NAFCU Compliance Blog

A Plan to Start Fresh: Throwing Out the Uncovered 2013 NCUA News; Programming Note

Written by JiJi Bahhur, Director of Regulatory Compliance

I was trying to come up with a clever title for this blog but sadly it just didn’t happen.  My intention here is to play “clean-up.” Because of the heavy regulatory burdens this year and therefore the abundant amount of news available, there were a few NCUA news items that we hadn’t mentioned on our blog, but that may be of interest to certain credit unions.  And so I throw it all out to you today in hopes of starting fresh in 2014. 

• NCUA Video Highlighting Training Available for Small, Low-Income CUs
• NCUA Letter to CUs on Projected 2014 Assessments
• NCUA Files First Annual Minority Report
• NCUA Releases Military Outreach Video
• NCUA Proposal to Phase Out Home-Based FCUs
• NCUA Letter to CUs Detailing  Private Student Lending Risks
• NCUA OSCUI Grant Program Funding Opportunity for Eligible CUs (Community Development Revolving Loan Fund (CDRLF))
• Free NCUA LICU Webinar on Improving Services to Low Income/ Underserved Members

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Programming Note.  NAFCU’s offices will close tomorrow at noon for the New Year and will reopen on Thursday, January 2.  We will be back to blogging on Friday, January 3. 

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Happy Holidays!  I couldn’t let 2013 end without sharing a holiday fun photo!  I'm not sure if they liked the toy or if the wrapping paper and the box were of more interest.  Have a safe and Happy New Year, all!

Getting to Know Bitcoin

Written by Shari R. Pogach, Regulatory Paralegal

Bitcoin has received a great deal of media attention lately, both positive and negative.  Now you may be asking yourself, so what?  Why should I be concerned or need to learn more about Bitcoin?

How about this….because it’s the forerunner of digital currency - money controlled and stored entirely by computers across the internet.  As this article, an excellent primer on Bitcoin states, it isn’t just a currency; it’s also a way of making payments, just like PayPal or a credit card network.  It lets you hold money, but not only that, Bitcoin gives you the ability to spend money and trade it, and move it from place to place. And, you can do this almost as easily as sending an email.  Bitcoin also lets a user do this all without revealing your identity. 

As Bitcoin offers semi-anonymity, it is of genuine concern to the U.S. financial community since this digital currency can be used to illegally launder money.  For example, read here about the Silk Road, the online illegal drug market that the federal government shut down.  Transactions on the Silk Road were transactions made with bitcoins. But as recent Congressional hearings indicate, digital currency is not just coming; it’s here now and must be dealt with. Although U.S. federal regulators still haven’t yet figured out how to deal with Bitcoin, the currency is doing fairly well in China, Japan, parts of Europe and Canada.  In fact, Bitcoin just opened up an ATM in Vancouver, Canada. 

Here in the States, the Department of Homeland Security closed the U.S. bank accounts belonging to Mt. Gox, generally the world’s largest Bitcoin exchange, because the Japan-based company let U.S. residents trade bitcoins for cash but didn’t register itself as a money transmitter.   This action in turn caused most U.S. financial institutions to close and drop any American Bitcoin accounts because the institutions simply didn’t want the risk.  However, as law enforcement officials emphasize, purchasing and using bitcoins is not illegal. 

As an innovator, Bitcoin may be problematic as FinCEN Director Jennifer Shasky Calvery testified during recent Congressional hearings, “So often, when there is a new type of financial service or a new player in the financial industry, the first reaction by those of us who are concerned about money laundering or terrorist finance is to think about the gaps and vulnerabilities that it creates in the financial system.”  But Shasky Calvery also noted it is “important that we step back and recognize that innovation is a very important part of our economy.”  

NCUA’s Final Rule on Charitable Donation Accounts; FHFA's Plan to Increase Mortgage Fees Delayed; Programming Note

Written by Alicia Nealon, Regulatory Compliance Counsel

Happy holidays compliance community!! 

