NAFCU Compliance Blog

Did You Know?; Compliance Central; NCCO; Life is a Zoo

Written by Steve Van Beek

Did you know?  Each issue of NAFCU's The Federal Credit Union features a Compliance Central article from NAFCU staff.  Below are a few of the recent articles:

• March/April 2012:  A Closer Look at the CFPB
• January/February 2012:  A Look Down the 2012 Compliance Pike
• November/December 2011:  The CFPB, NAFCU and You
• September/October 2011:  Writing Effective Comment Letters

The Compliance Central is just one part of The Federal Credit Union.  You can see much more here.  

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NCCO.  And, a special "shout out" to Katey Proefke - Assistant Vice President of Compliance at Chevron FCU.  Katey was featured in the March/April 2012 Getting to Know... article where she listed these goals:

"What’s your next professional goal?

My next professional goal is to become a NAFCU Certified Compliance Officer. I am also working on creating an enterprise risk management “think tank” comprised of other credit union professionals and would like to eventually head up a risk management team."

Katey called very excited yesterday to inform me she had successfully passed all her NCCO exams and was officially an NCCO!  And, she has already had a couple of meetings with other professionals on enterprise risk management.  Great job Katey!

Full disclosure:  I have promised Katey that her first beer is on me at NAFCU's Regulatory Compliance Seminar in Seattle.  If you are a NCCO (or thinking about becoming one) - please consider joining us for both Seminar and the beer.  

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Life is a Zoo.  It has been a bit since the last "married life" update - we just hit the six-month mark a couple weeks and it seems to have flown by.  We had family in town the past two weekends and had a chance to slow down - including a visit to the National Zoo.  

Have a great weekend!

Ask CFPB; Reg School; New MBL Bill; 5 Months

Written by Steve Van Beek

A couple of items for Monday morning.

Ask CFPB.  The CFPB announced a new initiative - Ask CFPB - which includes answers to over 350 common questions from consumers (mostly on credit cards and mortgages for now).  The CFPB's blog post is here and the press release is here.

For a split second I thought the CFPB might have taken a step to help regulated entities understand the confusing regulatory requirements.  Alas, we'll keep plowing through piles of cross-references and staff commentary to find the actual requirements. 

Regulatory Compliance School.  We had a great crowd at Reg School with over 150 attendees and 90 of those taking their NAFCU Certified Compliance Officer (NCCO) exams.  Here are a couple of NAFCU Today stories on School:  March 20 (with photo) and March 26.

For those who took the NCCO exams, we hope to have the results to you by the end of this week.  

MBL in Senate.  The Small Business Lending Enhancement Act was reintroduced in the Senate last week as S. 2331.  The new bill is identical to S. 509 but was reintroduced due to procedural reasons which might allow a vote in a shorter period of time.  The NAFCU Today has news stories from last Thursday and Today.    

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Last Friday marked 5 months since our wedding.  I wanted to put together a "Top 5 Things I've Learned" list but it really just comes down to one thing:  Happy Wife, Happy Life.

Regulatory Compliance School; NCUA Board Meeting & NCUA Report; Division 3 Update

Written by Steve Van Beek

Just wanted to provide a short note regarding next week.  

Reg School.  NAFCU's Regulatory Compliance School takes place next week.  Our Compliance Team will be in and out of the office next week giving presentations, so please bear with us as our response times will be a little longer than normal.  The blog will continue as usual.  

Study Guide & GPS.  For those attending school next week, we've put together a handy Study Guide to help if you will be taking the exams to obtain your NAFCU Certified Compliance Officer (NCCO) designation.  Additionally, be sure to download your version of the Updated 2012 NAFCU Credit Union Compliance GPS (you will also receive a hard copy of the GPS at School).

Note:  For those not attending Compliance School, the Updated GPS will be available for purchase very shortly.  Blog readers will be the first to know when the Updated GPS is available.    

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NCUA Board Meeting.  Late yesterday, NCUA announced their agenda for next Thursday's NCUA Board Meeting.  You can find the agenda here.

