Source: http://nafcucomplianceblog.typepad.com/nafcu_weblog/2012/09/index.html
Timestamp: 2014-09-02 06:48:03
Document Index: 74332509

Matched Legal Cases: ['art 703', 'art 1', 'art 2', 'art 1', 'art 2', '§723', '§ 723', '§ 723', 'art 703', 'arts 702', '§ 1026', '§ 1026']

NAFCU Compliance Blog: Posts from September 2012
TILA-RESPA Integrated Mortgage Disclosures Rule: The Closing Disclosure – Imposition of Average Charge Instead of Actual Amount Received for Particular Settlement Service; Great Training Opportunities Available to You
CFPB Adjusts CARD Act, HOEPA, and TILA Thresholds for Inflation
FinCEN's Proposed Rule on Customer Due Diligence
NCUA Webinar and CFPB Issues Consumer Advisory On Virtual Currency
A Consolidated Guide to TILA/RESPA Integration Resources; Mortgage Servicing Webcast
FinCen Releases AML/CFT Deficiencies Advisory; Free Kick
TILA-RESPA Integrated Mortgage Disclosures Rule: The Closing Disclosure – Timing and Delivery
NCUA Proposes to Allow FCUs to Invest in TIPS; Definition of “Rural District;” NAFCU Webcast
So far this week, we’ve blogged about NCUA’s proposed change to the definition of a “small entity” and the ANPR on the payday-alternative loan rule. Today, we’ll highlight two additional proposals from NCUA’s September Board meeting.
Investing in TIPS. NCUA approved a proposal to amend its investment regulation to allow federal credit unions (FCUs) to purchase Treasury Inflation Protected Securities (TIPS). The proposed amendment adds TIPS to the list of permissible investments for FCUs in part 703. NCUA believes that TIPS can be a valuable risk management tool for FCUs and they can benefit from including them in their overall investment portfolio.
Definition of “Rural District.” NCUA also issued a proposed rule to change the definition of a “rural district” in the agency’s Chartering and Field of Membership Manual. Currently, the definition includes a population ceiling of 200,000. The proposed change would allow a rural district if the population does not exceed the greater of 200,000 or three percent of the population of the state in which it is located. If the district crosses state lines, the three-percent component would be based on the population of the state containing the majority of the district.
Comments for both proposals are due by November 26, 2012. NAFCU’s Regulatory Affairs team is preparing Regulatory Alerts for NAFCU Members.
NAFCU Webcast. On November 7th, NAFCU’s Compliance team will discuss three recent mortgage proposals – mortgage loan originator compensation, “higher-risk mortgage loan” appraisals, and proposed changes to Regulation B that would require free appraisal copies to members. Dodd-Frank requires the CFPB to finalize these rules by January 21, 2013, so it’s important to gain an understanding of the proposals and how they will impact your current mortgage lending practices. Register by October 31 and save $100.
For a sneak peak, see these NAFCU Compliance blog posts: Mortgage Loan Origination – Part 1; Mortgage Loan Origination – Part 2; Higher-Risk Appraisal Proposal; Regulation B Appraisal Proposal.
Posted by NAFCU on September 28, 2012 | Permalink
FDIC & CFPB Order Discover Bank to Refund $200M
Written by Michael Coleman,
this week, the FDIC and the CFPB announced
a joint public enforcement action ordering
Discover Bank (“Discover”) to pay $200 million to more than 3.5 million
consumers as a result of deceptive marketing. The order also required Discover
to pay $14 million in civil money penalties. Discover will pay $7 million of
the penalty to the U.S. Treasury and $7 million to the CFPB’s Civil Penalty
Fund. The CFPB’s press
release also contains a fact
sheet regarding the consent order. The
CFPB’s press
release states that Discover used deceptive telemarketing and sales tactics
to “mislead consumers into paying for various
credit card “add-on products” – payment protection, credit score tracking,
identity theft protection, and wallet protection.” The CFPB states in the press
release that as a result of these deceptive tactics consumers were:
• Misled
about the fact that there was a charge for the products
about whether they had purchased the products
• Enrolled
• Withheld
material information about eligibility requirements for certain benefits In
prepared remarks regarding the enforcement action, CFPB Director Richard
Cordray stated:
“Discover used
deceptive telemarketing techniques when it sold consumers all four of these
add-on products. Discover’s telemarketing scripts contained many
misrepresentations, implying that these products were free of charge and simply
“added benefits” that came with having a Discover card. As a result, many
consumers did not realize that their accounts were actually charged for these
action that the Bureau has taken, in coordination with a fellow regulator, to
address the deceptive marketing of credit card add-on products. We have
also published a compliance bulletin to put other institutions more
specifically on notice that such tactics are illegal and should be
halted. We continue to expect that
more such actions will follow. In the meantime, we are signaling as
clearly as we can that other financial institutions should review their
marketing practices to ensure that they are not deceiving or misleading
consumers into purchasing financial products or services.” (emphasis added)
The previous enforcement
action referenced by Director Cordray was the CFPB’s order
requiring Capital One Bank to refund $140 million to consumers and assessing a
$25 million penalty. The CFPB issued a compliance bulletin – CFPB
Bulletin 2012-06 – which overviews the CFPB’s expectations for
institutions offering these add-on products. NAFCU Members, make sure to check
out the September Compliance
Monitor article on the Capital One
What is clear is that the CFPB
will continue to closely monitor credit card issuers for compliance with their
expectations regarding these add on products, and as Director Cordray stated,
more enforcement actions are likely to follow. Importantly, credit unions who
offer these credit card add-on products directly, or indirectly, need to review
their current practices and determine if they are meeting the CFPB’s
expectations. Of course, NCUA will be the entity examining the majority of
credit unions – but NCUA is likely to refer back to the CFPB’s expectations if
they have concerns with credit union products.