‘Twas the week before Christmas,

When all through this place…

In came a new rule,

Actually bringing a smile to a credit union’s face……

In keeping with the season of giving, the NCUA board voted 3-0 last Thursday to approve its final rule on charitable donation accounts (“CDA”), which is set to take effect upon its publication in the Federal Register.

This final rule establishes new ways in which credit unions may use their preapproved investment powers to support charitable donations and contributions to the community. 

The rule defines CDA as a hybrid charitable investment vehicle that facilitates the charitable activities of federal credit unions by allowing for investments with a higher expected return, within the safe and sound parameters the rule establishes. 

As in the proposed rule, the final rule requires federal credit unions to ensure that:

• A minimum of 51 percent of the total return from such an account must be distributed to one or more 501(c)(3) charities.
• Distributions must be made to qualified charities no less frequently than every five years.
• Assets in a charitable donation account must be held in segregated custodial accounts or special purpose entities regulated by the Office of the Comptroller of the Currency, the U.S. Securities and Exchange Commission or other federal or state financial regulatory agency.

NCUA, however, has advised that a credit union may make distributions at any time. So, if the credit union is a “victim of success,” and is running the risk of piercing the 5% ceiling, it can make a distribution to the charity. Alternatively, the credit union can make a distribution back onto its books to hold as cash until it wants to put the distribution back into the CDA or make a distribution to charity. 

This new rule expands the charitable opportunities for credit unions within their communities. NCUA’s Rules and Regulations have long recognized an FCU’s authority to make charitable contributions. 12 C.F.R. 721.3(b). Charitable contributions and donations are gifts you provide to assist others through contributions of staff, equipment, money, or other resources. Examples of charitable contributions include donations to community groups, nonprofit organizations, other credit unions or credit union affiliated causes, political donations, as well as donations to create charitable foundations. Charitable contributions, however, must still be necessary or requisite to enabling the credit union to effectively carry on its business. 

Moral of this holiday story, the final rule gives credit unions an opportunity to be a little more jolly, and little less scrooge just in time for the holidays.

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Update on FHFA Plan to Increase Mortgage Fees.  Last Friday, we blogged on the FHFA’s plan to increase Fannie Mae and Freddie Mac's guarantee fees, but later that night, Rep. Mel Watt (D., N.C.), the incoming director of the FHFA, the WSJ reported Watt's announcement that he intends to delay the implementation of an increase in mortgage fees until further evaluation is completed.  This announcement came shortly after NAFCU’s President and CEO Dan Berger sent a letter to FHFA Acting Director Edward DeMarco expressing concerns about the negative impacts of these changes on credit unions and their members. 

Winning! It looks like it really is the season to be jolly! 

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Programming Note.  NAFCU’s offices will be closed this Tuesday, Wednesday, and Thursday (December 24-December 26) for the holidays, but we will be back to blogging on Friday, December 27.  To you and your family, happy holidays! 

 

NAFCU Responds to FHFA on Increases to Fannie Mae & Freddie Mac’s Guarantee Fees and Changes to Loan-level Price Adjustments

Written by Brandy Bruyere, Regulatory Compliance Counsel

Last week, in response to a directive from the Federal Housing Finance Agency, Fannie Mae and Freddie Mac announced increases to loan guarantee fees for all maturities and loan-level price adjustments for single-family loans with original maturities greater than 15 years. FHFA believes this will meet the conservatorship goal of “gradually contracting Freddie Mac and Fannie Mae’s dominant presence in the marketplace.” Here are the basic details of these releases:

• The base g-fee for all mortgages will increase by 10 basis points;
• Upfront fees in the Loan-level Price Adjustment (LLPA) matrices will be adjusted to “better align pricing with credit risk” (Fannie Mae announcement; Freddie Mac announcement);
• The adverse market fee of 25 basis points that has been assessed on all of Fannie and Freddie’s mortgages since 2008 is being eliminated except in four states with higher than average foreclosure costs (New York, New Jersey, Connecticut, and Florida);

The FHFA expects the combination of fee changes to result in an average increase of 14 basis points for the typical 30 year mortgage. According to some in the mortgage lending industry, this will result in additional costs for borrowers, particularly because loan fee increases are typically passed along to borrowers through higher interest rates. To put this in perspective, an increase of just 10 basis points costs a borrower about $4,000 over the life of a 30 year, $200,000 mortgage. Also, the new LLPA fees will significantly increase initial costs for borrowers, even those with good credit scores.

