NAFCU Compliance Blog

Considering a Member’s Immigration Status in Evaluating Loan Applications + Trivia! + Monitor Survey

Written by Shereefat Balogun, Regulatory Compliance Counsel

Seems like immigration is on many minds these days.  In fact, we’ve received a number of questions concerning an applicant’s immigration status in evaluating loan applications.  The general question often looks like this:

A member came in applying for a VISA credit card. He is not a permanent resident of the U.S. He has a work permit that expires in July 2017. Are we able to deny a credit card to someone who is not a permanent resident of the U.S?

As many of us are aware, the Equal Credit Opportunity Act (ECOA) prohibits discrimination related to any aspect of a credit transaction on the basis of race, color, religion, national origin, sex, marital status, age, and income derived from public assistance.  See, 15 U.S.C. §1691(a); 12 C.F.R. §§ 1002.1(b), 1002.4(a).  That said, a credit union may consider a member’s credit status or status as a permanent resident in determining the member’s creditworthiness and the credit union’s rights and remedies regarding repayment.  Indeed, section 1002.5 of Regulation B, which implements ECOA, provides in relevant part:

§1002.5 Rules concerning requests for information.

…

(e) Permanent residency and immigration status. A creditor may inquire about the permanent residency and immigration status of an applicant or any other person in connection with a credit transaction.

12 CFR 1002.5(e)(emphasis added.)

Moreover, in section 1002.6, the rule states:

§1002.6   Rules concerning evaluation of applications.

(a) General rule concerning use of information. Except as otherwise provided in the Act and this part, a creditor may consider any information obtained, so long as the information is not used to discriminate against an applicant on a prohibited basis. The legislative history of the Act indicates that the Congress intended an “effects test” concept, as outlined in the employment field by the Supreme Court in the cases of Griggs v. Duke Power Co., 401 U.S. 424 (1971), and Albemarle Paper Co. v. Moody, 422 U.S. 405 (1975), to be applicable to a creditor's determination of creditworthiness.

…

(7) Immigration status. A creditor may consider the applicant's immigration status or status as a permanent resident of the United States, and any additional information that may be necessary to ascertain the creditor's rights and remedies regarding repayment.

12 CFR 1002.6(b)(7) (emphasis added.)

The Official Interpretation to 1002.6(b)(7) provides more detail:

Paragraph 6(b)(7) .

1. National origin—immigration status. The applicant's immigration status and ties to the community (such as employment and continued residence in the area) could have a bearing on a creditor's ability to obtain repayment. Accordingly, the creditor may consider immigration status and differentiate, for example, between a noncitizen who is a long-time resident with permanent resident status and a noncitizen who is temporarily in this country on a student visa.

2. National origin—citizenship. A denial of credit on the ground that an applicant is not a United States citizen is not per se discrimination based on national origin. 

12 CFR 1002, Supp. I, comments 1002.6(b)(7) – 1 and 2 (emphasis added.)

While Regulation B generally gives credit unions the ability to consider residency and immigration status in evaluating a loan application, there may be some risks associated with denying a loan based on the member’s citizenship status.  Comment 2 above indicates that a denial of credit based on citizenship status is not per se discrimination based on national origin.  This suggests that the denial in and of itself may not be discriminatory; however an examination of the facts and circumstances may form the basis of a discriminatory claim exposing the credit union to litigation risks.  One issue that may arise concerns claims that the credit union’s policy is not being applied consistently.  For example, if citizens of countries A and B are ok but citizens of C and D are not, then it can be argued that the credit union is discriminating on the basis of national origin, i.e. the place of origin rather than status as a non-citizen.  The credit union may want to make sure applicants are being treated consistently across the board and that any different treatment has a legitimate business purpose.

One thing to consider is that the rule seems to focus on the credit union’s ability to look at immigration status in determining the member’s ability to repay.  See, 12 C.F.R. 1002.6.  Based on this, the credit union may want to focus on the repayment aspect and the particular risks a noncitizen applicant poses.  This is alluded to in the commentary.  See, 12 CFR 1002, Supp. I, comments 1002.6(b)(7) – 1 and 2.  For example, a member who is new to the country, with no employment, and no past credit history may pose more risks to the ability to repay, than a person who has been in the country for 10 years, working as a physician at $450k a year, with satisfactory credit history and owns a home.

Notably, Form C-1 located in Appendix C to Part 1002, is a sample adverse action form and provides a few adverse action options that may apply to these situations.  For example, some reasons listed such as “Temporary or Irregular Employment”, “Length of Employment”, “Length of Residence”, or “Temporary Residence” may be applicable.  Ultimately, though, the rule requires credit unions to look at their underwriting criteria and select the appropriate reasons. 

Also, here are some useful resources which may be helpful:

• NCUA’s Fair Lending Guide
• Letter to Credit Unions No. 174.  This letter includes a white paper that’s geared towards risk-based lending. Starting on page 3, there is a pretty good discussion of consumer compliance and discrimination issues.

As always, if you have any questions concerning ECOA/Regulation B, or any other issue, please feel free to contact the NAFCU Compliance team. We’re here for you!

Trivia: What is ECOA’s record retention period for consumer credit applications?

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Each month, NAFCU's research division sends out an Economic and CU Monitor survey which is summarized and reported in the Economic and CU Monitor. This month’s survey topic is Housing, and it includes questions on GSEs, HMDA, TRID, and chattel lending. Your responses provide us with the meaningful data we need when we represent you before policy makers. You don’t need to complete the entire survey. Every response is a helpful one!

Hodgepodge Monday and a Special Goody from NAFCU

Written by JiJi Bahhur, Director of Regulatory Compliance

NAFCU Goody.  Members asked, and today they will receive.  NAFCU’s compliance team has updated its consolidated regulatory text on the Truth in Lending Act and Real Estate Settlement Procedures Act (TILA/RESPA) Integrated Disclosure (TRID) rule.  Available with a NAFCU member log-in, the updated consolidated text can be located on NAFCU’s mortgage resources webpage here and serves as a great research tool. 

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Free NAFCU-NCUA Webcast, Fine-Tuning Your Compliance Program: Common Compliance Violations.  On July 21, Bernadette and I will be joining NCUA’s Judy Graham, program director in the Office of Examination and Insurance, Patrick Truett, information system officer for E&I, and Matt Nixon, program officer in the Office of Consumer Protection, in presenting “Fine-Tuning Your Compliance Program: Common Compliance Violations.”  We will discuss how credit unions can navigate common compliance issues and examine various compliance areas of interest.

Online registration is available here and participation is free. You can find more information here.

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CFPB’s Fifth TRID Webinar Available.  Part 5 of the CFPB’s TILA/RESPA webinar series is now available for viewing here.  This fifth and final webinar addresses specific questions related to rule interpretation and implementation challenges that have been raised to the CFPB by creditors, mortgage brokers, settlement agents, software developers, and other stakeholders. In particular, this session covers industry questions relating to operations and technology challenges.

Recordings of the previous webinars in the TILA/RESPA series are available at the links below:

TILA-RESPA Integrated Disclosure, Part 1 — Overview of the Rule

TILA-RESPA Integrated Disclosure, Part 2 - Various Topics

TILA-RESPA Integrated Disclosure, Part 3 — Completing the Loan Estimate

TILA-RESPA Integrated Disclosure, Part 4 — Completing the Closing Disclosure

Just a reminder – if you are looking for additional help with TILA/RESPA, NAFCU’s Credit Union Compliance GPS contains an appendix that is solely dedicated to TILA/RESPA.  Also, check out our TILA/RESPA Boot Camp and blog series.

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CFPB Issues Guiding Principles for Faster Payment Networks.  Last week, the CFPB outlined guiding principles for faster payment networks.  In the CFPB’s guidelines, it states:

“Improvement in payment systems can aid many users — and consumers, in particular — if accompanied by more robust and timely information about payments and receipt of funds. When integrated with systems such as mobile banking and other channels by which consumers may obtain real time information about their account balances, consumers could know more definitively when they do and do not have funds with which to conduct transactions. At best, faster payments could enable faster, safer, and more accessible commerce.”

The guidelines focus on privacy, transparency, costs, security, access and more.  To view the guidelines, click here.  To view the press release, click here.

It should be noted that other federal agencies, including the Federal Reserve, have been engaged in initiatives to improve payment systems as well.  NAFCU has been very involved in these efforts and will continue to gather input on how to improve the U.S. payments system. 

Happenings on the Hill

Written by Jillian Pevo, Director, Legislative Affairs

Good morning faithful Compliance Blog readers! As many of you know, NAFCU’s regulatory compliance team is heading up Regulatory Compliance School here in our nation’s capital this week. For those of you attending, I hope it has been filled with valuable information you can use to stay current on the constant and complex changes on the compliance front.

As a member of NAFCU’s legislative affairs division, my colleagues and I are working hard on Capitol Hill to bring additional Congressional oversight to the regulatory agencies and effectuate change via the legislative process. In recent weeks, NAFCU members have testified before the House Financial Services and Senate Banking Committees on regulatory relief priorities for credit unions including the impact of NCUA’s second risk-based capital proposal, field of membership changes and a plethora of other issues outlined in NAFCU’s 5 Point Plan for Regulatory Relief. Last week the Financial Services Committee moved a package of bills, several of which positively impacted credit unions, and we expect the Senate will follow suit with their early ideas when Congress comes back from the current recess period.  

Our efforts in gaining momentum for much needed relief from the agencies and lawmakers are membership driven and we would love to hear from you about what regulations are especially burdensome and what changes you have made at your credit union post financial crisis to deal with all the bureaucratic red tape. The more data and specific examples we have to back up the changes we are seeking, the more effective our overall lobbying efforts will be. While it can be difficult at times to weigh the true cost-benefit of many regulations across the entire industry, the anecdotal evidence many of you can provide is a force to be reckoned with.  