Posted by NAFCU on September 27, 2012 | Permalink
Shameless Plug: NAFCU's Compliance Conferences
Shameless Plug: We'll be upfront here - this blog post will discuss NAFCU's upcoming compliance conferences. With all the proposed and final rules from multiple agencies (and specifically the CFPB), it is as important as ever to get in-person training and, more importantly, network with your colleagues (almost 200 signed up for Seminar already) who will prove to be useful sounding boards over the next couple of years. NAFCU's 2012 Regulatory Compliance Seminar - Seattle, Washington - October 23-26. This year's Regulatory Compliance Seminar is chock-full of great topics - and great speakers. I'm just going to provide bullets on the topics and you can see for yourself the richness of the content:
Keynote Presentation - What Compliance Officers of “Good CUs” Can Learn From “Bad Banks” by Kevin Funnell (author of the Bank Lawyer's Blog)
Regulatory and NCUA Update by Steve Van Beek and Michael Coleman, NAFCU
Upcoming Mortgage Servicing by Suzanne Garwood
Fair Lending: Why It's Important to You in 2012 by Suzanne Garwood
Technology Service Agreements: Marrying the Credit Union’s Business Needs with the Regulators’ Expectations by Kevin Funnell
TILA/RESPA Mortgage Disclosures by Suzanne Garwood
Social Media and Website Compliance - Live NAFCU Webcast by Justin Robinson
Remittance Transfers under Regulation E by Mary-Lou Heighes
Bank Secrecy Act Panel with Brian Vitale, Rob Rutkowski and Mary-Lou Heighes
CFPB Update - Part 1 by Steve Van Beek and Michael Coleman, NAFCU
Loan Participations by Katherine Weber
An Update on Credit Union Service Organizations (CUSOs) by Katherine Weber
Current Issues in Credit Unions - Live Podcast - with hosts Rob Rutkowski, Katherine Weber, Hal Scoggins and guest Steve Van Beek
Loan Modifications - Work Out Plans and Modifications by Andy Keeney
CFPB Update - Part 2 by Steve Van Beek and Michael Coleman, NAFCU
Consumer Lending at the Crossroads: The Status of Open-End Lending and Multi-Featured Plans by Hal Scoggins
Overdraft Litigation Explosion - Credit Unions Feeling the Heat by Hal Scoggins
Common Errors in ACH: Risky Business and Pain Points by Dennis Simmons
NCUA Board of Director Policies: Which Ones True Require Action by Andy Keeney
We are very proud of the strong agenda and great speaker line-up for Seminar. We'd love to have you join us in Seattle. ***
NAFCU's 2013 Regulatory Compliance School - Gaylord National Harbor, MD - March 18-23. 2013. Our 2013 Regulatory Compliance School will be held next March and is a great place for new compliance officers (or those who added more compliance to their job functions) to gain a comprehensive overview of the regulations that impact credit union operations. It is also the best place to study for an take the NAFCU Certified Compliance Officer (NCCO) exams to earn your NCCO. Attendance at 2013 School will also come with the 2013 NAFCU Credit Union Compliance GPS (which will be available prior to 2013 School). Registration is currently open and additional details will be available in the near future. ***
NAFCU's 2013 Regulatory Compliance Seminar - Gaylord Opryland Resort - Nashville, TN - October 22-25, 2013. If you can't make it to our 2012 Regulatory Compliance Seminar, plan now for 2013 in Nashville, Tennessee (and about a 7 minute walk from the Grand Ole Opry). Registration for 2013 Seminar will open in the upcoming weeks so keep an eye out. ***
Other NAFCU Conferences. Also, don't forget to pass NAFCU's 2013 Conference Schedule to your colleagues. This page includes information on all nine of NAFCU's conferences.
Posted by NAFCU on September 26, 2012 in Regulatory Compliance Seminar | Permalink
NCUA Issues Advance Notice of Proposed Rulemaking on Payday-Alternative Loans
In addition to the proposed definition of a “small entity” that we blogged about yesterday, the NCUA, at its September Board meeting, approved an advance notice of proposed rulemaking (ANPR) on the agency’s payday-alternative loan (PAL) rule. Previously, these loans were referred to as short-term, small amount loans. The current rule, found in section 701.21 of NCUA’s Rules and Regulations, allows federal credit unions to charge a rate no higher than 1,000 basis points above the agency-set loan interest rate cap, now 18 percent. The rule permits an application fee of up to $20, requires that loan amounts are no lower than $200 an no higher than $1,000 and, among other things, prohibits more than three such loans to one member in any rolling, six-month period.