In response, NAFCU’s President and CEO Dan Berger sent a letter to FHFA Acting Director Edward DeMarco about the negative impacts of these changes on credit unions and their members:

“NAFCU does not believe that these actions are appropriate because the cost of borrowing will greatly increase and lending will inevitably slow down. While we recognize that the housing market is recovering, it is important that the FHFA considers that there are many indicators showing a slowdown in the recovery. For example, applications for purchase transactions have decreased by 10 percent from the 3^rd quarter in 2012 to the same time this year. During the same period, lenders have seen over 50 percent fewer mortgage applications, including refinancings. Further, and crucially, many lenders, including a vast majority of NAFCU member credit unions, do not plan to extend mortgages that do not meet the definition of ‘qualified mortgage.’” 

NAFCU is closely monitoring this issue.  The FHFA will soon have a new director, current Representative Mel Watt, after he is sworn in. He would replace Acting Director Edward DeMarco.

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After that news, I’m sure everyone could appreciate a pick me up, so I’ll introduce you to my 130 pound lovable American Mastiff, Lemmy—would you believe he’s a runt? As you can see, like all of us at NAFCU, he wishes you a safe and happy holiday!

                       

Interagency Statement on Supervisory Approach for Qualified and Non-Qualified Mortgage Loans; FinCEN and Fed Finalize Changes to Definitions of “Funds Transfer” and “Transmittal of Funds”

Written by Bernadette Clair, Senior Regulatory Compliance Counsel

Supervisory Approach for Qualified and Non-Qualified Mortgage Loans (QM and non-QM). Last week, the NCUA, FDIC, Federal Reserve Board and OCC announced the release of an interagency statement regarding their supervisory approach for QM and non-QM loans.  The statement, intended to guide institutions as they implement the CFPB’s Ability-to-Repay and Qualified Mortgage Rule, clarifies in part that residential mortgage loans will not be subject to safety-and-soundness criticism based solely on their status as QMs or non-QMs.

From the statement:

“Safety-and-Soundness Expectations

The agencies recognize that many institutions are in the process of assessing how to implement the Bureau’s Ability-to-Repay Rule. The agencies emphasize that institutions may originate both QMs and non-QMs, based on their business strategies and risk appetites. Residential mortgage loans will not be subject to safety-and-soundness criticism based solely on their status as QMs or non-QMs.

Regardless of whether residential mortgage loans are QMs or non-QMs, the agencies continue to expect institutions to underwrite residential mortgage loans in a prudent fashion and address key risk areas in their residential mortgage lending, including loan terms, borrower qualification standards, loan-to-value limits, and documentation requirements. Institutions also should apply appropriate portfolio and risk management practices. Institutions should continue to comply with the applicable guidance on residential mortgage lending issued by their respective federal regulators.”

For complete details, the interagency statement is available here.

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Changes to the Definitions of “Funds Transfer” and “Transmittal of Funds.” FinCEN and the Federal Reserve Board recently finalized a rule amending the definitions of "funds transfer" and "transmittal of funds" under regulations implementing the Bank Secrecy Act (BSA). These changes were made in response to Dodd-Frank’s amendments to the Electronic Fund Transfer Act (EFTA), creating new protections for remittance transfers, and were necessary to maintain the current scope of transactions covered by the BSA recordkeeping and travel rules. The final rule adopts the amendments as proposed, and is effective January 3, 2014. For more background on these changes, see our December 17, 2012 blog post.