If you have any questions about the representation NAFCU provides for you and your credit union on the Hill, please don’t hesitate to contact me. I worked in the U.S. House of Representatives for a member of Congress from Virginia before coming to NAFCU over 5 years ago, and it’s a pleasure representing an industry that has bipartisan appeal and is truly making an impact on communities across the country. Thank you for making my job enjoyable!

 I’d love to hear from you and learn more about your experiences. To provide additional information on the regulatory burden you and your credit union face, or talk more about what’s going on in Congress, drop me a line – [email protected].

Enjoy Regulatory Compliance School!

CFPB’s Latest Rulemaking Agenda; One-Stop-Shop NAFCU Compliance Resource You Won’t Want to Miss

Written by JiJi Bahhur, Director of Regulatory Compliance

Recently, the CFPB posted a semi-annual update of its rulemaking agenda which explains and details the work it has done in 2014 and outlines the areas it intends to focus on in 2015.  If you have not seen the rulemaking agenda before, it includes items that the CFPB is/has been focusing on and states what stage in the rulemaking process that particular item is in: pre-rule, proposed rule, or final rule. 

I won’t go into any detail, but if you’re interested in seeing what the CFPB has been up to, take a look at the semi-annual update and the rulemaking agenda – both are short and sweet and easy to read.  But now for a shameless plug: Are you looking for a one-stop shop year-end review of the NCUA’s and CFPB’s activities from this year?  If so, you’re in luck!  NAFCU’s Compliance team has made available just that – an article that synthesizes the final rules, proposals, and other guidance provided by the NCUA and CFPB during 2014 and also what to expect in the near future.  If you are a NAFCU member, you can access this compliance resource in NAFCU’s December Compliance Monitor issue (NAFCU log-in required).  For a direct link to the article, click here (NAFCU log-in also required).     

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Speaking of NAFCU's December Compliance Monitor, members will also find an article outlining the CFPB's Annual Privacy Notice rule. 

NCUA to Cease Paper Mailings - Sign-Up for NCUA Express; Google Reader Ending Service on July 1st

Written by Steve Van Beek

Last week Bernadette highlighted the May 2013 NCUA Report. On the very last page was this notice:

"NCUA will stop mailing Letters to Credit Unions and other regulatory alerts as part of its ongoing efforts to reduce operating costs and become more efficient.

NCUA CU Express recipients automatically get the latest regulatory guidance and letters. All credit unions CEOs and Board Chairmen with emails provided in the CU Profile system are automatically subscribed to NCUA CU Express, and should currently be getting all regulatory letters or alerts.

NCUA CU Express emails are mandatory for credit union CEOs and Board Chairmen, while the separate, but similar NCUA Express is open to the public and subscriber-driven. In addition to regulatory alerts, you can sign up and receive NCUA’s monthly newsletter, The NCUA Report, legal opinions, press releases and more, using the NCUA Express system.

For more information about NCUA Express and to subscribe, free of charge, visit http://go.usa.gov/TDsC."

If you haven't already, consider signing up for the NCUA Express. At a minimum, be sure to pass this along to your colleagues in case they rely on the paper mailings. And, while you are at it - make sure your CEO and Board Chairmen's emails are current so they are getting all the information from the NCUA CU Express.

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Google Reader. Many blog readers use an RSS aggregator such as Google Reader. On July 1st, Google will no longer be supporting Google Reader - so it makes sense to begin the migration to a new RSS aggregator soon. Personally, I've switched over to Feedly (and since wondered multiple times why I didn't earlier). And, best of all - you can connect your existing feeds from Google Reader over to Feedly. Of course, there are additional alternatives as well. 

If you're wondering what RSS is, Wikipedia has some good information. In short, RSS feeds (and an RSS aggregator) allow you to receive updates to a particular blog (or other website) when they occur. If your email inbox is overflowing with blog posts and other resources, having an RSS aggregator can help you stay on top of the news you need without it cluttering up your inbox.  

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Asheville, North Carolina. Last week, Erin and I had the chance to head down to Asheville for NAFCU's Board of Directors Conference. Asheville is a special city for us as we got engaged there over Labor Day weekend in 2010.

Biltmore Gardens

Chimney Rock State Park, Chimney Rock, NC. And, that is Lake Lure in the background. Erin informed me numerous times (plus or minus 20) that Lake Lure was where "Dirty Dancing" was filmed.

NCUA Fair Lending Webinar; Additional Research Tip - Internet Explorer

Written by Steve Van Beek

Note: NAFCU's compliance team will be out of the office the next two days at a training conference in DC. NAFCU members, if you have a compliance question - the best way to contact us via email: [email protected]. Keep in mind our responses will be delayed a little longer than usual.

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NCUA Fair Lending Webinar. Today is NCUA's free Fair Lending Webinar. You can sign-up for the webinar here. The announcement is located here. The webinar is today at 1 p.m. - register here.

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Yesterday, I blogged about saving certain blog posts to your desktop. I used Chrome as my browser but the same process works for Mozilla Firefox. For Internet Explorer, the instructions are below along with screenshots.

Saving Important Blog Posts to Your Desktop - Internet Explorer.

1. Click on the Title of the blog post to be taken directly to the blog post site.

2. After clicking the Title, you'll be taken to the blog's main webpage - showing the blog post you clicked on. Your screen should look similar to below.

3. On this page, right click and choose "Create Shortcut" and choose Yes to the question of whether you want to create a "shortcut to this website on your desktop."

4. Go to your Desktop and look for the new shortcut. You should see something similar to below.  Double-click on this shortcut and you'll be taken directly to the blog post on the internet.

Using Internet Explorer, there is a direct shortcut created rather than the separate files stored locally on your desktop. Both work and should help ensure you have quick access to important blog posts to increase your efficiency when researching the new mortgage regulations.

Research Tips - Saving Blog Posts; NAFCU's Mortgage Rules Webpage

Written by Steve Van Beek

Last Tuesday, we linked to a series of past blog posts which contain links to the new regulatory text as well as other research tips for finding, reading and understanding the new mortgage regulations. Especially helpful is the February 22 blog post on Finding the New Reg Z & Reg X Requirements in the Electronic Code of Federal Regulations which contains direct links to the new regulatory text, official staff commentary and the new model forms.

One of the problems is that in today's fast-paced environment, those blog posts tend to get lost in the shuffle and it may be hard to find the information when you need it. However, there is an easy solution that keeps those blog posts (and any others you want to refer back to in the future) at your fingertips.

Below is a step-by-step process to save important blog posts to your desktop.

1. Click on the Title of the blog post to be taken directly to the blog post site.

2. After clicking the Title, you'll be taken to the blog's main webpage - showing the blog post you clicked on. Your screen should look similar to below.

3. From this page, right-click anywhere on the page and choose "save as."

4. Be sure to select your Desktop as the preferred location to save the file. After you've saved the file, you should see a copy of the file (along with a folder containing additional files) on your Desktop.  It should look similar to below.

5. When you want to refer back to the blog post you've saved, double-click on the file and you'll be taken to a copy of the blog post as shown below. And, yes, that is screen shot of my current desktop (the only part of the Appalachian Trail I've done).

6. If you look really closely at the screenshot above you can see that the browser actually references the file on my desktop rather than the actual blog post on the internet. However, all the links on the blog post that you've saved will continue to work and that is the key point.

Hope this helps and you find it useful!

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NAFCU's Mortgage Rules Webpage. Don't forget to visit NAFCU's Mortgage Rules webpage which includes resources on all of the new mortgage regulations. Recently added were the following resources for NAFCU members:

• Q&As from NAFCU's February 13 Webcast on the CFPB's Final Mortgage Regulations

• Q&As from NAFCU's March 6th Webcast on the CFPB's Ability-to-Repay/Qualified Mortgage Requirements

• New Compliance Monitor article on Mortgage Loan Originator Requirements for Qualification, Screening, Training and Disclosures

• New Compliance Monitor article on New Homeownership Counseling Disclosure Requirement

Be sure to refer back to page on regular basis as we'll continue to add resources throughout 2013.

You Know You're a Lobbyist When...

Written by Jillian Pevo, Senior Associate Director - Legislative Affairs

Some people gulp down a double-mocha-latte on their way out of the door each morning. Others need that time on the treadmill to feel good about the day ahead. I knew I had lived in Washington, D.C. for too long when the first thing I did each morning was check to see if the Congressional Record was posted.   

Aptly named, the Congressional Record is one stop shopping for all legislative business that occurred the day before. From new legislation and cosponsors to debate transcripts and floor speeches - it's all at your fingertips. 

When I worked on Capitol Hill for a Member of Congress, I read the Record to keep up with what other members of our state delegation were doing and looked to identify potential allies on our office's legislative priorities. In my role at NAFCU I'm doing much of the same - looking for activity on legislation impacting credit unions, checking to see what other issues our champions in Congress are working on, and reporting back to my colleagues on anything of note that will benefit our team's efforts in making the credit union voice heard.

While it's super-nerdy and mundane to most, the Congressional Record is a great tool to use if you want to drill down and get into the details of House or Senate happenings. Here's how it works:  

• Go to the Library of Congress “Thomas” landing page for the Congressional Record – Thomas was started in the mid-1990s to make legislative information freely available to the public.

• You will see some different search options – I use the “Latest Daily Digest” option which is an easy to read snapshot of the last legislative day’s activity.