NCUA is reviewing its regulation in part because there has been limited response from federal credit unions (FCUs). At the Board meeting, NCUA staff indicated that as of June 30, 2012, just 420 federal credit unions reported offering these loans. NCUA is seeking comments on the application fee and any other comments about the current regulation. Several questions are also provided for consideration:
Should the Board increase the permissible PAL interest rate, currently 28 percent, based on 1,000 basis points above the maximum level for non-PALs?
Should the Board expand the permissible PAL dollar range from the current $200 to $1,000?
Should the Board permit PAL maturities shorter than one month or longer than six months?
Should the Board allow federal credit unions to make more than one PAL at a time to a borrower? Should the Board eliminate or decrease the one-month minimum length of membership requirement?
Should the Board increase the limit on the permissible aggregate dollar amount of loans made, which currently is 20% of an FCU’s net worth?
The Board is also seeking information from credit unions offering other viable, responsible alternatives to payday loans and the business models they are using to execute these loan programs successfully. See the ANPR for more details.
The ANPR will have a 60-day comment period upon its publication in the Federal Register. NAFCU will prepare a Regulatory Alert for members.
Posted by NAFCU on September 25, 2012 | Permalink
NCUA Proposes Rule to Set the Definition of “Small” Credit Union at $30M
Written by Michael Coleman, Regulatory
Last week at the September NCUA
Board Meeting, the NCUA Board proposed
a rule and an IRPS that would update the definition of a
“small entity” under the Regulatory Flexibility Act to include federally
insured credit unions with less than $30 million in assets. This would
be an increase from the current $10 million threshold. Here is an interesting excerpt from the Board
Action Bulletin:
“In a new effort to ensure that the threshold
will be modernized more frequently in the future, the Board voted to reevaluate the small credit union definition every
three years. Each reevaluation would consider credit union asset growth
combined with inflation and industry consolidation.
The Regulatory Flexibility Act generally requires federal agencies to determine
and consider the effect of proposed and final rules on small entities. The
proposed rule would grant relief to 1,603 federally insured credit unions and
bring the total number covered by the definition to 4,041, an increase of 66
When NCUA adopted the $10 million threshold in 2003, 52 percent of credit
unions had asset levels that qualified them as “small entities.” Today, only 35
percent of credit unions fall under the $10 million threshold. The proposed
rule change would raise the percentage of small credit unions below the
threshold to 58 percent.” (emphasis added)
While this increase is undoubtedly beneficial for credit
unions, especially those in the $10 million to $30 million range, raising the
threshold even higher would be even more beneficial. Here is what NAFCU
President and CEO Fred Becker had to say: "Although
NCUA broadening the definition of small credit unions to $30 million is a step
in the right direction, it should go much higher to ease the burden for even
more small credit unions"
Also of note, the
NCUA Board issued the proposed rule with an abbreviated 30 day comment period
(once published in the Federal Register). NAFCU Members, NAFCU’s Regulatory
Affairs team will issue a Regulatory Alert on the proposed rule. However, we encourage
all credit unions to comment on the
proposed rule (again once published in the Federal Register), particularly
the threshold level, and how your credit union will be affected. Posted by NAFCU on September 24, 2012 in NCUA, RegFlex, Regulatory Burden | Permalink
Updated Q&A on "Fleets"; Feedback on NAFCU's Book of Answers
Yesterday's blog post stated it would be great if NCUA updated their legal opinion letters when they were superseded. Well, we had an eagle-eyed reader who was searching NAFCU's Book of Answers (member-only) and asked if we were going to update our Q&A. We sure are - it is below (and will be updated in the Book of Answers
soon):
Question: One of my credit union's members
has done plumbing work on the side over the years. Recently, her
"side" business has taken off, and she'd like to expand. She approached
us for a loan to purchase three vans to help the expansion. We are aware of
NCUA's Member Business Loans Regulation, and the loan-to-value (LTV)
requirements found at 12 C.F.R. §723.7. That regulation, however, exempts the
LTV requirements for vans - as long as the van is not part of a fleet. We'd
like to avoid the LTV requirements if we can, but our commercial lending
department cannot agree on what constitutes a "fleet." Has NCUA
issued guidance in this area?
Answer: Yes. NCUA has defined “fleet” in Legal
Opinion Letter 12-0764 which superseded NCUA’s prior guidance from Legal Opinion
Letter 05-1038. As you noted, NCUA's
Member Business Loans (MBL) Regulation contains LTV requirements for secured
loans. Subject to certain exceptions or an NCUA waiver, the maximum LTV for
secured MBLs is 80 percent. The LTV requirement, however, does not apply to cars, vans,
SUVs, or pick-up trucks - as long as the vehicle is not part of a
"fleet." 12
C.F.R. § 723.7(e). The regulation does not define "fleet,"
however, the 2012 opinion
letter defines “fleet” as “five
or more vehicles that are centrally controlled and used for a business purpose,
including for the purpose of transporting persons or property for commission or
hire. In the letter, NCUA emphasized
that the “fleet” definition is composed of the numerical component – five – as
well as the central control and used for a business purpose component. Both components are required before the
vehicles would be deemed to be part of a fleet. In your question, the member has three vans and would be below the
numerical component. Thus, the vans
would not be part of a “fleet” and the credit union would not be bound by the
LTV requirements of 12
C.F.R. § 723.7.