NCUA December Board Meeting Results; HPML Appraisal Supplementary Rule Finalized; NAFCU Webcast – Managing Third Party Fair Lending Risk.

Written by JiJi Bahhur, Director of Regulatory Compliance

NCUA December Board Meeting Results.  This past Thursday, the NCUA Board held its December Board meeting.  The agenda for the open meeting included the following action items:

1. Board Briefing, Supplemental Interagency Rule, Appraisals for Higher-Priced Mortgage Loans;
2. 2014 Temporary Corporate Credit Union Stabilization Fund Oversight Budget;
3. Final Rule, Part 700, 701, and 704, Technical Amendments, Corporate Credit Union Rating System;
4. Proposed Rule, Part 701, Requirements for Federal Credit Union Examination Sites; and
5. Final Rule, Parts 703 and 721, Charitable Donation Accounts.

All actions were approved.  I won’t go into detail on each of these actions in this blog post, but you can find the details here in NCUA’s Board Action Bulletin.   

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HPML Appraisal Supplementary Rule Finalized.  During NCUA’s December Board Meeting, the last of the lingering mortgage rule amendments finalized.  More specifically, the Interagency Proposed Supplemental Rule on the HPML Appraisal Requirements finalized.  This supplements the HPML Final Rule that was issued in January, 2013, and goes into effect at the same time as the original final rule on January 18, 2014.

As background, under the January 2013 final rule, credit unions extending higher-priced mortgage loans must obtain an appraisal or appraisals meeting certain specified standards, provide applicants with a notification regarding the use of the appraisals and give applicants a copy of the written appraisals used for certain mortgages with an annual percentage rate that exceeds the average prime offer rate by a specified percentage. 

The supplemental final rule provides exemptions from the requirements to:  (1) transactions secured by existing manufactured homes and not land; (2) certain streamlined refinancings; and (3) transactions of $25,000 or less. 

Also, the rule requires credit unions to provide notice to the borrower within three business days after receiving application that states, generally, that the credit union may order an appraisal for which the borrower may be charged.  The proposal defined “business day” to only exclude Sundays and legal holidays, but NCUA heeded the advice of NAFCU and finalized the supplemental rule to also exclude Saturdays from the “business day” definition for the purpose of providing the notice required after receiving an application.  NAFCU is appreciative of this outcome as it will provide added flexibility to those credit unions whose back office operations are not open on Saturdays.

You can view the final HPML Appraisal Interagency Supplemental Rule here.

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NAFCU Webcast – Managing Third Party Fair Lending Risk.  You may be following the fair lending regulations “to the letter,” but what about your vendors?  If you utilize vendors for indirect lending, mortgage services, marketing or other services, you won’t want to miss NAFCU’s webcast – Managing Third Party Fair Lending Risk: Don’t Let Your Vendors Let You Down.  The webcast will take place on January 13, 2013 at 2:00pm Eastern time.  Register by January 6, 2014 and receive $100 off.  For details on this webcast, click here.

FFIEC Issues Final Social Media Guidance; Berger at MACUMA: Enough is enough

Written by Alicia Nealon, Regulatory Compliance Counsel

Happy Friday compliance community! My name is Alicia Nealon and I am one of two new Regulatory Compliance Counsels here at NAFCU. As this is my inaugural blog post, and they always say you only get one chance to make a first impression, I figured I would start with something that we can all relate to- social media.

Social Media has all but exploded in the past five years.  Today, three out of every four Americans belong to social media sites.  Visiting these social media sites has become the fourth most popular online activity-ahead of even personal email. In fact, in August 2011, Facebook surpassed Google as the site where internet users spend the majority of their time.  Today, 41.1 million hours are spent on Facebook every single week.

Regulators, and the compliance community, have struggled to adapt to how the explosion of social media has consumed current culture and business practice.  But on Wednesday, the Federal Financial Institutions Examination Council (FFIEC) issued a final guidance aimed at helping, banks, credit unions and other financial institutions manage risks related to social media. 