NCUA Report.  NCUA also released their March 2012 issue of the NCUA Report.  This looks to be a good one to read, here is what is discussed:

• Chairman Matz's Corner: CFPB Director Cordray Answers Key Questions on NCUA Webinar 
• Building Wealth and Deposits: An Opportunity for Credit Unions – Individual Development Accounts, Part II
• Board Perspective: Interest Rate Risk Policy and Program
• Board Perspective: The Rites of Spring
• Understanding Credit Union Indirect Lending Programs
• Elements of an Effective Member Business Lending Program
• Trends in Member Complaints and Consumer Inquiries

Quite a few of those look like good reads.  Be sure to pass those along to others at your credit union who might be interested.  

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A quick update on the potential Division 3 basketball matchup between Hope College (my alma mater) and the College of Wooster (my wife's alma mater).  Wooster held up their end of the bargain but Hope fell in double-overtime.

I was really hoping for this matchup as I thought it would be a lot of fun.  I can't say the same about my wife.  Wooster's game finished a good half hour before Hope finally lost.  She spent the majority of that time on the phone with her Dad - who works at the College of Wooster - discussing the potential matchup and rooting against Hope.  As she so elegantly stated it:  "I want Wooster to win and that means Hope needs to lose, so be it."   

Streamlining Tool; Maturity Limits & Regulatory Review; March Madness

Written by Steve Van Beek

The CFPB's overdraft inquiry (more on this tomorrow) pushed back a couple of items I wanted to discuss.

CFPB's Streamlining Tool.  A couple of weeks ago, the CFPB announced their web-based streamlining tool.  If your credit union has one or two issues you'd like to raise - this is a good format as you wouldn't need to send a formal comment letter.  The web-based streamlining tool is here.

NCUA Opinion Letter.  In mid-February, NCUA made public an Opinion Letter on maturity limits for modified mortgage loans.  The letter is very detailed and includes examples.  The letter is also hard to summarize.  The best approach is to review the complete letter - 11-0903.

NCUA's Reg Review.  The letter interprets 12 C.F.R. 701.21(g) which is one of the sections under NCUA's current regulatory review.  This looks like a perfect place for NCUA to provide clarity in the regulation rather than requiring credit unions to:

• Know the existence of this legal opinion letter;
• Be able to find this opinion letter;
• Properly understand the complicated letter; and 
• Ensure the legal opinion letter has not been superseded by another interpretation by NCUA.

By incorporating this letter into NCUA's regulations, NCUA would help credit unions and those working with credit unions find NCUA's interpretation for the maturity limits for modified mortgage loans.  It may seem counterintuitive, but incorporating the letter into the regulation eases the regulatory burden on credit unions.  

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The language of the letter indicates NCUA has received multiple requests on the same issue.  There are undoubtedly numerous other credit unions who have had the same questions and concerns who may not have taken the formal approach of reaching out to NCUA.  

One of the things about guidance is that it exists somewhere on the internet.  With NCUA's recent approach to look at rules that are "outmoded, ineffective, insufficient or excessively burdensome", this opportunity is served up on a silver platter as NCUA could ensure its opinion was clear and easy for credit unions to find and understand by amending 12 C.F.R. 701.21(g) to reflect their interpretation on maturity limits for loan modifications.  

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March Madness - D3 Edition.  March Madness usually starts a bit early in the Van Beek household as both my wife and I went to Division 3 schools.  She went to the College of Wooster in Ohio and I went to Hope College in Michigan.  Well, the Division 3 brackets were just announced and there is a possibility our alma maters could be facing off next Friday.  Each team would need to win two games but both teams are hosting their games this weekend.  And, both teams have a pretty good pedigree as Wooster finished runner-up for the championship last year and Hope is currently ranked #1 (you can find Wooster way down at #15).

Blog Readers:  If your teams are in - let's hear about your rooting interests in the blog comments (click the title of the blog post to go to the blog itself).  The full bracket can be found here.      

