NAFCU Compliance Blog

Risk-Based Pricing Notice Final Rule!!!; HMDA Asset-Size Exemption

Posted by Anthony Demangone

I'm assuming many of you have attended a high school reunion.  At every reunion I've attended, the following takes place.  An unexpected classmate walks in the door, and every jaw in the joint drops. That happened yesterday to me, in a compliance-sort of way.

Door creaks open. (Enter the final rule for Risk-Based Pricing Notices.)
Anthony: Holy cow!  Where have you been?  We've lost touch.  What has it been....4 years?!

Yes, the long-awaited final rule for risk-based pricing notices has finally arrived.

The Federal Reserve Board and the Federal Trade Commission today announced final rules that generally require a creditor to provide a consumer with a notice when, based on the consumer's credit report, the creditor provides credit to the consumer on less favorable terms than it provides to other consumers. Consumers who receive this "risk-based pricing" notice will be able to obtain a free credit report to check the accuracy of the report.

Risk-based pricing refers to the practice of setting or adjusting the price and other terms of credit provided to a particular consumer based on the consumer's creditworthiness. The final rules provide creditors with several methods for determining which consumers must receive risk-based pricing notices.
    
As an alternative to providing risk-based pricing notices, the final rules permit creditors to provide consumers who apply for credit with a free credit score and information about their score. Today, most consumers must pay a fee to obtain their credit score.

Compliance date?  July 1, 2010.  Just kidding!  The rule becomes effective on January 1, 2011. 

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The HMDA asset-size exemption remains unchanged at $39 million for 2010.

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NAFCU's offices are closed today and tomorrow.  We'll get back at it on Monday.  Happy Holidays, everyone.

Grab Bag

Posted by Anthony Demangone

While the proposed changes to Regulation Z have grabbed our attention, other compliance issues continue to come up.  With that in mind, here are a few things that have happened recently that I wanted to mention.  We'll get back to Reg Z tomorrow.

• Everyone continues to ask HUD to delay implementation of its RESPA rule, due to take affect January 1, 2010.  RESPA keeps saying, thanks, but no thanks.

• The CFPA debate continues to rage on the Hill.  The latest development?  An amendment that would exempt credit unions under $1.5 billion in assets.  Stay tuned.

• The Fed continues its check processing restructuring.  Yesterday, the Fed issued a final rule to implement recent changes.  In this notice, I saw something of note.  The Fed gave us a heads up that they'll need to tinker with Reg CC's rules.  I'm not sure what those changes will look like, but here's why they'll need the changes.  Due to the consolidation of check processing centers, next year at some point...all checks will be considered local. 

• OTS issued a CEO memorandum that does a great job of summarizing how the recently enacted HOEPA rules affect HMDA reporting.  In short, OTS has amended their HMDA examination procedures, and this CEO memo addresses those changes.  It is a concise, clear overview.

• The revised model privacy form is coming. Soon.

• FinCEN has released the latest issue of its SAR Activity Review, Trends, Tips and Issues.   This document is a BSA goldmine.  In this issue, there's an article on SAR completion tips from law enforcement and another on how to avoid errors in SAR filings.

• Also, we hear that FinCEN is planning to release its rule to put stored value cards under its BSA requirements in February.

There. That's more than enough for a Monday.

Frequently-Asked-Questions

Posted by Steve Van Beek

Welcome back, we hope everyone had a peaceful, long weekend.

It seems appropriate to ease back into the week with a softer blog posting.  One of the great aspects about this blog is the ability to store research documents online in one place.  Often times, we are able to point NAFCU-members to information that we have already written on the blog.  Regulators do the same with frequently-asked-questions (FAQs) documents.  

Here is one of my favorites from the FFIEC website on HMDA FAQs - which covers both regulatory and technical questions.  Also, this blog has a category of "FAQs" that you can look through.  Also, this post has numerous FAQ documents organized by topic.  Sometimes the first place to look is if the regulators have specifically addressed your question before.  

Share Insurance Protection Extension; HMDA, Getting It Right!

