NAFCU Compliance Blog

Qualified Mortgages; Flood; Compliance Monitor; Fair Lending Webinars

Written by Steve Van Beek

Below are just a few quick items for your Friday - have a great weekend!

Qualified Mortgages.  The Consumer Financial Protection Bureau has reopened the comment period for their Qualified Mortgage rule (also known as the Ability-to-Repay rule).  The new comment period ends on July 9, 2012.  It had been expected that the CFPB would finalize this rule in early 2012 but it kept getting pushed back - with good reason as this rule has the potential to significantly alter the mortgage market - and now looks like it will be late 2012 before a final rule.  Dodd-Frank requires the rule in place by January 2013.  The CFPB's notice regarding the extended comment period is here. 

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Flood.  A 2-month extension was passed and then signed by President Obama.  This extends the National Flood Insurance Program (NFIP) through July.

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NAFCU's Compliance Monitor.  Our June 2012 issue of NAFCU's Compliance Monitor is now available for download by NAFCU members.  This month the articles focus on Reporting Interest Payments to Nonresident Aliens as well as the increased Focus on Fair Lending.

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Fair Lending Webinars.  The Federal Reserve's Consumer Outlook Live series is hosting a June 21st webinar on 2010 Census Data - What it Means for CRA, HMDA and Fair Lending Compliance.  The webinar is free and follows on the heels of their November 2, 2011 - Fair Lending Issues and Hot Topics webinar (archived version available).   

The Federal Credit Union (TFCU) Magazine; Flood; NCUA Regulatory Review

Written by Steve Van Beek

A couple of weeks back, we highlighted the Compliance Central articles in past The Federal Credit Union magazine editions.  Well, NAFCU has recently updated and enhanced The Federal Credit Union and released a reader-friendly digital version.

To view the May/June issue of The Federal Credit Union go here and click on the image.  The digital version is interactive allowing you to click on a particular article and be taken directly to that page.  This month's issue includes articles on:

• The 55+ Advantage - How credit unions are leverageing opportunities with older Americans.
• In the Year 2022 - Are credit unions prepard for the mobile future?

This is in addition to the usual Compliance Central articles and views from NAFCU's President/CEO Fred Becker and NAFCU's Chair.  Again, the digital version is available here.  

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Flood.  The House seems on track to pass a flood insurance extension - providing an additional 60-days of coverage.  Something tells me we'll have similar stories and discussions in a few months on flood.  Additional information is available in the NAFCU Today.

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NCUA's Regulatory Review.  NAFCU has released its Regulatory Alert (12-EA-12) on NCUA's Annual Regulatory Review of its regulations.  Take a minute to analyze the regulations under review and send along your comments.  Now is the time to voice your comments and frustrations with the existing regulations.  And, by sending your comments to NAFCU - you can get your message to NCUA anonymously.  

More on Prepaids; NCUA Grants Available; NCUA on YouTube; Flood Insurance Update

Written by Steve Van Beek

Below are just a couple short items to help you ease into the upcoming long weekend.

CFPB ANPR on Prepaids.  The CFPB's ANPR was published today in the Federal Register.  Comments are due by July 23, 2012.  NAFCU members - our Regulatory Affairs team will have a Regulatory Alert out in the near future.

For more on prepaids, the CFPB's press release is here and Director Cordray's speech is here.  

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NCUA Grants and Loans.  Credit unions with a low-income designation might want to take a look at NCUA grants and loans through their Community Development Revolving Loan Fund (CDRLF).  NCUA has a YouTube video with additional details on the program.  

Importantly, NCUA has prioritized its 2012 grants for the following:

• Financial literacy and education in school branches;
• New product and service development;
• Staff, official, and board member training;
• Student and job creation internships; and
• Volunteer Income Tax Assistance. (emphasis added).

Additional information on the process can be found in Letter to Credit Unions 12-CU-04 and the Enclosure (which includes the grant guidelines).  

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NCUA's May Economic Update.  NCUA has a new Youtube video with their May 2012 Economic Update.  

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Flood Insurance.  The NAFCU Today has the latest on a possible Flood Insurance extension.  If you are interested in having the NAFCU Today emailed to you each day, you can sign up here.  The NAFCU Today is open to everyone who is interested.   

BSA Due Diligence ANPR; FFIEC IT Handbook; Flood Insurance Expiring Soon

Written by Steve Van Beek

FinCEN has extended the comment period for their Advanced Notice of Proposed Rulemaking (ANPR).  The comment period was scheduled to end on May 4th but FinCEN will accept comments for an additional 30 days.

NAFCU's comment letter has already been submitted and can be found here.  I particularly enjoyed this section which discusses FinCEN's weak cost-benefit analysis.   