Use the Blog as a Resource Tool; Speed Trap

Written by Steve Van Beek

We know a majority of the daily blog readers receive the daily blog postings via email delivery.  However, don't forget about using the blog as a resource tool as well.  We all remember we saw a certain blog post - but can we find it when we need to share with a colleague?  

Here are three quick ways to find past blog postings on particular topics.

• Use the Blog's Search Function.  On the blog's main page, there is a search box in the upper-left corner which allows you to search for specific terms in past blog postings.  One of the drawbacks is the search results are by relevance rather than being listed chronologically.  So, if you are looking for the latest on Richard Cordray at the CFPB you might want to follow one of the other options below.

• View the Blogs Archives.  Each blog post that we do is archived.  The blog archives allow you to pinpoint a particular blog post - if you know the date of the post.  Perhaps you printed out the January 30, 2012 blog post on the Network Exclusivity Requirements from the Durbin Amendment but you want to find the original so that you can access the hyperlinks.  Using the Archives allows you to find blog posts by date which will allow you to find all the January 2012 blog posts.  Also very useful if you were out of the office for a period of time and want to play catch-up.

• Browse Blog Postings by Category.  Each day we attach "tags" or "categories" to our blog posts.  These tags allow you to view blog postings by topic.  You can find our various categories on the right-hand side of the blog's main page (just below the legal disclaimer).  If you are looking for the latest blog posts on the ADA or Remittances, browsing by category is a great starting point.    

For example, today's blog post includes tags of "Research," "Weblogs,""Meta - Blog," and "Married Life."

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It has been over 100 days of marriage for me and my beautiful wife.  We've kept pretty busy but it has been a fun time with new experiences - like "joint" expenses.  I use the term "joint" for reasons described below.

A couple of weeks after the holidays we received an envelope in the mail from:  Metropolitan Police Department, District of Columbia.  The dreaded speeding ticket from DC's "Automated Speed Enforcement."  

There was just one issue: we didn't know who was driving!

While there is some discrepancy as to who is the better driver - my wife, somehow, has a perfect driving record.  I do not.  So I'm sure you could imagine the twinkle in my eye when I thought for a brief second that this was her time.

Unfortunately, it was my time....again.  The timestamp on the photo clearly pinned me as the driver.  My wife's response was immediate:  "And you're paying the ticket too!"  So much for joint expenses.... 

Have a great weekend!

Wedding Weekend; Seminar Week

Written by Steve Van Beek

The 13 months of planning were worth it!  Erin and I had a wonderful weekend with family and friends in Ohio.  Here are a couple of quick photos from Saturday.  

(To get the full effect of the 2nd photo - listen to the intro of "Long Cool Woman in a Black Dress.")

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I know quite a few of you figured out the timeline:  the wedding fell awfully close to our Compliance Seminar.  The result is spending my first week as a married man away from my wife.  Luckily, I have a very understanding wife!

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NAFCU-members:  Sarah and I will both be down at Compliance Seminar all week - so the best way to get in touch with us (unless you're in Orlando!) is to send an email to:  compliance@nafcu.org  

We will do our best (along with help from our outstanding Regulatory Affairs team), but there will be a delay from our normal response time.  

Dodd-Frank's Impact on Small Institutions; Guest Bloggers

Written by Steve Van Beek

Given the prospect of changes to mortgage regulation in 2012 that we blogged about yesterday, (and perhaps changes to checking accounts), it was interesting to see Neil Wolin, Deputy Treasury Secretary, claim that Dodd-Frank is not hurting small banks.

Politico.com covered the story here.

I'd like to add my two cents:  Just because other institutions are hurt more doesn't mean that small banks and credit unions are not hurt when new regulations are written and existing regulations are constantly changed and tweaked.

In other words, if a large bank needs to read and comply with 12 new regulations - that doesn't alleviate the burden placed on a smaller institution of having to read, interpret and comply with 5 new regulations.  

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Over the next couple of weeks, we will have a few guest bloggers from other divisions at NAFCU that we hope you find useful and informative.  