It's official, the $250,000 share insurance protection level has been extended until the end of 2013.  Read NCUA's presser on the development here. (Technically, it was official when President Obama recently signed legislation into law.)  But some folks like to see the NCUA logo on the announcement.   Members, for example.

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The FFIEC has updated their HMDA, Getting It Right! Manual.  Access it here.  If you want to know what changed, check out this document.  A few thoughts about this manual.

• This manual is an example of good guidance.  It is updated regularly.  It provides visual charts, plain English explanations, the reg itself, and model forms.  If I ever meet the person who decided to create this manual, I'll buy him or her lunch.
• If you deal with HMDA/Reg C - this manual is a must read.  When I get a question about HMDA, it is the first place I look.

NCUA Board Meeting Agenda Available; HMDA Regulatory Alert

NCUA has released the agenda for this Thursday's NCUA Board meeting.  You can access it here.

Here's what they are going to cover:

1. Proposed Rule - Section 701.6 of NCUA's Rules and Regulations, Operating Fee Calculation.
2. Final Rule – Section 740.4 of NCUA's Rules and Regulations, Requirements for the Official Sign.
3. Insurance Fund Report.

Materials for the board meeting will be available Thursday morning.

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NCUA has released Regulatory Alert 09-RA-03.  The alert is designed to provide a general overview of HMDA requirements in light of the approaching HMDA filing deadline.  Here's a snippet:

NCUA anticipates every credit union that is required to report 2008 HMDA data will provide a readable transmission file to the FRB by the March 2, 2009 deadline. Following March 2, the FRB will provide a list of delinquent filers to NCUA. Credit unions appearing on this list could become subject to civil money penalty assessments.

Odds and Ends

Here are a few things that were kicking around my in-box.

• NCUA has posted Regulatory Alert 09-RA-02to alert credit unions to the new HMDA asset-size exemption threshold.  (Say that 5 times quickly.) 
• NCUA has posted Letter to Federal Credit Union 09-FCU-03 to alert us that the membership data collection process began with examinations that began in 2009.
• Bank of America has settle a lawsuit regarding its overdraft protection program.  To the tune of $35 million.  If your credit union offers such a program, I'd give this a read.

• NCUA has posted Regulatory Alert 09-RA-01 to alert credit unions to the new Standard Flood Hazard Determination Form.

• NAFCU has a webcast scheduled next month to address HUD's final rule that amends RESPA.  Read all about it here.

Ho, Ho, HMDA

Last week, the FFIEC published its annual HMDA Newsletter.  Access it here.  The newsletter is a great resource for the individual at your credit union who is in charge of reporting HMDA data.  It addresses recent changes, and it lists a number of valuable resources. 

As a reminder, Reg C's threshold exemption has been bumped to $39 million.

Thus, depository institutions with assets of $39 million or less as of December 31, 2008, are exempt from collecting data in 2009.

Other HMDA resources are:

• The FFIEC HMDA Webpage.

• Regulation C.

This and That; The Cookbook!

Posted by Anthony Demangone

My head is still spinning from last week.  Here's a little of this, and a little of that.  

• Note that on Thusday, the Fed issued a final rule to amend Regulation DD.  That's the bank version of Truth in Savings.  The changes take affect January 1, 2010, and they address overdraft protection programs.  NCUA has its own Truth in Savings reg, and I fully expect NCUA to follow suit quickly.  Here's a link to the final Reg DD rule.  What will it do?   It will require all depository institutions to disclose aggregate overdraft fees on periodic statements, and not solely institutions that promote the payment of overdrafts. The final rule also addresses balance disclosures provided to consumers through automated systems.
• NCUA has extended the CU Harp Deadline to December 29, 2008.  I thought the original deadline seemed a bit rushed.  I guess someone else agreed with me.

• On Thursday, the Fed announced its annual asset size bump for Reg C (HMDA.)  Credit unions with assets of $39 million or less as of December 31, 2008, are exempt from collecting data in 2009.

• The FDIC released the Winter 2008 issue of Supervisory Insights.   This is good reading.  This issue talks aobut liquidity risk (timely, eh?), reverse mortgages, and a discussion of "unfair and dececptive acts and practices." 