The FFIEC published the guidance in proposed form in January 2013 and invited public comments through March 25, 2013.  Taking into account the 81 official comments on the proposal, this final guidance differs from the proposal released in January in several respects, most notably the expectations for risk management practices and the definition of social media. 

Addressing the concerns raised by NAFCU Regulatory staff and other commenters that that the proposal appeared to recommend a "one-size-fits-all" approach for all lenders, the FFIEC acknowledged that a financial institution’s approaches to managing social media risk will vary according to its size, complexity, activities and relationships with third parties.  For example, commenters worried that the proposed guidance would require banks and credit unions to monitor all online communications that mention their institutions.  The final guidance clarifies this is not the case, but rather each financial institution should conduct its own risk assessment to determine the appropriate approach to take regarding monitoring of, and any response to, online complaints and inquiries about the institution.

The revised guidance also incorporates the requests from NAFCU Regulatory staff and other commenters to recognize that social media differ from other modes of communication.  Under the final guidance, traditional emails and text messages, standing alone, are not social media. However, messages sent through social media channels are social media.  The guidance cautions financial institutions to stay abreast of existing laws for emails and text messages, as they may overlap with social media regulations.

The guidance covers several other areas specific to the credit union industry, including clarification that the existing requirements regarding NCUA membership and share insurance apply equally to advertising and other activities conducted via social media as they do in other contexts. For more information, take a look at the guidance here. 

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While the FFIEC guidance does not impose any new regulatory requirements on financial institutions, NAFCU is committed to combat those existing and pending regulations that have begun to wreak havoc on the credit union industry.  Earlier in the week, NAFCU President and CEO Dan Berger spoke about the overregulation of credit unions as well as NAFCU’s plan to target “the dirty dozen” top regulations that must be eliminated or changed during his address Tuesday night before the Metropolitan Area Credit Union Management Association in Arlington, Va.

"Credit unions cannot serve Main Street if they remain locked in an uphill battle with Wall Street,” Berger said. “In its very essence, overregulation is nothing more than a regressive tax – one that hamstrings our fundamental ability to compete. Most important, every dollar credit unions spend on regulatory compliance is a dollar they cannot invest in a family's dream of homeownership or a budding entrepreneur's vision for a small business. It's far past time for a common-sense approach to regulation based on government's power to help rather than its ability to hinder.”

Berger cited several legislative efforts to curb the overregulation of the industry, including the “Regulatory Relief for Credit Unions Act,” introduced by Rep. Gary Miller, R-Calif. He also highlighted NAFCU’s decision to go after the top 12 regulations that pose unnecessary burdens on the industry– the “dirty dozen” – which affect whether credit unions can change their fields of membership, whether their members can transfer money from savings accounts more than a certain number of times per month, and more. Details about the 12 regulations are available on the NAFCU website.

Message to NAFCU Members

Written by JiJi Bahhur, Director of Regulatory Compliance

Yesterday, we experienced some difficulty with internet connection.  Our responses to your compliance questions will be delayed but we are working diligently to get you accurate information as soon as possible.  If you emailed one of NAFCU's Regulatory Compliance Counsels or [email protected] on Wednesday, December 11, 2013, and you received a bounce-back notification, please resubmit your question and we will get back to you as soon as possible.  Thanks for your patience and understanding, and we apologize for any inconvenieces. 

Smurfing’s Glamorous Cousin - Cuckoo Smurfing

Written by Shari R. Pogach, Regulatory Paralegal

What is cuckoo smurfing?  The term originated in Europe due to its similarities to the activities of the cuckoo bird.  You might remember that cuckoo birds lay their eggs in the nest of other bird species which then unwittingly take care of the cuckoo’s eggs believing them to be that of their own.  When money laundering criminals look to transfer funds through the bank accounts of innocent, legitimate customers who are expecting genuine payments from overseas you have a case of cuckoo smurfing.  What happens is the payment sends the criminal’s money to the account expecting an incoming payment, just as the cuckoo bird lays her egg in another bird’s nest.

