Written by Brandy Bruyere, Director of Regulatory Compliance
NAFCU’s Congressional Caucus kicks off today, and hundreds of credit union representatives will hear from various regulators and members of Congress before heading to Capitol Hill to discuss important credit union issues with members of Congress and their staff. Regulatory burden remains a theme in many of these issues, and today I wanted to give a round-up of a couple of frequently asked questions and deadline reminders.
Mortgage Servicing Rule. Many people keep asking – when is this finally going to publish in the Federal Register? On August 4, the CFPB released changes to the 2014 mortgage servicing rules, with deadlines either 12 or 18 months after the rule is formally published. It's been six weeks, but as of Friday when this blog was drafted, the rule had not yet hit the Federal Register so you did not miss it! NAFCU will be monitoring the Federal Register and we are in the process of completing additional resources for our members on this rule, but are holding off until we have formal compliance deadlines. We’ll continue to keep you posted on this one!
Military Lending Act. This deadline is in two weeks (October 3, 2016) and many credit unions have asked us about record retention requirements under the MLA. The DoD’s regulation does not specify the type of information that must be retained or contain a set record retention period. Rather, the rule states that the safe harbor is available “so long as that creditor timely creates and thereafter maintains a record of the information so obtained.” Here’s the rule text for reference:
(3) Determination and recordkeeping; one-time determination permitted. A creditor who makes a determination regarding the status of a consumer by using one or both of the methods set forth in paragraph (b)(2) of this section shall be deemed to be conclusive with respect to that transaction or account involving consumer credit between the creditor and that consumer, so long as that creditor timely creates and thereafter maintains a record of the information so obtained. A creditor may make the determination described in this paragraph (b), and keep the record of that information obtained at that time, solely at the time—
(i) A consumer initiates the transaction or 30 days prior to that time;
(ii) A consumer applies to establish the account or 30 days prior to that time; or
(iii) The creditor develops or processes, with respect to a consumer, a firm offer of credit that (among the criteria used by the creditor for the offer) includes the status of the consumer as a covered borrower, so long as the consumer responds to that offer not later than 60 days after the time that the creditor had provided that offer to the consumer. If the consumer responds to the creditor's offer later than 60 days after the time that the creditor had provided that offer to the consumer, then the creditor may not rely upon its initial determination in developing or processing that offer, and, instead, may act on the consumer's response as if the consumer is initiating the transaction or applying to establish the account (as described in paragraph (b)(3)(i) or (ii) of this section).
Without an interpretation from the DoD about what precisely is sufficient, and knowing that this could be important for both demonstrating a covered borrower check to examiners as well as to assert a defense in litigation, many are opting to keep either the document from the MLA database or the credit report as the “record of the information so obtained.” Additionally, the recent interpretative rule clarified that assignees of loans can also benefit from the safe harbor covered borrower check, if the assignee “continues to maintain the record created by the creditor that initially extended the credit.” Credit unions may want to consider what they are comfortable having as proof that the covered borrower check was performed for examination and litigation purposes.
NAFCU recently updated its MLA Compliance Guide which can be found here along with our other MLA resources.
NACHA Same Day ACH Phase 1. Phase 1 of NACHA’s same-day ACH changes go into effect on September 23, 2016 –this upcoming Friday. For more information, we blogged about this last year, NACHA has a resource center for this rule with helpful materials, the Federal Reserve has a FAQ page, and NCUA issued a Letter to Credit Unions earlier this month.
Other miscellaneous deadlines – Department of Labor, IRS Tax Reporting Changes. The DOL’s overtime rule is effective December 1, 2016 which impacts credit unions as employers. Another deadline to keep on the radar especially if your credit union has relationships with investment providers is the DOL’s fiduciary duty rule, effective April 10, 2017 (more information is available in this NAFCU blog post). Finally, some of you may recall that the IRS made changes to the 2016 1098 mortgage interest statement, we blogged about this earlier in the year but as we approach the end of 2016, it seemed worth a reminder
Nolan and Lemmy. Nolan is almost 2, and he really likes petting Lemmy (or as he calls him, “Mem-mee”). For his part, Lemmy is a very patient guy about it!