• From there, everything is pretty self-explanatory. Sponsors, descriptions, and bill numbers for new pieces of legislation are included. The full text of new legislation is not usually immediately available but is generally posted within a few business days. The Hill can be very fast-paced and we pride ourselves on getting you important and up-to-date information as it is happening, so, if a bill isn’t up yet chances are we are already have it. Feel free to give us a call!

• Note, the Daily Digest links to the Government Printing Office’s PDF file of the actual Congressional Record. So if you see a topic of interest, you can click on the links provided to look at it in more detail.  

You also can do a generic search for every mention of credit unions on the floor of either chamber. Go back to the Congressional Record landing page, and type “credit union” under “Enter Search.” Keep all of the boxes checked, and select “yes” under “search results by date.” Voila!   

For additional information on tracking federal legislation, check out my related post on this subject from last Congress. 

These are the basics on what the system has to offer. I’m always happy to help you navigate these online tools or track down whatever information you are looking for. 

Thanks and happy Congressional Record searching! 

Help is Here: NAFCU’s 2013 Credit Union Compliance GPS

Written By JiJi Bahhur, Regulatory Compliance Counsel

We talk to credit unions every day. And, we hear the same concerns, fears and frustrations:

• How do we keep up?
• How do we know if this is the latest information?
• Where can I find that guidance document?
• When will someone explain this information in plain English?
• How do we get everyone on the same page without busting our limited training budget?

It is with these conversations in mind that we created the GPS and are pleased to announce the 2013 edition (with a very shameless plug).

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NAFCU's Credit Union Compliance GPS - 2013 Edition. Hot off the electronic presses is the 2013 edition of NAFCU’s Credit Union Compliance GPS.  Written by NAFCU's compliance team, this electronic manual spans almost 500 pages and covers everything from the basic anatomy of a federal credit union to specific regulations from the NCUA, CFPB, and more.  It is the ideal companion for all credit union compliance officers and staff, consultants, vendors and attorneys.  The GPS translates complex regulatory language into plain English to help credit unions on a day-to-day basis while at that same time providing links to the applicable regulations, laws, and guidance documents.

And here’s the great part – you don’t have to be a NAFCU member to purchase the GPS.  The GPS is available to anyone and everyone at one affordable price ― $399 for NAFCU members and $499 for nonmembers. One purchase allows you to share the electronic manual with your entire credit union or business. And for no additional cost, your purchase of the 2013 GPS includes access to NAFCU’s new Scope & Applicability Charts to help you make sense of the CFPB’s new mortgage rules.

If your credit union has a prior version of the GPS (via purchase or attending a prior Regulatory Compliance School), you'd need to purchase the new 2013 GPS in order to receive the latest information. We've put a ton of time and effort into thoroughly reviewing the 2013 GPS to reflect regulatory changes. Additionally, we provided some additional bells and whistles to the 2013 GPS based on credit union feedback:

• an expanded section on the CFPB;
• user-friendly bookmarks, hyperlinks and pagination for easy navigation; and
• enhanced study tips for those studying for the NAFCU Certified Compliance Officer (NCCO) exams.

For a closer look, click here and check out our “sneak peek” documents available in the tabs to the right-hand side of the webpage (e.g., main table of contents, one page table of contents, section by section listing). 

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NAFCU Certified Compliance Officer (NCCO) Program. NAFCU’s Credit Union Compliance GPS serves as the learning manual for NAFCU’s annual Regulatory Compliance School held each March.  NAFCU also offers a self-study program which allows anyone interested in obtaining a solid foundation of the compliance issues facing credit unions to take the four exams required to earn the NCCO designation.

If you are interested in the GPS, take a look at our new NCCO Exam Study Guide (opens as a PDF) and consider taking the next step and obtaining your NCCO.  

Research Tip: Tracking Rulemakings in the Federal Register

Written by Steve Van Beek

We often get questions about the status of certain rulemakings.  For example:

• Has NCUA finalized their Emergency Liquidity proposal?

• Has the CFPB finalized (for the third time) the Remittance Transfer proposal?

• What about NCUA's CUSO proposal?

• Loan Participations?

You get the picture.  To help with this, we created a Pending Regulations Chart which can be found at the end of our Compliance Calendar.  You do not need to be a NAFCU member to view the Compliance Calendar; however, some of the linked resources are for members-only.  

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Federal Register.  There is also a great way to track the rulemakings in the Federal Register automatically.  You can subscribe to the topic "credit unions" to be sure you are emailed whenever a credit union-related rulemaking is published in the Federal Register.  This is especially important as - we are all aware - rulemakings impacting credit unions do not come from just NCUA.  Of course, this isn't a perfect science as some rules might not be coded with the "credit union" topic.  But, I've found it works pretty well.

To subscribe, start out be going to the "credit union" topic page.  Click the "Subscribe" button on the right-hand side.

From here, you'll get a pop-up box that you can enter your e-mail address (or subscribe via RSS feed).

You can choose to receive all "credit union" topics or only those labeled as "significant actions."  For me, I'm not one to trust the self-labeling of "significant" by the regulators - so I subscribe to the broader group.

Have a great week!

Finding the New Reg Z & Reg X Requirements in the Electronic Code of Federal Regulations

Written by Steve Van Beek

A couple weeks back, we looked at finding the new homeownership counseling disclosure requirements in the Electronic Code of Federal Regulations (e-CFR).  Now that all the final rules have been published, I thought it would be good to link to all the new and amended regulatory texts so that you have a central location for finding the future regulatory language. 

Note:  Below are links to the major changes - but there are tons of other little changes and tweaks to other sections of Regulation Z and Regulation X.  Additionally, some of the link names have the same citations but they go to a different regulatory text.  For example, there are numerous links to "Appendix I" but they all go to different staff commentary.   

Regulation Z (Truth in Lending Act) - 12 CFR 1026

• New Interest-Rate Adjustment Notices - 12 CFR 1026.20

• New Points & Fees Test - Closed-end Credit - 12 CFR 1026.32

• New High-Cost APR Thresholds & Expansion of High-Cost to Open-end Credit - 12 CFR 1026.32

• New Prohibitions & Requirements for High-Cost Mortgages - 12 CFR 1026.34

• Changes to Escrow Requirement for Higher-Priced Mortgage Loans - 12 CFR 1026.35

• New Appraisal Requirements for Higher-Priced Mortgage Loans - 12 CFR 1026.35

• New Negative Amortization Counseling Requirement - 12 CFR 1026.36(k)

• Changes to Prompt Payment Crediting & Payoff Statements - 12 CFR 1026.36(c)

• New Mortgage Loan Originator Compensation, Qualifications, Training, Disclosures & More - 12 CFR 1026.36

• Periodic Statements for Mortgage Loans - 12 CFR 1026.41

• Ability-to-Repay Requirements & Qualified Mortgage Standards - 12 CFR 1026.43

Appendices to Regulation Z

• New Model Forms for Adjustable-Rate Mortgages and Periodic Statements - Appendix H

• Higher-Priced Mortgage Loan Appraisal Safe Harbor Review - Appendix N

• Illustrative Written Source Documents for HPML Appraisal Rules - Appendix O

• Standards for Determining Monthly Debt and Income - Appendix Q

Official Staff Commentary to Regulation Z - Appendix I

• New Staff Commentary for Points & Fees Test; Ability-to-Repay Requirements & Qualified Mortgage Standards - Appendix I

• New Staff Commentary for High-Cost Mortgages; Negative Amortization Counseling Requirement - Appendix I

• New Staff Commentary for Appraisals on Higher-Priced Mortgage Loans - Appendix I

• New Staff Commentary for ARM notices; Payment Crediting & Payoff Statements; and Periodic Statements - Appendix I

• New Staff Commentary for Mortgage Loan Originator Requirements (all of them) - Appendix I

Regulation X (Real Estate Settlements Procedures Act) - 12 CFR 1024

• Changes to Escrow Accounts - 12 CFR 1024.17

• New Homeownership Counseling Disclosure - 12 CFR 1024.20

New Subpart C to 12 CFR 1024

The CFPB reorganized Regulation X - including a new Subpart C with Mortgage Servicing Requirements.  Sections 1024.30 through 1024.41 can all be found at this link.  Below are the new sections under Subpart C:

Subpart C—Mortgage Servicing

1024.30   Scope.

1024.31   Definitions.

1024.32   General disclosure requirements.

1024.33   Mortgage servicing transfers.

1024.34   Timely escrow payments and treatment of escrow account balances.

1024.35   Error resolution procedures.

1024.36   Requests for information.

1024.37   Force-placed insurance.

1024.38   General servicing policies, procedures, and requirements.

1024.39   Early intervention requirements for certain borrowers.

1024.40   Continuity of contact.

1024.41   Loss mitigation procedures.

The language of those new sections is available here.

Appendices to Regulation X

• New Model Language for Force-placed Insurance Notices - Appendix MS-3

• New Model Language for Early Intervention; Loss Mitigation; and Housing Counselor Notices - Appendix MS-4

• Official Bureau Interpretations to Reg X - Supplement I (link goes to Federal Register)

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Wow - that is a lot of links and a long blog post.  I know I've been running down some rabbit holes in my research and I'm sure some blog readers have as well.  Hopefully this blog post helps organize the confusion.  A bit.  Have a great weekend!

