NAFCU Compliance Blog

CFPB Updates Thresholds; Waiting on HMDA

Written by Steve Van Beek

Recently, the CFPB announced the 2013 threshold levels for HOEPA/Section 32/High-Cost loans as well as exemption levels for both Reg Z and Reg M.  They haven't released the HMDA asset threshold for 2013 yet, but we'll be sure to pass that along when it is published (last year's release was, unfortunately, delayed until February 15th).  

• The HOEPA fee threshold for 2013 will be $625 in fees.  

• The Regulation M (consumer leasing) threshold for 2013 will be $53,000 (up from $51,800 in 2012).

• The Regulation Z threshold for 2013 will also be $53,000 (up from $51,800 in 2012).  

For the Reg Z threshold, a couple of things to keep in mind:

• Private student loans are subject to Reg Z regardless of the loan amount.
• Loans secured by real property (mortgages) are subject to Reg Z regardless of the loan amount.  
• Loans secured by personal property used or expected to be used as the member's principal dwelling are subject to Reg Z regardless of the loan amount.

Additionally, most credit unions provide the Reg Z disclosures for all loans (even a $55,000 closed-end car loan) in order to keep consistent for their loan teams.  

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HMDA.  Last year's asset threshold was released on February 15th even though the Federal Reserve had historically announced the updated threshold in December of the year prior.  Hopefully the CFPB has learned from its growing pains of the first year and realizes how important it is to be timely with issues as important as the annual HMDA asset threshold.

Updated Threshold Levels for 2012; Musings from the CU Suite

Written by Steve Van Beek

A new year usually brings with it updated thresholds for various regulations.  Below are a couple of updated thresholds and, unfortunately, one unknown.  

Reg Z - Section 32 Threshold

Each year, the "points and fees" dollar amount threshold for Section 32 (high-cost mortgage loans) is adjusted.  The underlying requirement comes from 12 CFR 1026.32(a)(1)(ii):

"(ii) The total points and fees payable by the consumer at or before loan closing will exceed the greater of 8 percent of the total loan amount, or $400; the $400 figure shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index that was reported on the preceding June 1."

Here are the last few years - including 2012 - from Comment 2 in the Official Staff Commentary to Section 1026.32(a)(1)(ii):

"xiv. For 2009, $583, reflecting a 3.94 percent increase in the CPI–U from June 2007 to June 2008, rounded to the nearest whole dollar.

xv. For 2010, $579, reflecting a 0.74 percent decrease in the CPI–U from June 2008 to June 2009, rounded to the nearest whole dollar.

xvi. For 2011, $592, reflecting a 2.2 percent increase in the CPI–U from June 2009 to June 2010, rounded to the nearest whole dollar.

xvii. For 2012, $611, reflecting a 3.2 percent increase in the CPI–U from June 2010 to June 2011, rounded to the nearest whole dollar."

The 2012 threshold was published in the Federal Register by the Federal Reserve on June 20, 2011 (the Fed had authority over Reg Z until July 21, 2011).

Thresholds for Regulation Z and Regulation M

Dodd-Frank increased the exemptions in Regulation Z and Regulation M from $25,000 to $50,000 on July 21, 2011.  These exemptions were also tied to inflation and increased to $51,800 on January 1, 2012.

• Regulation Z Federal Register from June 20, 2011.
• Regulation M Federal Register from June 20, 2011.

Comment 1 to the Official Staff Commentary to Regulation Z includes background on these exemption levels:

"i. Prior to July 21, 2011, the threshold amount is $25,000.

ii. From July 21, 2011 through December 31, 2011, the threshold amount is $50,000.

iii. From January 1, 2012 through December 31, 2012, the threshold amount is $51,800."

HMDA Reporting Asset Threshold

I wish I knew what to tell you.  This seems to be the perfect example of growing pains with a new regulator.

In the past, the Federal Reserve published the HMDA asset threshold each December informing institutions who would need to collect HMDA data during the following year.  Below are the announcements from the Federal Reserve for past years:

• For the 2011 reporting year, a $40 million asset threshold.
• For the 2010 reporting year, a $39 million asset threshold.
• For the 2009 reporting year, a $39 million asset threshold.  

So, what is the threshold for 2012?  Unfortunately, no one seems to know - the CFPB hasn't provided any information on the 2012 threshold.  When the CFPB republished the consumer regulations, including Regulation C (HMDA), it did not update the asset threshold.  

Here is how the Official Staff Commentary currently reads for Regulation C:

"2. Adjustment of exemption threshold for depository institutions. For data collection in 2011, the asset-size exemption threshold is $40 million. Depository institutions with assets at or below $40 million as of December 31, 2010 are exempt from collecting data for 2011."  (emphasis added).

We'll be sure to update everyone as soon as we hear from the CFPB on the asset level for 2012 reporting.  In the meantime, chalk this one up as an example of unnecessary regulatory burdens.  

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New NAFCU Blog.  The new year also brings exciting news on the blog front.  Everyone knew blogging runs through his veins and it was only a matter of time before Anthony Demangone was blogging again.  Well, he's back - this time sharing his experiences as an executive.  