NAFCU's Book of Answers. We are working on an update to our Book of Answers and we want your feedback. If you are a current user of the Book of Answers - we look forward to any feedback you have on how to improve this NAFCU member benefit. What would make the Book of Answers better? Is it too big and bulky? Should the Book of Answers be split up by sections (i.e., all lending questions on one PDF)? If you are a NAFCU member and haven't used the Book of Answers, take a look (log-in required) and let us know what you think. As always, any and all feedback is appreciated. Feel free to leave a comment on this blog post or email us: compliance@nafcu.org.
Posted by NAFCU on September 20, 2012 in MBL, NCUA, Research | Permalink
NCUA Amends Definition of Fleet for Member Business Loans; Outdated Guidance
Yesterday, NCUA issued Legal Opinion Letter 12-0764 which amends the definition of "fleet" for purposes of NCUA's Member Business Lending regulation - specifically the LTV ratio requirement under 12 CFR 723.7(e). This is a welcomed change and one that NAFCU has advocated for in the past - including our 2011 Regulatory Review comment letter.
The amended definition of "fleet" applies when there are more than five vehicles:
"We found a wide variety in the number of vehicles that
constitutes a fleet. Among those many
descriptions, however, we found that a range from five to ten vehicles was not
uncommon. We were particularly persuaded
by Internal Revenue Service (IRS) publications on this topic and treatment of
fleets by auto industry fleet programs. The IRS, in addressing mileage rate deductions, refers to five or more
vehicles as being a fleet operation. In
addition, a number of auto manufacturers generally use five as a base number
for providing fleet discounts. We
believe this similar treatment by government and industry provides a reasonable
basis to conclude that a minimum of five vehicles constitutes a fleet. Also, we believe that increasing the number
to five provides regulatory relief to most credit unions making vehicle MBLs
without diminishing necessary safety and soundness precautions. Accordingly, we believe five or more vehicles
is an appropriate number to define a fleet for our purposes."
NCUA also went on to clarify and update the "business purpose" component of the "fleet" definition to require central control of business use for the purpose of transporting persons or property for commission or hire. Thus, the updated definition of "fleet" is:
"Accordingly, we amend the definition of “fleet” as
follows: A fleet is five or more vehicles
that are centrally controlled and used for a business purpose, including for
the purpose of transporting persons or property for commission or hire."
As always, the full legal opinion letter is the best source for a full discussion and analysis. ***
Piles of Outdated Guidance. We've blogged in the past about the regulatory burden caused by outdated guidance from regulators - including NCUA. Yesterday's announcement gives NCUA a great opportunity to change their existing practice and further reduce the regulatory burden for credit unions. How? By going back to their 2005 legal opinion letter and clearly indicating it has been superseded by the 2012 legal opinion letter. Two years from now, if a credit union searches for "fleet" on NCUA's website - which legal opinion letter will come up first? If it is the 2005 letter, will that letter clearly indicate that it has been superseded? If not, a credit union may stop their research after finding the 2005 letter. After all, the 2005 letter directly addresses the issue of what is considered a "fleet." Look to Other Regulators. As we mentioned in our prior blog post, the OCC and the Federal Reserve already have procedures in place to clarify superseded guidance documents. Or, check out this example from a past OTS guidance document. Hopefully NCUA takes these simple steps to prevent unnecessary regulatory burden in the future. Credit union compliance officers work very, very hard to analyze and interpret current NCUA's regulations and guidance. NCUA should work just as hard to help clarify which guidance and rules are applicable (the 2012 letter) and which are outdated (the 2005 letter). Posted by NAFCU on September 19, 2012 in MBL, NCUA, Regulatory Burden | Permalink
CFPB By the Numbers; BSA Webcast for Directors and Supervisory Committee
Last week was NAFCU's Congressional Caucus - which is a great event for credit leaders to discuss their issues with their representatives, Senators and regulators. As part of Caucus, I put together a short presentation and accompanying fact sheet in an attempt to quantify the burden on credit unions from the CFPB's actions (so far). Ultimately, the fast-paced schedule of Caucus did not allow the time for me to give the presentation. Fear not, I'm sharing the information with you today in hopes that you will share with your senior management and Boards to show them the impact the CFPB is having on credit unions. Consumer Financial Protection Bureau - By the Numbers Presentation
Consumer Financial Protection Bureau - By the Numbers Fact Sheet
BSA Webcast. On October 10, 2012, NAFCU will be hosting a BSA Webcast designed for Board of Directors and Supervisory/Audit Committee members. Of course, you do not need to attend for the live viewing and can use the webcast at your next Board or Supervisory Committee meeting to fulfill your training requirements. Sign up by October 3rd and Save $100. Posted by NAFCU on September 18, 2012 in Board of Directors, BSA, CFPB, Dodd-Frank, Regulatory Burden | Permalink
Agenda for NCUA's September Board Meeting; Mortgage Servicing Proposals in Federal Register
The agenda for NCUA's September 20th Board meeting is now available. The agenda includes:
Proposed Rule – Part 703 of NCUA’s Rules and Regulations, Permissible Investments – Treasury Inflation Protected Securities.
