 115, 120, and 121
1. The authority citation for part 360
is revised to read as follows:
Affiliation for Business Loan Programs
and Surety Bond Guarantee Program
■
Authority: 12 U.S.C.
1821(d)(1),1821(d)(10)(C), 1821(d)(11),
1821(e)(1), 1821(e)(8)(D)(i), 1823(c)(4),
1823(e)(2); Sec. 401(h), Pub. L. 101–73, 103
Stat. 357.
2. Revise § 360.6(b)(3)(ii)(A) to read as
follows:
■
§ 360.6 Treatment of financial assets
transferred in connection with a
securitization or participation.
*
The Regulatory Flexibility Act (5
U.S.C. 601, et seq.) (‘‘RFA’’) requires
each federal agency to prepare a final
regulatory flexibility analysis in
connection with the promulgation of a
final rule, or certify that the final rule
will not have a significant economic
impact on a substantial number of small
entities.4 Pursuant to section 605(b) of
the RFA, the FDIC certifies that the
Final Rule will not have a significant
economic impact on a substantial
number of small entities.
4 See
C. Small Business Regulatory
Enforcement Act
The Office of Management and Budget
has determined that this final rule is not
a ‘‘major rule’’ within the meaning of
the Small Business Regulatory
Enforcement Fairness Act of 1996 (5
U.S.C. 801, et seq.) (‘‘SBREFA’’). As
required by the SBREFA, the FDIC will
file the appropriate reports with
Congress and the Government
Accountability Office so that the Final
Rule may be reviewed.
41423
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(b) * * *
(3) * * *
(ii) * * *
(A) Servicing and other agreements
must provide servicers with authority,
subject to contractual oversight by any
master servicer or oversight advisor, if
any, to mitigate losses on financial
assets consistent with maximizing the
net present value of the financial asset.
Servicers shall have the authority to
modify assets to address reasonably
foreseeable default, and to take other
action to maximize the value and
minimize losses on the securitized
financial assets. The documents shall
PO 00000
Frm 00013
Fmt 4700
Sfmt 4700
RIN 3245–AG73
Small Business Administration.
Final rule.
AGENCY:
ACTION:
This final rule amends the
regulations pertaining to the
determination of size eligibility based
on affiliation by creating distinctive
requirements for small business
applicants for assistance from the
Business Loan, Disaster Loan and Surety
Bond Guarantee Program (‘‘SBG’’). For
purposes of this rule, the Business Loan
Programs consist of the 7(a) Loan
Program, the Microloan Program, the
Intermediary Lending Pilot Program
(‘‘ILP’’), and the Development Company
Loan Program (‘‘504 Loan Program’’).
Note: the Intermediary Lending Pilot
Program was inadvertently left out of
the proposed rule. There are currently
intermediaries with revolving funds for
eligible small businesses, so the
program has been included in this final
rule. The Disaster Loan Programs
consist of Physical Disaster Business
Loans, Economic Injury Disaster Loans,
Military Reservist Economic Injury
SUMMARY:
E:\FR\FM\27JNR1.SGM
27JNR1
]]>Agencies
[Federal Register Volume 81, Number 123 (Monday, June 27, 2016)]
[Rules and Regulations]
[Pages 41422-41423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15019]
=======================================================================
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 360
RIN 3064-AE38
Treatment of Financial Assets Transferred in Connection With a
Securitization or Participation
AGENCY: Federal Deposit Insurance Corporation (``FDIC'').
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The FDIC is revising a provision of its Securitization Safe
Harbor Rule, which relates to the treatment of financial assets
transferred in connection with a securitization or participation, in
order to clarify a requirement as to loss mitigation by servicers of
residential mortgage loans.
DATES: Effective July 27, 2016.
FOR FURTHER INFORMATION CONTACT: George H. Williamson, Manager,
Division of Resolutions and Receiverships, (571) 858-8199. Phillip E.
Sloan, Counsel, Legal Division, (703) 562-6137.