What is the new blog about?  The blog's subtitle says it all: Great Links. Big Ideas. A splash of Random Commentary.

Take a peek at NAFCU's new blog - Musings from the CU Suite.  Stop by, say hi, leave a comment and consider signing up for the email feed.   

CUSO LOL; FRB annual dollar adjustments

Written by Sarah Loats Zimmermann

NCUA LOL. NCUA has issued a legal opinion letter that discusses the CUSO customer base issue. For a credit union to be able to invest in a CUSO, that CUSO must primarily serve credit union members. As NCUA points out in the letter there is no bright line test for this  "primarily serves" requirement. The letter notes some of the factors to be considered and expresses NCUA's stance that the requirement is ongoing throughout the credit union's investment.

 

FRB. Yesterday, the Federal Reserve released two press releases regarding annual dollar amount adjustments. The first is in relation to HOEPA loans (also known as high-cost loans or section 32 loans). The Fed is required on an annual basis to adjust the dollar amount of the fee-based trigger. For 2012 that dollar amount will be $611. As the press release notes, this does not affect higher-priced mortgage loans, which are determined using a different rate-based trigger.

Second, the Federal Reserve has announced the exemption threshold for Regulations M and Z. For 2012, the threshold will be $51,800, meaning that leases/loans at or below $51,800 will be subject to Regs M/Z (note that private education loans and mortgage loans are subject to Reg Z regardless of amount).

 

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Maybe it's all of that compliance training, but our blog readers sure do notice the small details. A couple of weeks ago I quietly changed my name, but it didn't get past you guys. Yes I did get married and I truly thank you all for your well wishes! We were actully married this past October in my home state of Ohio. We took a chance on the weather for an outdoor ceremony and got lucky with a gorgeous sunny weekend. I've had many requests for pictures over the last few months so here we go - I had a hard time picking just a couple to capture the day but here's my best shot.

 

From pretty lace shawl...

 

...to feather boa.

 
 

No, not that deadline; Married Life

There's a compliance deadline coming October 1.  And I'm not talking about Affiliate Marketing.

Last year, the Federal Reserve announced final rules to amend Regs B, E, M, Z and DD.  The amendments address the delivery of electronic disclosures.   Here's the Fed's press release, which includes links to each final rule.  Remember, NCUA has to ensure that our Truth in Savings rule closely mimics their Reg DD, so expect changes in the not too distant future. 

Don't blame the messenger.

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My father said something funny the other day.  He grew up in Latrobe, Pennsylvania, which is 40 or so miles outside of Pittsburgh.  He played tennis for Duquense, which is in downtown Pittsburgh.  He may live in north-central Pennsylvania, but he's a Pittsburgh boy, through and through. After the Steeler's victory last week, I called to chat.  Both my Mom and Dad were on the line. 

Mom: Your father said something that made me laugh this weekend.  He said that at his age, the only thing that he gets excited for is the Steelers.
Dad: It's true.  I was sick to my stomach all day Sunday.

I told Mandy, and I think she saw her future.  She looked worried.

Editor's note: The editor isn't watching as much football as he did as a bachelor.  Mandy says this is a good thing.  The editor is not so sure. 

NCUA Express and other Gems

At a recent board meeting, NCUA Chairman Johnson commented that only 24 percent of credit unions are using NCUA Express.  NCUA Express is a vehicle through which NCUA communicates electronically with federally-insured credit unions.  With this service, credit unions will receive Regulatory Alerts, Legal Opinion Letters, Letters to Credit Unions and other important notifications as they become available from NCUA.  Sign up for NCUA Express here. 

Other agencies have similar services as well. 

Sign up for the FinCEN notification service here.
Sign up for the U.S. Treasury notification service here. (Can include OFAC notifications.)
Sign up for the Federal Reserve notification service here.

The Compliance Guy loves this stuff.  He goes on vacation.  He may miss work due to illness.   But he always checks his email.  With email notifications, it is far less likely that I'll be blindsided by compliance-related developments.

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NAFCU has published a Final Regulation that covers the Federal Reserve's recent final regulations that amend Regs (take a deep breath) B, E, M, Z and DD.  The final rules address electronic communications with members.  The compliance deadline for these is October 1, 2008.  You can access NAFCU's Final Regulation here. (NAFCU members only.)

Odds and Ends, and Electronic Alphabet Soup

Late last week, the Federal Reserve announced final rules to amend Regs B, E, M, Z and DD.  The amendments address the delivery of electronic disclosures.   Here's the Fed's press release, which includes links to each final rule.  Remember, NCUA has to ensure that our Truth in Savings rule closely mimics their Reg DD, so expect changes in the not too distant future. 

While amendments to all these regs may seem dauting, it really is a good thing.  For example, the changes generally will allow credit unions to give electronic disclosures to members who access applications or advertisements electronically.  Mandatory compliance with this regs will be October 1, 2008.  

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NAFCU members, the following is for you.

• The November BSA Blast is available here.   (NAFCU member log in needed.)
• NAFCU's Regulatory Affairs Department has updated a very useful tool.  Especially those who lose track of which FACT Act provisions are on the books and which are not.  Access a handy-dandy chart on this page (Scroll to bottom.)