• NCUA issued Letter to Credit Unions 08-CU-25.  The guidance addresses holding foreclosed properties as Foreclosed and Repossessed Assets.  (Unfortunately, this is timely as well.) 

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Download Holiday Recipes!  The previous link takes you to the first annual, NAFCU Holiday Treats and Assorted Diet Busters Compliance Guide.  Enjoy, enjoy!  And many thanks for those who shared their wonderful recipes.

Frequently Asked Questions; delicious

Anthony has mentioned the value of Frequently-Asked-Questions documents in past blog postings here and here.  These documents can help compliance officers weave through convoluted regulations and find answers to common issues.  Here are a few that I've found useful in the past: 

Bank Secrecy Act

Anti-Money Laundering Compliance FAQs

FinCEN Answers to FAQs on BSA

FAQs on Final CIP Rule - February 2004

FAQs on Final CIP Rule - May 2005

FAQs Relating to BSA and Hurricane Katrina

OFAC

OFAC Q&As Prepared by Treasury

Privacy

FAQs on the Privacy Regulation

Share Insurance

FAQs from NCUA's October 7, 2008 Webinar on Share Insurance Changes

NCUA's FAQs on NCUSIF and Share Insurance

HMDA

FAQs on Regulation C (HMDA Reporting)

RESPA

FAQs on RESPA for Industry

Appraisals

FAQs on Appraisal Regulation and Interagency Statement*

*Note:  The Agencies recently announced a proposal to replace this interagency statement.

Third Party Due Diligence

FAQs from NCUA's January 29, 2008 Webinar on Third-Party Relationships

Flood Insurance

2008 Proposal on Interagency Q&As on Flood Insurance (would replace 1997 Q&As)

1997 Interagency Q&As on Flood Insurance

Servicemembers Civil Relief Act (SCRA)

HUD's Q&As for Lenders Regarding SCRA

Judge's Guide to SCRA - including Q&As

Health Savings Accounts

Q&As on Health Savings Accounts - IRS Notice 2004-50

Q&As on Health Savings Accounts - IRS Notice 2008-59

Check 21 Act

Consumers FAQs on Check 21

FAQs for Financial Institutions on Check 21

Check 21 FAQs on Financial Institutions Requirements - from ABA

Accounting for Loan and Lease Losses (ALLL)

Questions and Answers on Accounting for Loan and Lease Losses

Online Banking

FFIEC Guidance on Authentication in an Internet Banking Environment

Savings Bonds

FAQs on Savings Bonds

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You never know when these FAQ's will come in handy.  That is why I have mine bookmarked on my delicious page.

If you are wondering what delicious is, take a look at the user guide and slides I prepared for a talk on Organizing the Compliance Information Flow at NAFCU's 2008 Regulatory Seminar.

If you know of other valuable FAQ documents, please let us know by adding a comment to this post. 

NCUA on the CLF; Reg C

Yesterday, NCUA released Letter to Credit Union 08-CU-23.  The letter urges credit unions to consider the Central Liquidity Facility should they need help meeting their liquidity needs.  Need more info on the CLF after you read the letter?  Visit NCUA's Central Liquidity Facility homepage.  It is chock full of good information. 

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Yesterday, the Fed issued a final regulation to amend Regulation C.    The changes put into effect changes regarding higher priced mortgage loans.  Read all about it here.

Regulation C currently requires lenders to collect and report the spread between the annual percentage rate (APR) on a mortgage loan and the yield on a Treasury security of comparable maturity if the spread is greater than 3.0 percentage points for a first lien loan or greater than 5.0 percentage points for a subordinate lien loan.  This difference is known as a rate spread. Under the final rule, a lender will report the spread between the loan's APR and a survey-based estimate of APRs currently offered on prime mortgages of a comparable type ("average prime offer rate") if the spread is equal to or greater than 1.5 percentage points for a first lien loan or equal to or greater than 3.5 percentage points for a subordinate-lien loan.  The Board will publish average prime offer rates based on the Primary Mortgage Market Survey® currently published by Freddie Mac.  The Board will conduct its own survey if it becomes appropriate or necessary to do so.

The changes take effect October 1, 2009.