NAFCU's Scope & Applicability Charts for the New Mortgage Rules; NAFCU Calls for CU Reg Relief

Written by Steve Van Beek

The CFPB's 3507 pages of new mortgage regulations has everyone wondering where to start and how to best handle the new requirements.  One of the best first steps is to determine which requirements apply to which types of mortgage loans.  To help with this, NAFCU has put together the following Scope & Applicability Charts:

• Regulation Z (TILA) Mortgage Servicing Requirements

• Regulation X (RESPA) Mortgage Servicing Requirements

• Loan Originator Compensation, Qualifications, Training and Disclosure Requirements

• Regulation B Appraisal Requirements

• Appraisal Disclosure Requirement for Higher-Priced Mortgage Loans

• Appraisal Requirements for Higher-Priced Mortgage Loans

• New Escrow Requirements for Higher-Priced Mortgage Loans

• New Requirements for High-Cost Mortgage Loans

• New Homeownership Counseling Disclosure Requirement

• Ability-to-Repay Requirements and Qualified Mortgage Standards 

Now, you might be wondering how you gain access to those charts.  There are Five Ways:

• NAFCU members have access directly via NAFCU's CFPB Mortgage Rules webpage.

• Registrants for today's webcast on The CFPB's Final Mortgage Regulations (registration is still open) will be able to download the charts during the webcast.

• Attendees at NAFCU's Regulatory Compliance School will hear a similar presentation to today's webcast and will receive access to the charts at School in March (of course, NAFCU members can access the charts here).

• Purchasers of NAFCU's Credit Union Compliance GPS will receive access in mid-March when the 2013 GPS is available.

• Non-NAFCU member registrants of NAFCU's Regulatory Compliance Seminar will receive access in the next week.  If you sign-up for Seminar after today, we'll get the charts to you within a week of your registration.   

A Note on Sharing of Charts.  We put a ton of time and effort into researching and creating these charts.  And, we've made the accessible - in one way or another - to any credit union or organization that is interested.  Please do not share these outside of your credit union.  Of course, if you have any questions - just shoot me an email.  

Hope to see you on today's Mortgage Rules Webcast.

***

NAFCU Calls for Regulatory Relief.  Yesterday morning, NAFCU sent a letter to Senate and House leaders calling for a five-point plan on providing regulatory relief for credit unions through administrative, capital, structural, operational and data security reforms.  You can find the letter here.  For additional details, check out the NAFCU Today.

Finding the New Requirements in the Electronic Code of Federal Regulations

Written by Steve Van Beek

On Friday, I inquired as to whether the CFPB would make available a full version of Reg Z and Reg X as they would be in January 2014.  The seven new regulations are very much related and, in fact, cross-reference each other.

Luckily, the Electronic Code of Federal Regulations links to amendments - including the new mortgage rules. If you are researching a particular regulatory section, you are alerted that there are upcoming changes and the effective date of those changes.  

An example may work best to explain.  Section 1024.20 of Regulation X (RESPA) includes the new Homeownership Counseling Disclosure Requirement that must be provided to any applicant of a "federally related mortgage loan" (don't be fooled by the fact that this requirement was part of the "high-cost" final rule).    

Note: The rules need to be published in the Federal Register before they'll start showing up on the Electronic Code of Federal Regulations.  As we indicated in last Tuesday's blog post, all but one of the rules will be published by the end of this week.

***

On to the screen shots.  The main Regulation X - 12 CFR 1024 - in the e-CFR is below.  You can see the 1024.20 followed by XXX which simply means there will be a future requirement placed in this section.

If you click on the 1024.20 link you'll be taken to the place holder page below.  This means there is not a current requirement under 1024.20 but there is an amendment - the Homeownership Counseling Disclosure Requirement - that will be effective in the future.

If you click the link to the the amendment - you'll be taken to future text of 1024.20 as well as a reminder of the effective date.

The same approach will work for Regulation Z - provided the rules have been published in the Federal Register - and this also works for the Official Staff Commentary (click here and you can see two amendments to the OSC of Reg Z). 

Hope this helps - have a great week!

Updated Q&A on "Fleets"; Feedback on NAFCU's Book of Answers

Written by Steve Van Beek

Yesterday's blog post stated it would be great if NCUA updated their legal opinion letters when they were superseded.  Well, we had an eagle-eyed reader who was searching NAFCU's Book of Answers (member-only) and asked if we were going to update our Q&A.  We sure are - it is below (and will be updated in the Book of Answers soon):

Question: One of my credit union's members has done plumbing work on the side over the years. Recently, her "side" business has taken off, and she'd like to expand. She approached us for a loan to purchase three vans to help the expansion. We are aware of NCUA's Member Business Loans Regulation, and the loan-to-value (LTV) requirements found at 12 C.F.R. §723.7. That regulation, however, exempts the LTV requirements for vans - as long as the van is not part of a fleet. We'd like to avoid the LTV requirements if we can, but our commercial lending department cannot agree on what constitutes a "fleet." Has NCUA issued guidance in this area?

Answer: Yes. NCUA has defined “fleet” in Legal Opinion Letter 12-0764 which superseded NCUA’s prior guidance from Legal Opinion Letter 05-1038.  As you noted, NCUA's Member Business Loans (MBL) Regulation contains LTV requirements for secured loans. Subject to certain exceptions or an NCUA waiver, the maximum LTV for secured MBLs is 80 percent. The LTV requirement, however, does not apply to cars, vans, SUVs, or pick-up trucks - as long as the vehicle is not part of a "fleet." 12 C.F.R. § 723.7(e). The regulation does not define "fleet," however, the 2012 opinion letter defines “fleet” as “five or more vehicles that are centrally controlled and used for a business purpose, including for the purpose of transporting persons or property for commission or hire.  In the letter, NCUA emphasized that the “fleet” definition is composed of the numerical component – five – as well as the central control and used for a business purpose component.  Both components are required before the vehicles would be deemed to be part of a fleet.  In your question, the member has three vans and would be below the numerical component.  Thus, the vans would not be part of a “fleet” and the credit union would not be bound by the LTV requirements of 12 C.F.R. § 723.7.

***

NAFCU's Book of Answers.  We are working on an update to our Book of Answers and we want your feedback.  If you are a current user of the Book of Answers - we look forward to any feedback you have on how to improve this NAFCU member benefit.  What would make the Book of Answers better?  Is it too big and bulky?  Should the Book of Answers be split up by sections (i.e., all lending questions on one PDF)?  

If you are a NAFCU member and haven't used the Book of Answers, take a look (log-in required) and let us know what you think. 

As always, any and all feedback is appreciated.  Feel free to leave a comment on this blog post or email us: [email protected].

NCUA's New Office of National Examinations and Supervision Coming in 2013; July NCUA Economic Update

Written By JiJi Bahhur, Regulatory Compliance Counsel

NCUA’s New Office of National Examinations and Supervision.  During NAFCU’s 45^th Annual Conference and Exposition yesterday, Debbie Matz, NCUA’s Board Chairman, announced the creation of an Office of National Examinations and Supervision, starting on January 1, 2013.   The creation of the new office is part of a reorganization attempt to reallocate existing resources to focus on the largest credit unions and protect the share insurance fund from losses. 

Matz stated that the supervision required for a small credit union is not appropriate for a larger credit union.  The reorganization will enhance oversight on credit unions with more than $10 billion in assets and also assume supervision over corporate credit unions.   

NCUA’s Media Release provides a breakdown of where NCUA’s examination hours are currently spent.  It shows that credit unions with more than $1 billion in assets comprise 47 percent of the industry assets and yet only 10 percent of examination hours are received in that category.  With the creation of the new office, NCUA will concentrate more hours and attention to these larger credit unions in order to address the imbalance.  The reallocation of resources will mean that NCUA will spend less time with well-performing small credit unions. 

For the full text of Matz’s speech, given at NAFCU’s 45^th Annual Conference and Exposition, go here.  For more information on the Office of National Examinations and Supervision, go here.   

***

NCUA’s July Economic Update.  NCUA’s July Economic Update is free and available on YouTube.  The video reviews the latest in economic trends and how they are affecting the credit union industry.  July’s focus was on consumer installment credit, auto loans, and consumer spending.  It also covered recent developments in the housing market and employment sector and the potential risks to the economy. 

Consumer Compliance Resources; NAFCU’s Comment Deadline for NCUA’s 2012 Review

Written By JiJi Bahhur, Regulatory Compliance Counsel

I don’t know about you all, but the break in the middle of the week for Independence Day just made me want the weekend to come even faster!  And so here we are…it’s finally Friday.  Let’s keep it simple but informative today. 

***

Consumer Compliance Resources.  As Steve mentioned in a blog post earlier this week, the Federal Reserve's 2nd Quarter Consumer Compliance Outlook is now available.  There are some really great articles in this issue, but I wanted to point you to the very handy section called Consumer Compliance Resources.  This particular page of the Consumer Compliance Outlook gives you the ability to link to very valuable consumer compliance resources – a Compliance Officer’s dream come true! 

Give it a try!  The page provides updated links to an array of resources, including but not limited to:

• CFPB’s Official Website (plus 7 other related links)
• Dodd-Frank Act (plus 3 other related links)
• Federal Reserve’s Consumer Compliance Handbook
• FFIEC Guidance on Electronic Banking
• Payment Cards Center
• Regulation B (plus 13 other Fair Lending-related links)
• Reg C/HMDA (plus 5 other related links)
• Reg E/EFTA (plus 2 other related links)
• SCRA (plus 6 other related links)

And it goes on and on.  It wouldn't be a bad idea to save that resource page in your favorites. 

***

NAFCU’s Comment Deadline for NCUA’s 2012 Review.  Today is the deadline for submitting comments to NAFCU on our Regulatory Alert regarding NCUA’s 2012 review of its regulations.  Comments can be submitted by answering the questions in the Regulatory Alert (accessible to members only) or you can send an email to Tessema Tefferi, Regulatory Affairs Counsel, at [email protected].