SUPPLEMENTARY INFORMATION
I. Background
The FDIC, in its regulation codified at 12 CFR 360.6 (the
``Securitization Safe Harbor Rule''), set forth criteria under which,
in its capacity as receiver or conservator of an insured depository
institution, it will not, in the exercise of its authority to repudiate
contracts, recover or reclaim financial assets transferred in
connection with securitization transactions. Asset transfers that,
under the Securitization Safe Harbor Rule, are not subject to recovery
or reclamation through the exercise of the FDIC's repudiation authority
include those that pertain to certain grandfathered transactions, such
as, for example, asset transfers made prior to December 31, 2010 that
satisfied the conditions (except for the legal isolation condition
addressed by the Securitization Safe Harbor Rule) for sale accounting
treatment under generally accepted accounting principles (``GAAP'') in
effect for reporting periods prior to November 15, 2009 and that
pertain to a securitization transaction that satisfied certain other
requirements. In addition, the Securitization Safe Harbor Rule provides
that asset transfers that are not grandfathered, but that satisfy the
conditions (except for the legal isolation condition addressed by the
Securitization Safe Harbor Rule) for sale accounting treatment under
GAAP in effect for reporting periods after November 15, 2009 and that
pertain to a securitization transaction that satisfies all other
conditions of the Securitization Safe Harbor Rule (such asset
transfers, together with grandfathered asset transfers, are referred to
collectively as Safe Harbor Transfers) will not be subject to FDIC
recovery or reclamation actions through the exercise of the FDIC's
repudiation authority. For any securitization transaction in respect of
which transfers of financial assets do not qualify as Safe Harbor
Transfers but which transaction satisfies all of its other
requirements, the Securitization Safe Harbor Rule provides that, in the
event the FDIC as receiver or conservator remains in monetary default
for a specified period under a securitization due to its failure to pay
or apply collections or repudiates the securitization asset transfer
agreement and does not pay damages within a specified period, certain
remedies can be exercised on an expedited basis.
Paragraph (b)(3)(ii) of the Securitization Safe Harbor Rule sets
forth conditions relating to the servicing of residential mortgage
loans. This paragraph includes a condition that the securitization
documents must require that the servicer commence action to mitigate
losses no later than ninety days after an asset first becomes
delinquent unless all delinquencies on such asset have been cured.
In January, 2013, the Consumer Financial Protection Bureau
(``CFPB'') adopted mortgage loan servicing requirements that became
effective on January 10, 2014. One of the requirements, set forth in
Subpart C to Regulation X, at 12 CFR 1024.41, in general prohibits a
servicer from commencing a foreclosure unless the borrower's mortgage
loan obligation is more than 120 days delinquent. This section of
Regulation X also provides additional rules that, among other things,
require a lender to further delay foreclosure if the borrower submits a
loss mitigation application before the lender has commenced the
foreclosure process and requires a lender to delay a foreclosure for
which it has commenced the foreclosure process if a borrower has
submitted a complete loss mitigation application more than 37 days
before a foreclosure sale.\1\
---------------------------------------------------------------------------
\1\ See 12 CFR 1024.41(f) and (g).
---------------------------------------------------------------------------
II. The Proposed Rule
While the Securitization Safe Harbor Rule does not define what
constitutes action to mitigate losses, the preamble to the notice of
proposed rulemaking that accompanied an earlier amendment to the
Securitization Safe Harbor Rule stated, ``action to mitigate losses may
include contact with the borrower or other steps designed to return the
asset to regular payments, but does not require initiation of
foreclosure or other formal enforcement proceedings.'' \2\ Accordingly,
it should be unlikely that the 90-day loss mitigation requirement of
the Securitization Safe Harbor Rule would conflict with the foreclosure
commencement delays mandated by the CFPB under Regulation X. However,
as there may be circumstances where commencement of foreclosure is the
only available and reasonable loss mitigation action, the FDIC recently
issued a notice of proposed rulemaking (the ``NPR'') to amend the
Securitization Safe Harbor Rule to clarify that the documents governing
a securitization transaction need not require an action prohibited by
Regulation X in order to satisfy the loss mitigation conditions for
safe harbor. The NPR was published in the Federal Register on November
25, 2015 with a 60-day comment period.\3\
[[Page 41423]]
No comments were received by the FDIC in response to the NPR.
---------------------------------------------------------------------------
\2\ 75 FR 27471, 27479 (May 17, 2010).
\3\ 80 FR 73680 (November 25, 2015).
---------------------------------------------------------------------------
III. The Final Rule
Having received no comments on the NPR, the FDIC is adopting the
amendment set forth in the NPR as a final rule (the ``Final Rule'').