The term might be amusing but this is complex money laundering and a bigger issue with international wire transfers.  There are four key steps in the process:

1. A legitimate customer deposits funds with a remitter, other than a bank, in a foreign country to another customer’s account in the U.S.
2. The customer isn’t aware that the remitter is part of a wider criminal syndicate looking to launder money.  This criminal remitter in the foreign country gives the details of the transfers, including the amount of funds and account details, to a criminal based in the U.S. 
3. The U.S. criminal deposits his illicit cash profits into the account of the customer waiting for the overseas transfer.  This cash is usually small amounts to avoid reporting requirements.  After the customer checks the balance, he believes the overseas transfer has been legitimately completed.
4. The U.S. criminal travels overseas and gets the legitimate funds initially deposited with the remitter.  The criminal has gotten his funds successfully laundered and simply owes a commission to the money launderer syndicate. 

This form of money laundering has been prevalent for some time overseas but the United States Secret Service believes it is becoming more widely used to launder funds through financial institutions here in the U.S.  You will want to be alert to third parties making structured or unusual cash deposits into third party accounts as this could be an instance of cuckoo smurfing activity. 

CFPB Releases Semiannual Regulatory Agenda--Fall 2013

Written by Brandy Bruyere, Regulatory Compliance Counsel

Happy Monday compliance folks! My name is Brandy Bruyere and I am one of two new Regulatory Compliance Counsels here at NAFCU. As this is my first blog post, and it's Monday, we'll start with something short.

Last week the CFPB posted its Semiannual Regulatory Agenda for Fall 2013. This agenda provides insight into which regulations the CFPB will focus on over the next six months. The agenda is organized by rulemaking stage and is current as of September 6, 2013.” Here is the list of various regulations by stage:

Prerule State:

• Home Mortgage Disclosure Act (Regulation C)
• Annual Privacy Notice
• Payday Loans and Deposit Advance Products
• Debt Collection Rule
• Overdraft
• Further Amendments to 2013 Mortgage Rules (Regulations X and Z)

Proposed State:

• Requirements for Prepaid Cards (Regulation E)
• Supervision of Certain Nonbank Covered Persons—Defining Larger Participants in Certain Consumer Financial Product and Service Markets
• Amendments to FIRREA Concerning Appraisals
• Extension of the Temporary Exception for Certain Disclosures Under the Remittance Transfer Rule

Final Rule Stage:

• Restatement of Federal Consumer Financial Law Regulations
• Amendments to TILA Concerning Appraisals
• Integrated Mortgage Disclosures under RESPA (Regulation X) and TILA (Regulation Z)
• Equal Access to Justice Act Implementation Rule
• Rules of Practice for Issuance of Temporary Cease-and-Desist Orders
• The Expedited Funds Availability Act (Regulation CC)
• Defining Larger Participants of the Student Loan Servicing Market*
• Amendments to 2013 Mortgage Rules (Regulations B, X, and Z)

* Since releasing the agenda last week, the CFPB has published a final rule on “Defining Larger Participants of the Student Loan Servicing Market.”

The CFPB blog announcing the release of the agenda also highlights certain pending rulemakings such as regulation of prepaid card products and its expectations to release a proposal to reduce the annual privacy notices customers must receive. The blog also discusses areas the agency will consider in 2014 for potential regulation such as debt collection, payday loans and deposit advance products.

NCUA Letter to Credit Unions on the CUSO Rule; NAFCU Webcast

Written by Bernadette Clair, Senior Regulatory Compliance Counsel

Recently, JiJi blogged about the NCUA’s adoption of a credit union service organization (CUSO) final rule. NCUA has issued Letter to Credit Unions 13-CU-13, outlining the primary changes to the CUSO-related rules, and providing an overview of what credit unions need to do as a result of the changes. These regulatory changes will become effective June 30, 2014. CUSOs will begin submitting reports to NCUA under new section 712.3(d)(4) when NCUA’s reporting system becomes fully operational by December 31, 2015.