Updated Search Bar on the NAFCU Compliance Blog

Written by Steve Van Beek

Given the fast paced-nature of the regulatory changes, we thought it would be a good idea to slow down on Friday and introduce a revamped tool to help find those past blog posts or regulatory changes that you need to now implement.  

Updated Search Function.  We've made a slight change to the NAFCU Compliance Blog webpage that allows for much greater search capabilities.  The search bar now provides a more robust way to find past blog posts on the "Equal Housing Lender" poster or "adverse action notices."    

How to Use.  Below is a quick tutorial on using the search function.

• Go to the blog's main page - www.nafcucomplianceblog.com - and look to the left-hand side for the new search bar.      
• Type in your search (using quotation marks provides more specific results - such as "fair lending").
• View your results directly in the NAFCU Compliance Blog.
• The search results default to showing the Best Match.  If you want to sort by date, click the link for "Most Recent" just below the main heading.  

If you have a few minutes, try out a couple of sample searches to learn how it works.  If you have other tips, be sure to share as well.  For additional tips on using the NAFCU Compliance Blog as a resource tool, check out this blog post.  

Have a great weekend!

Compliance Officer Skills & 7 Compliance Rules for Non-Compliance Managers

Written by Steve Van Beek

Today is Compliance Officer Skills day at NAFCU's Regulatory Compliance School.  We'll be talking about:

• The Role of the Compliance Officer; 
• How to Conduct Research; 
• Dealing with Outside Counsel;
• How to Write Effectively;
• Policies and Procedures Writing; and 
• Vendor Management.

But, not everyone is a compliance officer or has responsibilities in all of these areas.  

Well, Anthony Demangone had an outstanding blog post at the Musings from the CU Suite blog which highlights his "7 Compliance Rules for Non-Compliance Managers."  I couldn't dream of writing as well as Anthony, so I'll just give you the 7 rules plus an 8th added by a commenter and pass you along to Anthony's post.

1. You are regulated.
2. NCUA writes most of this stuff down.
3. NCUA wears two hats.
4. NCUA isn't always right.
5. It's not just regulations.
6. Ask for help.
7. Read.
8. Bonus: Regulations flow from laws (written by Congress - enough said).

If you are interested, anyone can subscribe to the Musings from the CU Suite blog (which is published a couple of times a week).   

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."

***

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!

New NAFCU Blog, Same Approach

Written by Anthony Demangone 

When my father dropped me off at McKean Hall for my freshman year at Penn State, I knew I wanted to be a journalist.  I quickly joined the college newspaper and started writing.  I never found stories about intrigue and politics interesting to write.  Rather, I focused on things that interested me.  

I somehow got sidetracked on my road to the Pulitzer Prize. Life happens.  But my love of writing never wore off.  That’s one of the reasons I started the NAFCU Compliance Blog back in 2007.  

But life happened…again.   When I took on the role of NAFCU COO, I handed off this blog to Steve’s capable hands.  

Well, the addiction has overtaken me yet again.  As Steve mentioned a few weeks ago, I’ve started a new blog – Musings from the CU Suite.  What’s the new angle?  Work and management are tough.  But there’s a ton of good information out there about how to be better at both.  My new blog will attempt to bring the best of all of that to you.  

I hope you consider wandering over to sign up for the blog.  It would be great to have you join the conversation.

Now, I did write along those lines a wee bit back in the day.  Here are some of those old posts, which I hope you find useful.  

• Just how did my view of compliance change now that I’m NAFCU’s COO?
• A good compliance officer should try to read the tea leaves.
• In an age of Google, Facebook, Twitter, and iPads, don’t forget the research power of picking up the phone. 
• The art of making decisions when you are “off the grid.”
• My ode to compliance officers.  

Have a great week, guys.  

NCUA's New Website; Compliance Hot Topics Webinar

Written by Steve Van Beek

It is amazing how a website change can extend the time it takes to research a compliance issue.  NCUA's website change not only changed the links to existing pages - such as Opinion Letters and Letters to Credit Unions - but it also seems to have impacted an already rough search process.

It is especially frustrating when you know a legal opinion letter exists and you can't find it.  However, there is a way to bypass NCUA's search engine (or any website's) and use Google instead.

Try searching for "site:ncua.gov foreclosed property" and you will find NCUA's 2008 Letter to Credit Unions on Holding Foreclosed Properties.

***

On December 15, 2011, the Philadelphia Federal Reserve's Consumer Compliance Outlook will host a free webinar on Consumer Compliance Hot Topics.  While there is not a listing of topics, these webinars are pretty good (and the price is right!)    

Tracking Federal Legislation on the Web

Written by Jillian Pevo, Associate Director of Legislative Affairs

Let me preface this by saying it was Steve’s idea for me to walk his faithful readers through the best ways to track different pieces of legislation online. So, if you find this post boring, you know who to blame. To spice things up let’s first look at the origins of the Internet (at least according to some), and the long history politicians apparently have with this wonderful research tool.

In all seriousness, these days there are a lot of resources on the Web that can be very helpful in checking up on the legislative goals of your Representative and Senators. The most encompassing and up-to-date legislative information tends to be on the "Thomas" site maintained by the Library of Congress. There are several ways to conduct an inquiry here.

For example, if you want to read the text of the legislation introduced by Representative Ed Royce to raise the credit union member business lending cap, or see if your own Representative has signed on as a cosponsor, click “search by bill number” and enter H.R. 1418. A bill originating in the House of Representatives is designated by the letters “H.R.” followed by a number that it retains throughout all its parliamentary stages. Bills introduced in the Senate begin with an “S.” After you plug in H.R. 1418, you can see all actions taken on the bill including the recent subcommittee hearing, how many members are cosponsoring the bill and who those members are. If you didn’t know the bill number, you could have just gone under “browse bills by sponsor” and selected Ed Royce. This would give you a bucket list of every single bill Representative Royce has introduced this Congress. Thomas is a quick and easy way to gather baseline information about what issues members of Congress care about.

From the Thomas site, you can also gain access to the Congressional Record which each day updates the public on every detail of the previous day’s legislative work. Every bill introduced, every member added as a cosponsor, every amendment filed, every roll call vote taken – you name it, it’s in here.  There is also a lot of information found on the House.gov and Senate.gov websites about members and committees.

That’s the basics, but you are always welcome to call our Legislative team at NAFCU who can help answer questions and give you more up-to-date information on how various issues are shaping up on the Congressional front. Most of us have worked on Capitol Hill and we all enjoy connecting our credit union members with what’s going on “Inside the Beltway.”

I’m so appreciative that I could be a guest writer on this blog – as they say, always a bridesmaid never the bride! I’ll leave that to Steve.  :)     

Electronic Code of Federal Regulations

Written by Steve Van Beek

With the creation of a new financial regulator, comes the requirement to track and research new regulations.

One of my favorite starting research points is the main Electronic Code of Federal Regulations page.

What is the e-CFR?  

"The Electronic Code of Federal Regulations (e-CFR) is a currently updated version of the Code of Federal Regulations (CFR). It is not an official legal edition of the CFR. The e-CFR is an editorial compilation of CFR material and Federal Register amendments produced by the National Archives and Records Administration's Office of the Federal Register (OFR) and the Government Printing Office. The OFR updates the material in the e-CFR on a daily basis." 

This main page provides the ability to search federal regulations by Title (everyones' favorite hobby, right?)  The majority of the regulations impacting credit unions are found in Title 12 (Banks and Banking) of the Code of Federal Regulations.

For example, the Federal Reserve's regulations are in the 200's (such as Reg E - 12 CFR 205 or Reg Z - 12 CFR 226).  NCUA's regulations are in the 700's (such as Truth in Savings - 12 CFR 707 or Member Business Loans - 12 CFR 723).  

And - Title 12 is also the location of the 1000's series featuring the Consumer Financial Protection Bureau's regulations. 

***

This also brings up an interesting situation.  The Federal Reserve "owned" Reg Z and had regulatory authority over it - which is why Reg Z is in the Federal Reserve's section under 12 CFR 226.  Now that the CFPB has regulatory authority over the consumer regulations (such as Reg Z) - will the CFPB make changes and bring these regulations under the 1000 series?  

We haven't heard any indication either way on this - but if the CFPB does move the regulations over they would be located in the 12 CFR 1000 section of the Code of Federal Regulations.  

The Role of Comment Letters

Written by Steve Van Beek

I hope everyone had a great holiday weekend and the chance to spend time with family and friends while remembering those who made the ultimate sacrifice for our country.  

***

Unfortunately, the summer regulatory season is about to heat up.  The pace and scope of potential new regulations is frightening.  Another variable coming into play is the July 21, 2011 transfer of powers to the Consumer Financial Protection Bureau (CFPB).  

Comment Letters.  One of the greatest tools that credit unions have is the ability to comment on proposed regulations.  Regulatory agencies must follow "notice and comment" rulemaking for the majority of their new requirements (as opposed to guidance documents which can simply be released by the agencies as they do not carry the force of law).

NCUA Chairman Matz recently released a press release and video on the importance of credit union comment letters.  Chairman Matz also gave advice on how to write an effective comment letter.

Now, you may be thinking:  We cannot even keep up with the existing final regulations, how can we keep track of proposals and find the time to write comment letters?

Valid point.  This is an understandable concern for most credit unions - especially small credit unions.  However, I would argue that input during the rulemaking process can help ease the compliance burden of final regulations.  Before a rule is finalized is the best time for credit unions to ask for clarifications and ask the regulatory agencies to elaborate on their expectations.  

NAFCU Members:  Our Regulatory Affaris team releases Regulatory Alerts on proposed regulations and you can submit your comments directly to NAFCU in addition to (or in lieu of) sending your comments directly to the agency. 