Specifically, Sec. 360.6(b)(3)(ii)(A) is being revised to include
language stating that the loss mitigation action requirement thereunder
``shall not be deemed to require that the documents include any
provision concerning loss mitigation that requires any action that may
conflict with the requirements of Regulation X . . .''
IV. Policy Objective
One of the FDIC's general policy objectives is to facilitate
regulatory compliance and ease regulatory burden by ensuring that
regulations are clear and consistent with other regulatory initiatives.
In particular, the objective of this rulemaking is to harmonize the
residential loan servicing condition of the Securitization Safe Harbor
Rule with the CFPB's loan servicing requirements. Adopting the Final
Rule accomplishes that objective.
V. Administrative Law Matters
A. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act (44 U.S.C. 3501, et
seq.) (``PRA''), the FDIC may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless it
displays a currently valid Office of Management and Budget (``OMB'')
control number. The amendment set forth in the Final Rule would not
revise the Securitization Safe Harbor Rule information collection (OMB
No. 3064-0177) or create any new information collection pursuant to the
PRA. Consequently, no submission will be made to the Office of
Management and Budget with respect to the PRA.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601, et seq.) (``RFA'')
requires each federal agency to prepare a final regulatory flexibility
analysis in connection with the promulgation of a final rule, or
certify that the final rule will not have a significant economic impact
on a substantial number of small entities.\4\ Pursuant to section
605(b) of the RFA, the FDIC certifies that the Final Rule will not have
a significant economic impact on a substantial number of small
entities.
---------------------------------------------------------------------------
\4\ See 5 U.S.C. 603, 604 and 605.
---------------------------------------------------------------------------
C. Small Business Regulatory Enforcement Act
The Office of Management and Budget has determined that this final
rule is not a ``major rule'' within the meaning of the Small Business
Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801, et seq.)
(``SBREFA''). As required by the SBREFA, the FDIC will file the
appropriate reports with Congress and the Government Accountability
Office so that the Final Rule may be reviewed.
D. Plain Language
Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113
Stat. 1338, 1471) requires the Federal banking agencies to use plain
language in all proposed and final rules published after January 1,
2000. The FDIC has sought to present the Final Rule in a simple and
straightforward manner.
List of Subjects in 12 CFR Part 360
Banks, Banking, Bank deposit insurance, Holding companies, National
banks, Participations, Reporting and recordkeeping requirements,
Savings associations, Securitizations.
For the reasons stated above, the Board of Directors of the Federal
Deposit Insurance Corporation amends 12 CFR part 360 as follows:
PART 360--RESOLUTION AND RECEIVERSHIP RULES
0
1. The authority citation for part 360 is revised to read as follows:
Authority: 12 U.S.C. 1821(d)(1),1821(d)(10)(C), 1821(d)(11),
1821(e)(1), 1821(e)(8)(D)(i), 1823(c)(4), 1823(e)(2); Sec. 401(h),
Pub. L. 101-73, 103 Stat. 357.
0
2. Revise Sec. 360.6(b)(3)(ii)(A) to read as follows:
Sec. 360.6 Treatment of financial assets transferred in connection
with a securitization or participation.
* * * * *
(b) * * *
(3) * * *
(ii) * * *
(A) Servicing and other agreements must provide servicers with
authority, subject to contractual oversight by any master servicer or
oversight advisor, if any, to mitigate losses on financial assets
consistent with maximizing the net present value of the financial
asset. Servicers shall have the authority to modify assets to address
reasonably foreseeable default, and to take other action to maximize
the value and minimize losses on the securitized financial assets. The
documents shall require that the servicers apply industry best
practices for asset management and servicing. The documents shall
require the servicer to act for the benefit of all investors, and not
for the benefit of any particular class of investors, that the servicer
maintain records of its actions to permit full review by the trustee or
other representative of the investors and that the servicer must
commence action to mitigate losses no later than ninety (90) days after
an asset first becomes delinquent unless all delinquencies have been
cured, provided that this requirement shall not be deemed to require
that the documents include any provision concerning loss mitigation
that requires any action that may conflict with the requirements of
Regulation X (12 CFR part 1024), as Regulation X may be amended or
modified from time to time.
* * * * *
Dated at Washington, DC, this 21st day of June, 2016.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2016-15019 Filed 6-24-16; 8:45 am]
BILLING CODE P