Proposed Rule – Parts 702 and 741 of NCUA’s Rules and Regulations and Interpretive Ruling and Policy Statement 12-2, Regulatory Relief for Small Credit Unions.
Proposed Rule – Section 701.1 of NCUA’s Rules and Regulations, Expanded Definition of “Rural District” for Field of Membership.
Advanced Notice of Proposed Rulemaking – Section 701.21 of NCUA’s Rules and Regulations, Payday-Alternative Loans.
NCUA will also be meeting in closed session for a few additional agenda items. ***
Mortgage Servicing. Back in our September 7th blog post, we linked to the CFPB's mortgage proposals as they were published in the Federal Register. At that time, the Reg Z and Reg X mortgage servicing proposals had not yet been published.
Today, those mortgage servicing proposals have been published in the Federal Register. The links are below.
Regulation Z (TILA) Mortgage Servicing Proposal
Regulation X (RESPA) Mortgage Servicing Proposal
Note: Even though the proposals were published in today's Federal Register (September 17th), the CFPB is sticking with their October 9th deadline for comments. Remember, the CFPB is required by Dodd-Frank to finalize the mortgage servicing rules by January 21, 2013. In order to meet that deadline, the CFPB is providing very limited timeframes for comments - especially on a proposal that would require 20 new notices. Posted by NAFCU on September 17, 2012 in Dodd-Frank, Investments, Lending, Mortgage Servicing, NCUA | Permalink
Joint Comment Letter to CFPB: Drop Proposed Change to APR; Where is Full Reg Z?
Drop the APR Proposal. On Monday, NAFCU - along with 15 other trade associations - sent a joint comment letter to the CFPB urging it to drop its proposed change to the definition of finance charge. The letter argues the CFPB has not shown the change in the finance charge, and the corresponding change to the annual percentage rate, would help improve consumer understanding.
"As the CFPB and other agencies have documented and industry can attest, the current APR is
of little value to consumers. It neither
enhances a borrower’s understanding of the obligation they are undertaking, nor
serves as an accurate shopping tool. The
Bureau’s own research indicates that consumers confuse the APR with the note
rate; this confusion has nothing to do with what is in or out of the APR
calculation. Simply adding additional
fees to an unhelpful formulation that consumers do not use or understand will
add significant costs and complications to the rulemaking effort, with no
measurable benefit to the borrower."
Additionally, the comment letter points out that the proposed change is not required by Dodd-Frank and making this change at the same time as other wholesale changes to Regulation Z will increase confusion and uncertainty. You can view the full letter, including a listing of all 16 trade associations, here. ***
Where is the Full Proposed Reg Z? One aspect that needs attention is that there are numerous proposals to change Regulation Z. And, the proposals often cross-reference changes that are proposed in other, simultaneous, rulemakings. In fact, the CFPB themselves encourage commenters to view all the proposed rules together. Here is from the CFPB's High-Cost Mortgage proposal:
Bureau regards the foregoing rulemakings as components of a larger undertaking;
many of them intersect with one or more of the others....In addition,
each of them may include other provisions the Bureau considers necessary or
appropriate to ensure that the overall undertaking is accomplished efficiently
and that it ultimately yields a comprehensive regulatory scheme for mortgage
credit that achieves the statutory purposes set forth by Congress, while
avoiding unnecessary burdens on industry....For efficiency's sake, however, the
Bureau is publishing and soliciting comment on proposed answers to certain
issues raised by two or more of its mortgage rulemakings in whichever
rulemaking is most appropriate, in the Bureau's judgment, for addressing each
specific issue. Accordingly, the Bureau urges the public to review this and the
other mortgage proposals identified above, including those previously published
by the Board, together. Such a review will ensure a more complete understanding
of the Bureau's overall approach and will foster more comprehensive and informed
public comment on the Bureau's several proposals, including provisions that may
have some relation to more than one rulemaking but are being proposed for
comment in only one of them."
Thus, the CFPB is urging credit unions and others to view all of the mortgage proposals together in order to understand the CFPB's approach for "a comprehensive regulatory scheme for mortgage credit."
The response in the joint letter is to strongly request that the CFPB publish a complete version of Regulation Z (i.e., as the regulation would be if all the
proposals were adopted):
there are several outstanding proposed rules making changes to Regulation
Z. These proposals cross-reference
provisions in each other, making it difficult to tell what each references and
what Regulation Z would look like if all of these proposals are finalized. In addition, there are conflicts among the
proposals. For example, the proposed
Ability to Repay rule would remove § 1026.35 because Dodd-Frank made it
obsolete, but the proposed HOEPA rule would retain it. We respectfully request that the CFPB publish
a single version of Regulation Z as it would be amended by all of the pending
rulemakings as soon as possible. This
would improve our ability to provide input that CFPB will need before the
comment periods close."