***

We will have more on comment letters in the future as their role will be crucial in communications with the CFPB which will have broad powers to regulate numerous industries - including credit unions - at the same time.   

The Federal Register

Posted by Anthony Demangone

Regulations are fine and dandy, but the Federal Register often is the bee's knees.  Now, that statement seems to imply that things that are the bee's knees are better than those that are fine and dandy.  I have no idea if that's the case. But I do know that the Federal Register is a huge asset for compliance officers.  This blog post from the past says why.

***

I think we've all read a regulation at least once that caused us to scratch our heads.  We may ask why a regulation was put in place.  Or, we may have a situation that is not clearly discussed in the regulation.  Here's a good tip to help you find some extra guidance.

1. Find the regulation that you are researching using GPO's electronic code of federal regulations page.  I use this even for NCUA's regulations.  I'll explain why below.  Find the regulation that you are researching.

2. Scroll to the bottom of the regulation you are researching.  As an example, I've picked NCUA's Insurance/Fidelity Bond Reg.  12 C.F.R. Part 713.5.  Take a look at it here.

3. At the bottom of many sections, you'll see a Federal Register notation.  At the bottom of the reg I selected, you see this: [64 FR 28720, May 27, 1999, as amended at 70 FR 61716, Oct. 26, 2005].  This is a gold mine of information.  This tells you the dates the reg was amended and the actual Federal Register that houses the final rule.  The regs on www.ncua.gov don't have that information.

4. Here's a link to the Federal Register Page.  If you scroll down, you'll see the "browse the table of contents from past issues."  Look back at number 3 above.  The reg in question was amended most recently on October 26, 2005.  So, let's select 2005 from the drop down menu to browse through.  If you did it correctly, you should see this.  From there, you should be able to find the October 26 issue, which is here.

5. Scroll down.  Under "National Credit Union Administration" you'll find the final rule.  Which is here. 

Et voila!  You have the final rule that most recently amended this section.  This can come in handy, as the agency will always explain the purpose of the rule, give background information, etc.  And they will usually tell you the last time that they amended the rule if you want to keep winding yourself back.  I've used this trick quite often. 

_____________________________________________________

Check out the Compliance Guide for Credit Unions
Be sure to use promo code NAFCU11 to save 10% 

And Oldie But Goodie

Posted by Anthony Demangone

In an age of Twitter, Facebook, blogs, the internet, Google, Four Square, Blackberries, Androids, iPads, the "Cloud," and email, it can be very easy to overlook one of the most effective technologies for compliance research.

The telephone.  Here's an old blog post about this old, but useful technology.

***

I love to do research.  The challenge.  The riddle.  Finding an answer can be a rewarding experience.  But we don't always have all the time in the world, and guidance doesn't always answer every question. 

Never forget to ask for help.  Example?  You have a question regarding how to escheat funds in your state.  After looking at your guidance documents, you still have the question.  Pick up the phone and call your state's office of abandoned property. Chances are good that there's a person in that office who has answered your question dozens of times...this year. 

A quick call can save time and frustration.  You can't be expected to know everything!

 

FAQs

Posted by Anthony Demangone

Here's an old post, which references a few other posts as well.  All of them touch upon "frequently asked questions" documents.  Regulators issue these guidance documents to answer, well, frequenly asked questions.  These documents can be very useful for a number of reasons.

1. They generally are written in something akin to English. 
2. They can be a quick way to provide an authoritative answer to a colleague.  For example, is a modular home a manufactured home for purposes of Regulation C? Here's what the FFIECsays in a HMDA FAQ.

Modular homes. Is a modular home a manufactured home for purposes of Regulation C?

Answer: For Regulation C reporting, a manufactured home is one that meets the HUD code, 12 CFR 203.2(i). The official staff commentary indicates that modular homes that are ready for occupancy when they leave the factory and meet all of the HUD code standards are included in the definition of "manufactured home".203.2(i)-1. The comment, and a prior FAQ on this site, have raised questions about whether a modular home should be reported as a manufactured home or as a one- to four-family dwelling. Until the Board provides further guidance regarding modular homes, lenders may, at their option, report a modular home as either a one- to four-family dwelling or as a manufactured home.

So, take a look at the blog post below and see if any of the FAQs are useful.  We probably should update the post at some point, as new FAQs are being produced all the time. 

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.  

Happy hunting, everyone!

________________________________________________________

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Be sure to include the NAFCU11 promo code at checkout to save 10% on the price.  

Useful Post from the Past

Editor's Note. All of NAFCU's compliance attorneys are at school today.  We still have folks at NAFCU who can help you out, but your best bet is to email us at [email protected] today for assistance.  Keep in mind that response times may be a bit longer than normal.

Posted by Anthony Demangone

Here's an old blog post from last May that I think would be useful to share again, especially with all of the new subscribers to the blog.  I'll try to hammer home the points raised in this blog with attendees this week.

***

When you research a compliance issue, it is very wise to find "the grid."  This is the known universe of law, regulation or guidance that can help you find an answer to your compliance quest.  For example, if you are researching an issue related to periodic statements, the grid would include the following:

• NCUA's Truth in Savings regulation, including all of its appendices. 
• NCUA guidance, such as legal opinion letters, and the Examiner's Guide.
• Regulation E, including all of its appendices. 
• Federal Reserve guidance on Regulation E. 
• The Federal Reserve's Truth in Savings Regulation, and all of its appendices.  While Regulation DD does not  govern credit unions, the information may be useful.
• Any Federal Reserve Guidance  on Regulation DD. Again, while not controlling, it may be useful. 
• In addition, you may want to look for secondary documents.  These could include manuals, trade association rags, such as the NAFCU Compliance Monitor, or compliance-related websites and blogs.  A Google search can help locate these sources.  
• Possibly, a court case could be useful, but this is a rarity. 

Now that you  have the grid, start pouring through the information.  There's a potential issue that you must consider.  You may find that your research takes you off the grid.  There isn't a clear answer to every compliance question.  Regulators do not issue regulations to address every conceivable situation.  And when they do regulate a situation, you'll find that they don't even address every possible outcome.  Like I said, you'll often have a question that is not answered on the grid.

 So, what do you do?  Here are some possible solutions.

1. Plow ahead blindly.  Can you do this or that?  There's no answer, so just go ahead and do it.  This solution is very simple, and it does allow processes to move ahead quickly.  However, it doesn't measure the risk of a given situation.   You can use this method and get away with it.  But should a problem pop up (lawsuit, exam finding, etc.), you may have to unwind a decision in a very costly way.
2. Hit the brakes.  Can you do this or that?  There's no answer, so let's shy away from the potential risk. This solution is also simple, and it protects you from risk.  However, it doesn't measure risk, and it may keep you from implementing viable solutions that can help your members and your bottom line.  You'll never get burned using this system.  If you don't cross the street, you won't get hit by a horse and buggy.  But you won't get to the other side, either. 
3. Control the risk.  There are a number of ways to do this.  If a given situation has no clear guidance, take a step back and think about risk in a global way.  Could the decision lead to a lawsuit?  Member complaints?  Disrupt operations?  Affect liquidity risk?  Reputation?  Strategic risk?  Does the decision merit a legal opinion from an attorney?  What does your examiner think?  Your Regional Director?  Should you call someone at NCUA's General Counsel's office and chat about it?  Or hire an attorney to do any or all of the above?  Can you purchase insurance to protect you if the decision leads to problems?  Have other credit unions gone down this path?  What happened?  This solution is not simple, but it does measure risk and allow management to make an informed decision.  Knowing the risk, management will be better able to price the product, limit concentration risk, think about alternatives, etc.  

Which is the best solution?  That's a (3) business (3) decision (3) for your (3) credit union.  Only (3) you'll know what's (3) best.  Living off the grid can be disconcerting.  But once you have a methodology for handling those situations, you will learn to live with the uncertainty.

________________________________________________________

Managers Guide to 2010: Addressing Risk in a New Regulatory Environment
Be sure to use promo code NAFCU11 at checkout to save 10%.

This and That...

Posted by Anthony Demangone

I hope everyone enjoyed their long weekend.  Winter appears to be loosening its grip on the Washington, D.C. area. There's nothing like the sun on one's shoulders to put a skip in your step. Of course, by just thinking that out loud, I've ensured that we'll have a terribly cold spring.   Here are a few things to kick off the week.

Consumer complaints.  Last week, NCUA’s Chairman Debbie Matz and senior NCUA staff held a Webinar that covered a range of timely issues.  One of those concerned NCUA’s practice of handing consumer complaints.  As you may know, NCUA has established a new Office of Consumer Protection, which, among other things, will handle member complaints.  Previously, after receiving the complaint, NCUA would contact the credit union and ask it to reply to the member and copy NCUA.  This practice has now changed.  Now, after receiving a complaint, NCUA will contact the credit union (specifically, the credit union’s supervisory committee) and ask that it responds to NCUA’s office of consumer protection.  This is an important change and credit unions should be aware of it.

Archives.  I'm embarrassed to pass along something that I learned about NAFCU's own compliance blog.  Check out this archives page, which provides archives back to the beginning of the blog, as well as links to each of the blog's categories.  Here's how the conversation went.  

Steve: Check out this archive page.
Anthony: That's on our blog? 
Steve. Yes.
Anthony.  Cool.  

That's right - nothing gets by me.

Sale of non-deposit investments.  NCUA has published a legal opinion letter, which is their response to NACUSO on a number of issues related to NCUA's recent guidance on the sale of non-deposit investments. 

SCRA Notice.  HUD has updated its SCRA notice.

HPML.  The Bankers Compliance Consulting Blog has a nice post on HPMLs and how the issue of truncating versus rounding can make a big difference.  