"Further, NAFCU believes that this rulemaking is representative of exactly the type of regulation that President Obama sought to address in two executive orders, both issued in 2011, establishing a reasonable, but firm, standards that both executive and independent agencies should meet before issuing regulations.  Executive Orders 13563 and 13579 specifically direct executive and independent agencies to conduct careful analysis of the likely consequences of regulation, including the cost and benefits.  The ANPR places far too much weight on the benefits of having a standard regime across regulated institutions, and offers very little discussion, let alone much weight, to the cost that many institutions would bear.    

The Executive Orders also direct agencies to ensure regulations promote economic growth, innovation, competitiveness and job creation.  The ANPR would achieve none of these goals.  In fact, these goals would be undermined as the proposal would force credit unions to devote more financial and human capital to regulatory compliance rather than to lending and other products and services."

If you missed it earlier, be sure to check out this NAFCU Compliance Blog post which roundups up recent BSA changes and future changes.  

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IT Exam Handbook.  The FFIEC announced recent updates to their IT Examination Handbook.  They have also added a "What's New" page that will track changes in between formal updates.  This page also includes a Change Log that might be useful.

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Flood Insurance.  The latest temporary Band-Aids for the National Flood Insurance Program (NFIP) are set to come off May 31st.  Congress needs to act soon to prevent a lapse in flood insurance coverage.  NAFCU has been pushing for a long-term extension as well as urging Congress to act prior to lapse.  For more, see this Joint Letter sent to the Senate yesterday.  

In June 2010, NCUA issued Letter to Credit Unions 10-CU-08 which addresses issues related to flood insurance lapses.  This Letter and the Enclosure might be good ones to keep handy as May rolls along.  

Updated Agency Contact Information - Credit Card Disclosures & FEMA Notices

Written by Bernadette Clair, Regulatory Compliance Counsel

Today, we'll continue with the updated Agency information that we started yesterday.   

Credit Card Applications and Solicitations; Account Opening Disclosures.  Last but not least, credit unions need to update references to the Federal Reserve’s website on credit card applications and solicitations provided under12 CFR 1026.60 and credit card account opening disclosures provided under 12 CFR 1026.6(b)(2)(xiv) to refer to the CFPB and the CFPB’s website.

• For a visual example of the change, here is the CFPB's G-10(B) Model Form from Appendix G of Section 1026.  See the section "For Credit Card Tips from the Consumer Financial Protection Bureau."

For more detailed discussion on this particular change, see our January 10, 2012 blog post.

When must credit unions make these changes?  January 1, 2013 is the deadline for all of these updates.  If you haven’t already updated your forms, it’s never too early to start since even the smallest changes can take time. Plus, it always feels good to check something off the list!

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Updated Address for Obtaining the Standard Flood Hazard Determination Form

Since we’re on the subject of address changes, NCUA’s recent technical amendments rule changed the address credit unions can use to obtain a copy of FEMA’s Special Flood Hazard Determination Form.  The address, found in 12 CFR 760.6(a) has been changed from FEMA’s mailing address to FEMA’s website, http://www.fema.gov/.  

Hat tip to Joyce for pointing this one out!

This rule also contains a couple of other technical changes – we blogged about one of these – the changes to the Equal Housing Lending Poster – back on March 22^nd.

NCUA Webinar with Richard Cordray; Consumer Compliance Outlook; NAFCU Compliance Monitor

Written by Steve Van Beek

NCUA Town Hall Webinar.  Yesterday, NCUA announced it would host a February 8th town hall webinar that will include Richard Cordray, Director of the CFPB.  The webinar is free, but you do need to sign-up.    

Consumer Compliance Outlook.  The 4th Quarter issue of Consumer Compliance Outlook has been released by the Philadelphia Federal Reserve.  This issue includes the two articles below that might be useful:

• Flood Insurance Compliance Requirements
• Servicemembers Civil Relief Act - Compliance Update 

January Compliance Monitor.  The January 2012 Compliance Monitor is now available for NAFCU members.  This month's issue features Tips for Conducting a SAFE Act Audit and an Overview of the CFPB's Streamlining Initiative.

NAFCU Members: If you'd like to receive an email each month when the Compliance Monitor is available, simply email us at compliance@nafcu.org and we'll get you added to the email subscription list.   

Fair Lending Webinar; Flood FAQs

Written by Steve Van Beek

It was one of those weekends - Michigan, the Tigers and the Lions lose.    

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The Philadelphia Federal Reserve's Consumer Compliance Outlook Live will host a November 2, 2011 webinar on Fair Lending and Hot Topics.  The webinar will include a discussion by the Non-Discrimination Working Group of the Financial Fraud Enforcement Task Force.  From the invitation:

"The Financial Fraud Enforcement Task Force was created by President Obama in November 2009 and is the largest coalition whose purpose is to confront financial fraud relating to the financial crisis. The Task Force has a five-part mission, one of which is to address discrimination in the lending and financial markets.

The Non-Discrimination Working Group focuses on financial fraud and unfair practices directed at people or neighborhoods based on race, color, religion, national origin, sex, age, disability, or any other basis prohibited by law. The Working Group is chaired by representatives of the Department of Justice, the Department of Housing and Urban Development, the Federal Reserve Board, and the Attorney General of Illinois on behalf of the State Attorneys General."