I don't think it is too much to ask that the CFPB provide a complete version of the proposed Regulation Z. Only with a complete version will credit unions be able to analyze and review the all the proposed changes together and provide substantive comments to the CFPB about how the proposals will impact their mortgage operations. ***
Have a great weekend! Posted by NAFCU on September 14, 2012 in CFPB, Reg Z | Permalink
NAFCU Study on Credit Unions’ Benefit to U.S. Economy; CFPB Credit Union Advisory Council
Yesterday, on the opening day of Congressional Caucus, NAFCU released a study on the “Economic Benefits of the Credit Union Tax Exemption to Consumers, Businesses and the U.S. Economy.” NAFCU commissioned the study to look at the benefits of the credit union federal tax exemption to consumers, businesses and the U.S. economy and to examine what would happen to the U.S. economy if the credit union federal income tax exemption is eliminated.
Eliminating the federal credit union tax exemption will reduce U.S. GDP by about $148 billion (in 2010 dollars) over the next decade ($14.8 billion per year); resulting in a loss of 150,000 jobs per year, or a total of 1.5 million jobs over the next decade.
The total benefit to U.S. consumers from the presence of the federal tax exemption for credit unions is approximately $10 billion per year. From 2005-2011, the direct consumer benefit totaled $72.6 billion. $1.5 billion per year in federal income tax revenue will be lost due to the reduction in consumers’ personal income as a result of the anticipated reduction in the number of credit unions in the marketplace. The authors of the study are Robert Feinberg Ph.D., professor of economics at American University, and Douglas Meade, Ph.D., director of research at Interindustry Economic Research Fund, Inc.
See NAFCU’s press release and NAFCU Today article for additional details. More information on the study and the credit union tax exemption can be found here, including a one-page summary of key findings as well as the full study.
CFPB Credit Union Advisory Council. The CFPB has announced the selection of 15 credit union representatives to its Credit Union Advisory Council. The council will provide feedback to the CFPB on its policy development, research, rulemaking and engagement functions. Those selected include NAFCU nominees John Buckley of Gerber FCU (Mich.), Mitch Klein of Police and Firemen FCU (Pa.), Camille Shillenn of Unified People’s CU (Wyo.) and David Wright of Services Center FCU (S.D.)
The CFPB also named its Community Bank Advisory Council members and members of the new Consumer Advisory Board. More information on the CFPB’s advisory groups is available here.
Posted by NAFCU on September 13, 2012 in CFPB, tax exemption | Permalink
FinCEN Webinars on E-Filing Process and Instructions for BSA Forms
FinCEN announced yesterday that it will be holding two upcoming informational webinars to discuss the BSA E-Filing process and filing instructions for the agency’s new Suspicious Activity Report (SAR), Currency Transaction Report (CTR) and Designation of Exempt Person (DOEP) forms. The webinar covering SARs will be held Tuesday, September 18, 2012 at 1:00pm ET. The second webinar on the CTR and DOEP forms will be held on Tuesday, October 2, 2012 at 1:00pm ET. FinCEN indicates agency representatives will provide an overview of the E-Filing process and filing instructions as well as FAQs on completing the forms during each webinar. FinCEN’s new forms are only available through the BSAE-Filing System. It is recommended that you review the new forms before the webinars for any specific questions you may have for discussion. The two webinars are meant for and oriented to personnel with BSA-related responsibilities. The agency indicates that space is also limited so you might want to go ahead and register for these sessions.
In addition, FinCEN released FIN-2012-G005. This guidance discusses the definition of motor vehicles, vessels, aircraft and farm equipment in relation to exempting cash transactions from the CTR requirement. The agency stresses that this is general guidance and serves as an informal guide of examples of the purchase or sale of motor vehicles, vessels, aircraft and farm equipment that fall within ineligible business activities for CTR exemptions. In case you were wondering, the list of examples include: jet skis, paddle boats, hang gliders, hot-air balloons, golf carts, snow mobiles, motorized skateboards and Segways.
Posted by NAFCU on September 12, 2012 in BSA | Permalink
NCUA Announces Free Town Hall Webinar; Archived Webinars
Yesterday, NCUA announced an October 4th Town Hall Webinar featuring NCUA Chairman Debbie Matz. Registration is free and available here.
The webinar will feature updates on:
Credit union industry performance
NCUA’s low-income credit union eligibility initiative
NCUA’s Regulatory Modernization Initiative
The corporate credit union resolution
The new Office of National Examinations and Supervision
Recently finalized and proposed rules
Credit unions are able to email question prior to the webinar by sending them to WebinarQuestions@ncua.gov. The subject line should read “Matz Town Hall Webinar.”
NCUA Archived Webinars. NCUA usually archives their prior webinars and the below may be of interest to your credit union if you missed them:
Webinar on the Central Liquidity Facility (which is combined with a webinar on the Low-Income Designation - which starts at the 1:03 mark). Loan Workouts, Loan Nonaccrual and Regulatory Reporting of Troubled Debt Restructuring
Consumer Compliance Outlook Archives. Yesterday was the SCRA webinar (slides are available here). Previous webinars covered the following:
Proposed Ability to Repay Standards for Mortgage Loans
NAFCU On-Demand Webcasts. In addition to the webinars above, NAFCU provides past webcasts for purchase "On Demand." Posted by NAFCU on September 11, 2012 | Permalink
The CFPB's Mortgage Servicing Proposals: 20 New Notices
20 Notices. If you are looking for an example of increased regulatory burden, you need not look any further than the CFPB's mortgage servicing proposed rules. The proposals, taken together, will require at least 20 notices by credit unions. Below I've included a listing of these proposed notices along with the proposed section number. Oh, and a majority of these notices have their own unique timing requirements. Of course, this is an unofficial number but it does give you an idea of the CFPB's mortgage proposal changes. Regulation Z
Rate Adjustment Notice - 1026.20(c)
Initial Rate Adjustment Notice - 1026.20(d)
Periodic Statement Requirement - 1026.41
Written Acknowledgment of Member's Notice of Error - 1024.35(d)
Response to Member's Notice of Error - 1024.35(e)
Notification to Member if Error is Excludable from Error Resolution Process - 1024.35(g)(2)
Written Acknowledgment of Member's Request for Information - 1024.36(c)
Response to Member's Request for Information - 1024.36(d)
Notification to Member if Information Request is Unreasonable - 1024.36(f)(2)
First Notice for Force-Placed Insurance - 1024.37(c)(2)
Version 1 - Reminder Notice for Force-Placed Insurance - 1024.37(d)(2)(i) Version 2 - Reminder Notice for Force-Placed Insurance - 1024.37(d)(2)(ii) Renewal Notices for Force-Placed Insurance - 1024.37(e) Provision of Member's Servicing File Upon Request - 1024.38(c)(2)
Oral Notice to Delinquent Borrowers - 1024.39(a)
Written Notice to Delinquent Borrowers - 1024.39(b) Notice to Member of Incomplete Loss Mitigation Application - 1024.41(b)(2)(ii)
Notice of the Decision on a Member's Loss Mitigation Application - 1024.41(c)(2)
Notice of the Decision on a Member's Appeal of the Initial Loss Mitigation Application - 1024.41(h)(4)
Notification to Other Servicers Holding Liens - 1024.41(j)
Wow - that is quite a few proposed notices for financial institutions who did not cause the financial crisis and who did not use servicing practices that lead to the National Mortgage Settlement. What About Small Servicers? The CFPB's own analysis in their discussion of the proposed periodic statement exemption indicates that small servicers have a completely different business model:
"Where small servicers already have incentives to
provide high levels of customer contact and information, the Bureau believes
that the circumstances may warrant exempting those servicers from complying
with the periodic statement requirement. In particular, small servicers that
make loans in their local communities and then either hold their loans in
portfolio or retain the servicing rights have incentives to maintain
“high-touch” customer service models. Affirmative communications with consumers
help such servicers (and their affiliates) to ensure loan performance, protect
their reputations in their communities, and market other consumer financial
products and services. Because those
servicers have a long-term relationship with the borrowers, their incentives
with regard to charging fees and other servicing practices may be more aligned
with borrower interests. These motivations to ensure a good relationship
incentivize good customer service, including making information about upcoming
payments, fees charged and payment history, and information for distressed
borrowers easily available to consumers by other means." (underlining added, italics in original).﻿
It would seem reasonable that the same rationale would apply to the other new notices proposed by the CFPB to correct the errors of large servicers. Comments Needed. If you are wondering what action your credit union can take, consider commenting on the proposed rules and letting the CFPB know how difficult it will be to comply with 20 new notice requirements. NAFCU members can view our Regulatory Alert here (12-EA-24), comments are due to NAFCU by September 18, 2012. If you comment directly to the CFPB, comments are due October 9, 2012. Posted by NAFCU on September 10, 2012 in CFPB, Dodd-Frank, Mortgage Servicing, Periodic Statements, Reg Z, Regulatory Burden, RESPA | Permalink
Tracking the CFPB's Mortgage Proposals - Federal Register
With the various mortgage proposals from the CFPB, I thought a good Friday blog post would be one that linked to the various proposals in the Federal Register so that credit unions had the proposed rules in one place.
Initially, here is a link to the CFPB's section of the Federal Register. Below are links to the CFPB's mortgage proposals.
High-Cost Mortgages and Housing Counseling Amendments Note: The comment period for the finance charge portion has been extended until November 6th. Equal Credit Opportunity Act (Regulation B) - Appraisals
Integrated Mortgage Disclosures under TILA/RESPA Note: The comment period for the finance charge portion was also extended until November 6th.
Loan Originator Compensation (Regulation Z)
Update (10/01): The Mortgage Servicing proposals can be found here (Reg Z) and here (Reg X). It doesn't appear that the Mortgage Servicing proposed rules have been published in the Federal Register yet (the comment period ends October 7th for those proposals). Those proposals can be found here: Reg Z and Reg X. Our August 23rd blog post also has a recap of our mortgage servicing blog posts to date.