_________________________________________________
 

 Check out Thompson's HR Policies manual.  Be sure to use the promo code NAFCU11 to save 10 percent at checkout.

Stop Squinting; NAFCU Member Call-In

Posted by Anthony Demangone

Welcome to a new week.  Today, I'll try to be brief.

Stop Squinting.  Are you tired of squinting at small print on your computer screen when using the internet to conduct research?  Squint no more! (Or at least less.)  Simply press the "Ctrl" and "+" keys on your computer's keyboard at the same time, and the text should get larger.  If you overdo it, simply press the "Ctrl" and "-" keys to reduce the size of the text. This comes in handy for reading the Federal Register, or any other online document that appears to have been written by an action figure.  It doesn't work for emails, but if you're looking at a document via Internet Explorer or Google Chrome, give it a try.

NAFCU Member Call-In. NAFCU members: Please join us for "Challenges & Opportunities," a NAFCU member-only conference call on Feb. 15, 4-5 p.m. EST. NAFCU President Fred Becker and the association's government affairs staff will report on the latest developments in Washington affecting credit unions, including the new Dodd-Frank regulatory reform law, the Consumer Financial Protection Bureau, corporate credit union issues, insurance fund assessments and recent trends in compliance and regulation. In addition, we will discuss the outlook for the economy.  NAFCU's Member Call-In is free, but you must register to participate. Call our Member Service Center at (800) 344-5580 or (703) 522-4770. You can also register online.

***

Roundtables; Don't Forget Google

Posted by Anthony Demangone

Last Friday, I had the good fortune to attend a meeting of the Capital Area Compliance Roundtable.   The Roundtable is a great example of collaboration.  A good number of credit union compliance officers, and a handful of trade peeps and attorneys, gather to chew the collective fat. Area credit unions take turns hosting the event.  We discuss problems and solutions to our compliance conumdrums.  In addition, we invariably trade a few laughs.  I always leave the meeting better off having attended.  If you don't have a roundtable nearby, by all means start one!  

In this meeting, we devoted some time to the art of compliance research.  With that in mind, here are a few tips about Google that can help you reserach.

1. This New York Times article provides 10 Google "tips" that can help focus your searches.  For example, you can use Google to search specific websites, or you can easily exclude certain terms that you don't want to see in results. The tricks are very clever.
2. Don't forget Google Government.  This Google search engine just searches government sites.  This cuts away a lot of the clutter that people like me create on the internet.
3. Google Scholar lets you use Google to search court cases. If you're like me, the first think you'll do is search your last name.

I hope these items are useful.  Happy hunting!

 

Official Staff Interpretations

Posted by Anthony Demangone

If I could only stress one research tool, it would be the use of Official Staff Interpretations.  The Official Staff Interpretation is an appendix to a regulation that gives you additional information about a regulatory requirement.  You won't find them on every regulation.  They generally are found only in Federal Reserve regulations, but NCUA included an Official Staff Interpretation for its Truth in Savings regulation.

Here's a good example.  In NCUA's Truth in Savings regulation, account is defined as:

(a) Account means a share or deposit account at a credit union held by or offered to a member or potential member. It includes, but is not limited to, accounts such as share, share draft, checking and term share accounts. For purposes of the advertising regulations in §707.8, the term also includes an account at a credit union that is held by or offered by a share or deposit broker.

That seems simple enough, right?  Well, visit the Truth in Savings Official Staff Interpretation appendix to Truth in Savings.  These appendixes are laid out the same as the regulations themselves. So, for example, there's a section that provides additional information about the definition of "accounts." And the Official Staff Interpretation not only gives additional examples of what is an account, but they give a list of things that are not accounts for the purpose of NCUA's Truth in Savings regulation.  Some things on the list may surprise you.

2. Other accounts. Examples of accounts not subject to the regulation are:

i. Mortgage escrow accounts for collecting taxes and property insurance premiums.

ii. Accounts established to make periodic disbursements on construction loans.

iii. Trust accounts opened by a trustee pursuant to a formal written trust agreement (not merely declarations of trust on a signature card such as a “Totten trust,” or an IRA or SEP account).

iv. Accounts opened by an executor in the name of decedent's estate.

v. Accounts of individuals operating businesses as sole proprietors.

vi. Certificates of indebtedness. Some credit unions borrow funds from their members through a certificate of indebtedness that sets forth the terms and conditions of the repayment of the borrowing, such as federal credit unions do through 12 CFR 701.38. Such an account does not represent an account in a credit union and is not covered by part 707.

vii. Unincorporated nonbusiness association accounts.

So, NCUA's staff is telling you that if you have accounts that are on that list, NCUA's Truth in Savings regulation does not apply to those accounts. 

Like I said, nearly all the Federal Reserve regulations have Official Staff Interpretations.  So there are a ton of helpful nuggets for Regulations Z, E, B, CC, D, C...you get the idea.   I would guess that roughly one-quarter of all the answers we give at NAFCU come right out of the Official Staff Interpretation Sections.  Give or take.

Research Tip from the New York Times

Posted by Anthony Demangone

All the news that is fit to print, and some handy research tips as well.  Steve Van Beek located this gem from the New York Times.  This article highlights 10 simple Google search tips.   Tip number one is a dandy.

1. Use the “site:” operator to limit searches to a particular site.  I use this one all the time, and it’s particularly handy because many site’s built-in search tools don’t return the results you’re looking for (and some sites don’t even have a search feature). If I’m looking for WWD posts about GTD, for example, I could try this search: GTD site:webworkerdaily.com.

So, you could use this too to harness Google's search power on places such as:

• site:ncua.gov
• site:nafcu.org 
• site:nafcucomplianceblog.typepad.com 
• Or your own website, to see if people are using terms such as interest, CD, or customer.  Or search for $100,000 to see if you are up to date on insurane levels.  Or, "no more than three" to see if you've incorporate recent changes to Regulation D.

Mortgage Loan Officers; Supplemental Capital; GPO Access

Posted by Anthony Demangone.

Here are a few items that caught my eye.

Mortgage loan officers and "wage and hour" laws.  File this one under "don't shoot the messenger."  The Department of Labor recently issued an administrator's interpretation indicating that the "typical" mortgage loan officer does not qualify for the "administrative exemption" under the Fair Labor Standard Act's rules.  In other words, the DOL does not view them as exempt.  In other words, they should get overtime.  The interpretation admitted that the term "mortgage loan officer" does refer to a variety of jobs, so the the guidance lays out what it considers to be the typical mortgage loan officer position.  You'll want to have your HR people review the guidance document to ensure that you've categorized your employees properly.  (Keep in mind that we're not employment law experts here at NAFCU.  We're just passing this along, as it is directly related to our industry.)

Supplemental capital.  NCUA Boardmember Gigi Hyland announced the release of a supplemental capital white paper.  The link will take you to the presser, which provides a general overview of the paper's conclusions. 

NCUA regulations.  NCUA has a nice document that contains all of its regulations.  But NCUA doesn't update that document very often.  That's why a good source is the GPO online Code of Federal Regulations, which includes an up-to-date electronic version of NCUA's regulations. 

Organizing the Compliance Information Flow; Webcasts

Posted by Steve Van Beek

Wow.  It has been a whirlwind of a year.  The speed and complexity of the regulatory changes has been maddening.   

I utilize a few unique tools to help obtain and organize compliance information to make my life easier and less stressful.  At last year's Compliance Seminar in San Francisco, I presented on "Organizing the Compliance Information Flow" and I believe these tools could be very useful to compliance officers looking to sift through information during compressed implementation periods.  I created a powerpoint slideshow as well as a user's guide to detail some of the tools I use to stay organized.  Hopefully some of these resources are useful and can help save you time.  

***

On Thursday, November 12, NAFCU will host a webcast on Essential Updates on FHA Lending Programs and RESPA.  Assistant Secretary of Housing - FHA Commissioner, David H. Stevens will discuss updates and changes to FHA Lending Programs.  The webcast will also address implementation of RESPA - scheduled to be effective January 1, 2010.  This webcast is a great opportunity to hear directly from FHA Commissioner Stevens on FHA lending and RESPA.  NAFCU's President and CEO, Fred Becker, will moderate the webcast.  Please note: Due to Veteran's Day, this webcast will be on Thursday rather the customary Wednesday timeslot.  

Additionally, NAFCU will be offering a unlimited webcast subscription for 2010.  This is your opportunity to sign-up for all of NAFCU's webcast at one price for the year.  There are a minimum of 18 webcasts planned for 2010.  Given the rapidly changing regulatory environment, this subscription allows you to ensure you are able to attend and view all of NAFCU's webcasts.  Remember, even if you are unable to attend the live webcast - all of NAFCU's webcasts are archived for 6 months for later viewing.   

Research Tip

We all get a ton of information each day from emails.  And I'm not helping matters with this blog!  How do you manage all these emails?  Let me use the NAFCU Compliance Blog emails as an example.

Problem.  While the emails contain useful information, the subject line of the email is the same every day.  When I look at all the emails together, they all look alike.  Also, it is hard for me to look through all of them to find the issue that was important to me. 

Solutions. (The following solutions can be used in many other areas of research as well.)

1. Change the daily email subject line.  It is very, very easy to do.  Double click on the email in your inbox.  Go to the subject line and highlight the text.  Then type in the new subject line.  When you go to close the email, you will be asked whether you want to save your changes.  Hit yes if you want the new subject line to be permanent. 
2. Use folders.  Many email systems allow you to create folders to organize your inbox.  I have about 120 of them.  (Seriously, I do.) I have folders for risk management, elections, board issues, Regulation Z, UDAP, etc.  If you have an email that is worth saving, send it to the approriate folder.
3. Use the blog's categories.  Each NAFCU Compliance Blog posting usually includes categories at the bottom.  For example, today's category is "research."  But you don't see the categories in the daily email.  If you go to the blog's homepage, you'll see these categories along the right side.  If you want to read all the postings that deal with research, for example, click on that category.
4. Use the blog's search engine.  If you go to the actual blog homepage, there is a search engine (upper left side) where you can type in a word or two to help locate what you need.