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On Friday, the Agencies (including NCUA) issued guidance that updates Interagency Q&As for Flood Insurance.  The guidance finalized two Q&As and requested comment on three additional Q&As.  

The full notice can be found here.

OCC ODP Proposed Guidance; CFPB; NFIP

Written by Sarah Loats Zimmermann

OCC ODP proposed guidance. Another federal agency is jumping on the ODP guidance bandwagon. The OCC issued proposed supervisory guidance last week. This guidance, if finalized, would not apply to credit unions, but for those of you following the ODP guidance issue, it's one more sign of the times.  Reviewing the OCC's proposed guidance, it doesn't appear to have specific guidelines. For example, in relation to consumer usage of ODP, the OCC proposed guidance suggests that banks should establish prudent limitations and monitor accounts for excessive usage; however, it does not indicate a specific limitation (the FDIC's guidance states that if a consumer overdraws an account 6 times where a fee is charged in a 12-month period, the bank should contact the consumer to discuss less costly alternatives). It does however list several ODP practices it is concerned with, including excessive reliance on ODP fee income, lack of responsible limits on customer costs and usage, and failure to monitor promotional practices for potentially misleading statements. Again, this guidance wouldn't apply to credit unions, but you may want to keep it in the back of your minds when discussing your own ODP programs.

CFPB. Elizabeth Vale is the Assistant Director for Community Banks and Credit Unions at the CFPB (so, an important person for us). Yesterday, she blogged about the outreach the CFPB has made to community banks and credit unions regarding the inital proposed TILA/RESPA combined forms.

Flood. Last week, the Senate Banking Committee held a hearing on the reauthorization of the NFIP program. As you may know, the program is set to expire on September 30 this year, so Congress will need to reauthorize the NFIP before then in order to avoid another lapse. 

NCUA's Office of Consumer Protection; Compliance GPS

Written by Steve Van Beek

I have focused quite a bit recently on the role and authority of the CFPB.  While the CFPB will have rulewriting authority that will impact all credit unions, NCUA will remain the primary examiner for federal credit unions with less than $10 billion in assets.

The new CFPB has been generating tremendous amounts of press coverage.  I have a feeling this will only intensify when the CFPB starts writing and enforcing regulations.  Financial journalists and consumer groups will write articles detailing the practices the CFPB is focusing on.  This will spark an uptick in consumer and member complaints.  For example, if the CFPB hints that a practice might be "unfair or deceptive," any institution involved in that practice will face reputation risk and will need to examine its practices.    

One thing to keep in mind is that NCUA will handle member complaints for credit unions under $10 billion in assets.  Any complaints the CFPB receives for credit unions below this threshold will be passed on to NCUA.  Those complaints will be handled by NCUA's Office of Consumer Protection - an office recently created by NCUA to focus on consumer compliance issues.

Unfortunately, we do not have a good idea of how NCUA's Office of Consumer Protection will handle these complaints and the processes it will use to communicate issues with credit unions.  On Monday, NAFCU sent a comment letter to NCUA seeking transparency regarding the new office and asking NCUA to, at a minimum, release a Letter to Credit Unions outlining the Office's functions and expected policies and processes in order for credit unions to be prepared.

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Shameless Plug:  NAFCU has a new Credit Union Compliance GPS manual available.  The manual is electronic and includes numerous links to legal opinion letters, guidance documents, and the regulations themselves.  

You can take a peek at the table of contents as well.  We have chapters on the E-SIGN Act, Share Insurance, How to Conduct Research and many more.  The manual is available for purchase by anyone seeking to know more about compliance issues facing credit unions.  

Have a great weekend!      

Material Loss Review; CFPB and Mortgage Forms; Help from Others

Posted by Anthony Demangone

Happy Wednesday, folks. 

Material Loss review. Recently, NCUA's Office of Inspector General released a material loss review for Members United Corporate Federal Credit Union.  The report noted that a general lack of proper oversight on the part of the credit unions management team and board greatly contributed to the credit union's conservatorship by NCUA.  If you deal with board issues, this is a must read.  It underscores the importance of good corporate governance and risk management. 

CFPB and Mortgage Forms.  Elizabeth Warren has stated again and again that one of the CFPB's first priorities will be to reconfigure mortgage-related disclosures. Well, she wasn't kidding.   That link takes you to the CFPB website that discusses that particular "project." 

Help from others.  

• The FEMA Flood Insurance Manual has been updated, effective May 1.  
• The OCC has issued a bulletin regarding  updated SCRA exam procedures, and another regarding Protecting Tenants at Foreclosure Act of 2009 exam procedures. 
• The OTS issued this bulletin, which updates their Reg Z procedures. 

Bliss. And yesterday marked my third anniversary with my lovely wife, Mandy. Here's my favorite picture from that day: