Pub. 3 2024 Issue 5

unlawful discrimination and advanced access to credit during 2023. PROPOSED RULE TO STRENGTHEN AND MODERNIZE AML/CFT PROGRAMS On June 28, 2024, FinCEN issued a proposed rule to strengthen and modernize AML/CFT programs. This rule would enable financial institutions to focus their resources and attention in a manner consistent with their risk profiles. This proposed rule would: • Amend the existing program rules to explicitly require financial institutions to establish, implement and maintain effective, risk-based and reasonably designed AML/CFT programs with certain minimum components, including a mandatory risk assessment process. • Require financial institutions to review government-wide AML/CFT priorities and incorporate them, as appropriate, into risk-based programs, as well as provide for certain technical changes to program requirements. • Promote clarity and consistency across FinCEN’s program rules for different types of financial institutions. MORTGAGE SERVICING DURING THE COVID-19 PANDEMIC On June 28, 2024, the CFPB released a report on the experiences of distressed mortgage borrowers trying to access loss mitigation programs during the COVID-19 pandemic. The report highlights the following findings: • Distressed respondents reported that they didn’t know how or where to apply for loss mitigation programs and the application process was too cumbersome. • Over 20% of respondents reported speaking a language other than English at home; the survey reflects a prevalence of borrowers with limited English proficiency. • Among distressed respondents who received forbearance, more than one-third were unclear about what would happen at the end of the forbearance period and how to repay suspended payments. QUALITY CONTROL STANDARDS FOR AUTOMATED VALUATION MODELS In June 2024, the OCC, FDIC and CFPB approved a final rule to implement quality control standards for automated valuation models used to estimate the value of a home. The rule is to be jointly issued by the OCC, Federal Reserve Board of Governors, FDIC, NCUA, CFPB and FHFA and will take effect 12 months after publication in the federal register. The rule applies to mortgage originators and secondary market issuers who use automated valuation methods (AVMs) and requires quality control standards designed to: • Ensure a high level of confidence in the estimated property valuations. • Safeguard against the manipulation of data. • Avoid conflicts of interest. • Require random sample testing and reviews of AVM valuations. • Comply with applicable nondiscrimination laws. 22 | INDEPENDENT REPORT

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