NAFCU Seminar. We'll be discussing both of the Mortgage Servicing proposals as well as the TILA/RESPA Integrated Mortgage Disclosures in breakout sessions in Seattle (October 23-26th). We'll also be discussing the other proposals in our CFPB Update sessions. On-Demand Webcast. If you missed the 3-hour marathon webcast on Wednesday, you can still purchase the on-demand version in order to get a detailed update of the CFPB's proposals on mortgage servicing and high-cost mortgages (including the impact on HELOCs). I also provided an overview of the proposed Integrated Disclosures.
Football Season. I'll admit we've been a little slow on the football talk lately. With that being said: Go Blue!
Posted by NAFCU on September 07, 2012 in Appraisals, CFPB, Dodd-Frank, HOEPA, Lending, Loan Originator Compensation, Mortgage Servicing, Periodic Statements, Reg B, Reg Z, Regulatory Burden, Regulatory Compliance Seminar, RESPA, SAFE Act | Permalink
FinCEN Guidance on Mortgage Loan Fraud
FinCEN recently issued Advisory FIN-2012-A009 highlighting mortgage loan fraud activity when credit unions are filing Suspicious Activity Reports (SARs). A consolidation of information from previously issued agency reports, the advisory provides examples of common fraud schemes and potential “red flags” for mortgage loan fraud activity.
The advisory identifies and briefly describes nine types of mortgage loan fraud based upon descriptions from previously filed SARs or as identified by law enforcement including: occupancy fraud, income fraud, appraisal fraud, employment fraud, liability fraud, debt elimination schemes, foreclosure rescue scams, social security number fraud and other identity theft, and home equity conversion mortgage. In addition, FinCEN offers examples of possible red flag indications of fraudulent schemes related to mortgage fraud. However, the agency also cautions that these indicators should not be considered exhaustive nor should any single red flag be considered as definite proof of fraudulent activity. In fact, many of the provided examples could apply to multiple fraud schemes. FinCEN notes that a credit union must look at any red flag(s) in the context of other indicators and facts, and whether this might indicate the need for further due diligence or require a decision as to the filing of a SAR.
In completing a mortgage loan fraud activity SAR, credit unions should indicate the type of mortgage loan fraud by entering the appropriate code and providing a detailed description in the narrative. For activity that does not have a corresponding code, credit unions should identify “Other” and describe the activity in the narrative. And, where available, credit unions are requested to include in the SAR narrative portion, the Conference of State Bank Supervisors’ (CSBS) National Mortgage Licensing System and Registry (NMLS) assigned “NMLS Unique Identifier.” All in all, FinCEN’s Advisory FIN-2012-A009 contains good Bank Secrecy Act (BSA) compliance guidance for credit union mortgage loan originators. Posted by NAFCU on September 05, 2012 in BSA | Permalink
CFPB Extends Comment Period for Proposed Change to Finance Charge Definition
On Friday afternoon, the CFPB extended the comment period for the proposed change to the finance charge definition. Initially, the comment period was scheduled to close on Friday, September 7th. The extension will now allow public comments until November 6, 2012. The proposed change was part of the TILA/RESPA proposal and would also impact the HOEPA proposed rule (as the move to an all-in APR would impact the number of mortgage loans covered by HOEPA). The CFPB's notice includes formal extensions for both the TILA/RESPA proposal and the HOEPA proposal. Of note, the extension to November 6th aligns the finance charge comment period with the rest of the TILA/RESPA proposed rule - where comments are due for the full proposal by November 6th. However, the HOEPA proposal - except for the finance charge proposed change - will still have a comment deadline of Friday, September 7th. From the notice:
"The comment period for whether and how to account for the
implications of a more inclusive finance charge on the scope of HOEPA coverage,
see proposed § 1026.32(a)(l)(i) and (b)(1)(i), is extended to November 6,
2012. The comment period for all other
proposed amendments in that notice, which ends on September 7, 2012, is
Regulatory Alerts. NAFCU members can view our Regulatory Alerts on the
TILA/RESPA proposal (which includes a separate Alert for the finance charge
change), the HOEPA proposal and mortgage servicing proposed rules.
NAFCU Webcast on Mortgage Proposals. Don't forget, I'll be doing a special 3-hour webcast tomorrow on the CFPB's mortgage proposals. The presentation will focus heavily on the CFPB's mortgage servicing proposals (both the TILA and RESPA proposed changes) as well as the HOEPA changes. I'll also overview the TILA/RESPA rule - including a detailed discussion of the proposed change to the finance charge and how this change could impact credit unions (especially with relation to bringing more loans under the HOEPA protections). Additionally, I've done my best to highlight future headache areas. I'm sure there will be plenty of additional issues that will arise but I've tried to organize the webcast to put these topics "on your radar." Remember, the CFPB must finalize the mortgage servicing proposals and the HOEPA proposal by January 21, 2013. Posted by NAFCU on September 04, 2012 in CFPB, HOEPA, Reg Z | Permalink