One aspect of the rule that I'd like to highlight today is that it clarifies how the new CUSO regulations apply to CUSO subsidiaries. From the letter:

“CUSO Subsidiaries

The new CUSO regulations apply to all levels, or tiers, of a CUSO’s structure. Any subsidiary in which a CUSO has an ownership interest of any amount is treated as a CUSO, and is subject to the regulations if it is engaged primarily in providing products or services to credit unions or credit union members.⁴

There is an inherent risk that a subsidiary CUSO could adversely affect the investing credit union and, ultimately, the NCUSIF. This provision was explicitly included in the regulation to ensure that credit unions and CUSOs are aware that the requirements of the NCUA regulations, and applicable state rules, apply to all subsidiary entities in which a CUSO invests. This includes entities with the appearance of being formed to evade the CUSO-related rules.” (Footnote omitted)

For complete details, Letter 13-CU-13 is available in its entirety here.  Also note, NAFCU’s Regulatory Affairs team will issue a Final Regulation summarizing the key aspects of this rule. Once it is available, it will be located here.

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NAFCU Webcast – NCUA Update: Looking Ahead to 2014. On Tuesday, December 10th, from 2:00 – 3:30 p.m. ET, NAFCU’s Regulatory Affairs team will be discussing NCUA’s recent and expected actions for 2014, with a special focus on the newly-issued CUSO rule. Registration is still open - Sign Up Today! Remember, NAFCU's webcasts are available to anyone and everyone. On-demand webcasts are archived and available for up to 12 months after the live broadcast.

Have a great weekend!

CFPB Updates its Mortgage Exam Procedures; On the Move

Written by JiJi Bahhur, Director of Regulatory Compliance

I don't know about you all, but I have a hunch that most of us are still trying to catch up with our reading from the holiday.  We'll keep it light today . . .

Last week, the Consumer Financial Protection Bureau (CFPB) released updates to its exam procedures in connection with the new mortgage regulations issued in January 2013.  The updates cover all final rules issued by the CFPB through October 15, 2013.

Although the CFPB only has examination authority over credit unions with more than $10 billion in assets, the exam procedures serve as guidance to all credit unions on how the CFPB will conduct examinations for compliance with the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA).

The CFPB’s Supervision and Examination Manual can be located here. 

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Baby Kyse is on the move!  Ava isn’t quite there yet, but she does enjoy standing on her feet so I know she’ll get there soon enough!

 

That's my boy!

 

SAFE Act Housekeeping Reminder

Written by Bernadette Clair, Senior Regulatory Compliance Counsel

First off, I hope everyone had a great Thanksgiving holiday, spending time with friends and family!

This is the time to update and renew loan originator registrations. The SAFE Act renewal period, which began November 1st, will expire on December 31, 2013. Remember that under the SAFE Act, all credit unions and their MLOs must renew their registration during the annual renewal period each year (there is an exception for MLOs registering for the first time less than six months prior to the end of the annual renewal period). If a credit union and its MLOs do not renew their registration, they would be prohibited from originating residential mortgage loans until their status has been reactivated.

From 12 CFR 1007.103(a)(2):

Ҥ 1007.103 Registration of mortgage loan originators.

[…]

(2) Covered financial institution requirement —(i) In general. A covered financial institution that employs one or more individuals who act as a residential mortgage loan originator must require each such employee to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this part.

(ii) Prohibition. A covered financial institution must not permit an employee who is subject to the registration requirements of this part to act as a mortgage loan originator for the covered financial institution unless such employee is registered with the Registry pursuant to this part.”

If the institution’s MLO(s) misses the December 31 deadline for annual renewal, the MLO’s status goes inactive. During the period of inactivity, the MLO cannot originate loans, but as soon as the MLO renews his/her registration, he/she will go back to active status and may begin originating again.