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I'm off to Ohio tonight for a weekend that I'll remember for the rest of my life.  Thank you again for the all the wedding wishes! 

MBL Testimony; Repealing Durbin; State of CU Industry; Best Practices

Written by Steve Van Beek

Below are just a couple of items for your Friday.  

NAFCU Today has a detailed recap of Wednesday's testimony on H.R. 1418 - a bill to increase the credit union member business lending cap.

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On Wednesday, Rep. Jason Chaffetz (R-UT) and Rep. Owens (D-NY) introduced H.R. 3156 which would repeal the Durbin Amendment.  NAFCU Today has additional information on this first step of an uphill climb.

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NCUA issued Letter to Credit Unions 11-CU-16 which discusses the State of the Credit Union Industry and includes Financial Trends.  Included in the Letter is this information:

"While overall loan growth remains relatively flat, historically low-rate first mortgage real estate loans continue to grow.  This trend could impact credit unions’ future earnings potential.  Accordingly, NCUA is focusing supervisory efforts on credit unions with elevated levels of credit, interest rate, concentration, and strategic risk." 

NCUA follows this language with additional details on each of these risks that is worth taking a look at.  

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I wanted to thank everyone for the great advice as the Wedding Day approaches (currently in the single digits at 8 days!!)

I also wanted to share my own advice to those who may be in a similar situation now or in the future:

• Try not to move within 30 days of the wedding - especially when your move date coincides with the RSVP response date.  The USPS might be pushing their mail service reliability - but it can take a while for that RSVP from Aunt Edna to finally hit your new mailbox.
• No matter how much you want to say it, please do not mention the fact that if your favorite team continues on in the playoffs they will have a championship game during the wedding.  If you fail this, please do not compound the mistake by indicating the cocktail reception room - with the large TVs - would make a great viewing area.
• And on a serious note - remember that it is not possible to say Thank You enough to your significant other.

Have a great weekend - and Go Blue!      

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:

 

Fiduciary Duties; This and That

Posted By Anthony Demangone

Here are a few thoughts about NCUA's recently issued fiduciary duties rule.

Training and existing directors.  As I pointed out on Friday, NCUA's new fiduciary duties rule requires that new directors obtain a basic level of financial literacy within six months of election or appointment.  When the rule becomes effective, it is easy enough to identify those new directors.  But what about existing directors?  Are they grandfathered?  The rule is silent on this issue.  NCUA did indicate that it will issue additional guidance in the near future to clarify expectations.  On one hand, we can wait for further guidance. On the other hand, if your federal credit union has a director who does not feel comfortable reading financial reports or does not understand basic accounting, what are you waiting for?  Training in that area would make them a more effective director, whether the training is required or not. 

Business practices.  A savvy reader brought this to my attention.  The new fiduciary duties rule mandates that a board directs management's operation of the federal credit union in conformity with the FCU Act, NCUA regulations, other applicable law, and sound business practices.  I raise the last point, because the reader brought this thought to my attention.  If an examiner wants your credit union to do something that goes against a sound business practice, such as something that doesn't conform to GAAP, it looks like your board has a fiduciary duty to ignore the examiner. How about that? (Hat tip to Peter.)

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Here are a few other items of interest...

WikiLeaks.  You see that a member wants to use your credit union to make a payment to WikiLeaks.  Do you allow the member to make the transaction?  There's no official guidance, but some banks are saying "no." (Washington Post.)

CFPB.  Elizabeth Warren has reportedly chosen the new head of enforcement for the CFPB, and he has quite sharp teeth. (Cleveland Leader.) 

Question of the Day.  Are you "Astroturfing?"  (Kaufman and Canoles.) Yes, this is compliance related.  I promise. 

Unsolicited Marriage Advice of the Day.  Never hold anything that your spouse says after 2 a.m. against them.  Or anything that they say while assembling IKEA furniture.  For some reason, sleep deprivation or furniture "activation" brings strange words out of one's mouth.  Of course, I'm the one that usually benefits from this guidance in my household.