5. Ask Dr. Google for help.  I find Google to be an amazing tool.  If you think you read something on the blog, simply go to Google and enter a search.  For example, if you were looking for our FAQ posting, I would enter the following search on Google: "NAFCU Compliance Blog" and "FAQ".  You'll get what you need.

Let Your Fingers Do The Walking

I love to do research.  The challenge.  The riddle.  Finding an answer can be a rewarding experience.  But we don't always have all the time in the world, and guidance doesn't always answer every question. 

Never forget to ask for help.  Example?  You have a question regarding how to escheat funds in your state.  After looking at your guidance documents, you still have the question.  Pick up the phone and call your state's office of abandoned property.  Chances are good that there's a person in that office who has answered your question dozens of times...this year. 

A quick call can save time and frustration.  You can't be expected to know everything!

Brother, Can You Spare An FAQ? 2.0

I love FAQs.  Someone just passed a few good ones my way, so I thought I'd update the master list and pass it along your way.  Enjoy.

1. HUD General FAQ on RESPA * New FAQ*
2. NCUA FAQ on Accounting for Loan and Lease Losses *New FAQ*
3. General HMDA FAQ.
4. NCUA's FAQ on the NCUA Privacy Regulation.
5. OFAC's FAQ.
6. NCUA's FAQ to Boardmember Hyland's webinar on third party due diligence and strategic planning.
7. General BSA FAQ. (Supplied by FinCEN.)
8. General BSA/Money Laundering/OFAC FAQ.  (Attachment to 05-CU-09)
9. FAQ concerning final "Customer Identification Program" rule. (Attachment to Regulatory Alert 04-RA-04.)
10. FAQ for the Children Online Privacy Protection Act (COPPA.) (It is one of the four attachments to 01-RA-07.  Unfortunately, I can't seem to find the FAQ as a stand-alone document.)
11. FFIEC FAQ on "Authentication in the Internet Banking Environment."
12. FAQ on Appraisal Requirements and Interagency Statement on Appraisal Independence and Evaluation Functions. (Please remember that there is a proposal out to amend these.) 

Good Things Come in Threes: Resources for the SCRA

I don't know how this happens, but things often do come in threes.  The last two days I've shared some good research tips.   Well, yesterday I came across two great resources for the Servicemember's Civil Relief Act.  I've always been looking for good resources for this, as there are no implementing regulations for this Act.

Here's the "Judge's Guide" to the SCRA.

And here's the SCRA Guide.  All 146 pages!

Enjoy, enjoy!

Regulation D Gold Mine

Someone had a question for me last week on Regulation D.  After a few minutes of research, I found the following resources.  I almost shed tears of joy upon their discovery.

Questions and Answers Regarding Reg D.  This document comes from the Philadelphia Fed, and it contains a ton of information on Reg D.  There are questions and answers.  There are legal interpretations.  There are staff opinion letters. 

Reg D Official Interpretation Letters.  This 4-page document (also from the Phily Fed) lists major legal letters from the Fed that clarify Reg D issues.  Good stuff.

Good Research Tip

I think we've all read a regulation at least once that caused us to scratch our heads.  We may ask why a regulation was put in place.  Or, we may have a situation that is not clearly discussed in the regulation.  Here's a good tip to help you find some extra guidance.

1. Find the regulation that you are researching using GPO's regulation page.  I use this even for NCUA's regulations.  I'll explain why below. 

2. Scroll to the bottom of the regulation you are researching.  As an example, I've picked NCUA's Insurance/Fidelity Bond Reg.  12 C.F.R. Part 713.5.  Take a look at it here.

3. At the bottom of many sections, you'll see a Federal Register notation.  At the bottom of the reg I selected, you see this: [64 FR 28720, May 27, 1999, as amended at 70 FR 61716, Oct. 26, 2005].  This is a gold mine of information.  This tells you the dates the reg was amended and the actual Federal Register that houses the final rule.  The regs on www.ncua.gov don't have that information.

4. Here's a link to the Federal Register Page.  If you scroll down, you'll see the "browse the table of contents from past issues."  Look back at number 3 above.  The reg in question was amended most recently on October 26, 2005.  So, let's select 2005 from the drop down menu to browse through.  If you did it correctly, you should see this.  From there, you should be able to find the October 26 issue, which is here.

5. Scroll down.  Under "National Credit Union Administration" you'll find the final rule.  Which is here. 

Et voila!  You have the final rule that most recently amended this section.  This can come in handy, as the agency will always explain the purpose of the rule, give background information, etc.  And they will usually tell you the last time that they amended the rule if you want to keep winding yourself back.  I've used this trick quite often. 

You can access other research tips posted on the NAFCU Compliance Blog here.

Great NAFCU Resource; Regional Coalitions

Hey NAFCUers, do not forget about NAFCU's Regulatory Alerts and Regulatory Finals.  (NAFCU member log-ins needed to access any individual Final or Alert.)  Carrie Hunt and her staff do a great job of writing mini "white papers" when a proposed or final regulation comes our way.

And if you need to see what comment periods are open, go to this page.

Here's why I love Alerts and Finals - they have a copy of the final rule built right in.  And if you look, we have Alerts and Finals available all the way back to 1999.  When I need to find the preamble to an older final rule, I often look here first.

***

NCUA recently issued NCUA Letter to Credit Unions 08-CU-15, which highlights the growth of regional coalitions that work on critical infrastructure issues.  If you are interested in networking with professionals in your area that work on business continuity and other related issues, read this piece of guidance. (And here's a link to its attachment.)  Note that there are not regional partnerships that cover every area in America at this time.

Reg D; NAFCU Book of Answers has been updated; HMDA Asset Size Exemption up to $37 Million

Hey NAFCU members: the NAFCU Book of Answers has been updated and is available here.   (NAFCU member log-in needed.)

For you non-NAFCU people, here's a snippet from the Book of Answers.

Question: If a member has a direct deposit into a share account and funds are then automatically dispersed into other of his/her accounts, do these dispersals count as part of the allowable monthly transactions under Regulation D?

Answer: No. According to the Federal Reserve, “(w)here a deposit is made directly to one account but within a very short time routine disbursements of a portion of a payroll deposit are made to family member accounts or other accounts of the depositor, such disbursements are an element of the deposit transaction and are not to be regarded as transfers.” Where credit unions and members have made agreements for these allocations of a direct deposit, such transfers do not make the account in which the payroll funds have been initially deposited a transaction account. 2-302.8, Q15, Federal Reserve Regulatory Service Volume I, Regulation D (Questions and Answers).

***

The Federal Reserve has bumped up the asset size exemption for HMDA reporting.  It is now $37 million, effective January 1, 2008.

"As a result, depository institutions with assets of $37 million or less as of December 31, 2007, are exempt from collecting data in 2008.  An institution’s exemption from collecting data in 2008 does not affect its responsibility to report the data it was required to collect in 2007."

The NCUA Compliance Self-Assessment Guide

The Compliance Guy is a generalist. (As are most compliance officers.)  As my father points out, this means that I don't know that much about anything.  I always counter that know a little bit about a lot of things.  That being said, my Dad is amazed that I'm gainfully employed.  Thankful, but amazed.

Due to the general nature of my knowledge, I'm always thankful for useful compliance documents.  And the NCUA Compliance Self-Assessment Guide is one of them.  From the Bank Secrecy Act, to Regulation Z, this guide provides a good overview of numerous laws and regulations.  There are checklists, glossaries, and more.  The guide even covers Regulation S.  (I thought that would catch your attention.)

And if you hire a new compliance team member, this guide is a great training tool.  This is definitely one of the Compliance Guy's favorites.

Gift Cards

Yesterday, the OCC released what appears to be their annual "consumer alert" regarding gift cards.  Access the press release here.  You can access the consumer tips here.  The Compliance Guy plans on sending this to his friends and relatives this holiday season, as it is full of useful, consumer-centric tips about fees, disclosures, and the like.

But what about guidance for credit unions that wish to offer gift cards to their membership?  There isn't all that much guidance on the issue.  Gift cards are partially regulated by Regulation E.  The Federal Reserve, however, has not issued a regulation that governs gift cards specifically.

In August 2006, the OCC issued guidance for national banks to consider when offering gift cards.  Read a press release about the guidance here.   Read the guidance here.  OK, so it isn't from NCUA.  Fine.  But the OCC Bulletin raises good issues and gives good guidance in the area.  I certainly would read it before offering gift cards.  But that's just me.

The Internet - A Double-Edged Sword

No one loves the Internet more than the Compliance Guy.  With the click of a button, I have access to practially every law, regulation and guidance document.  Ah, but the Lord giveth, and the Lord taketh away.  When the internet goes down, I sometimes feel like Samson without his hair.  (Sure, I'm bald.  But I can still use the analogy.)   Without access to the world-wide web, I used to head to the coffee station and say a prayer to the Patron Saint of Internet Access.

The solution?  Steve Van Beek, one of my coworkers, gave me this tip about a month ago.  Save a copy of NCUA's rules and regulations, as well as other go-to documents, to your computer.  NCUA has a nearly-complete set of its regulations here. (Note that its most recent final regulations are not incorporated for a few months.)  You can open the document and then save it.  You may want to save copies of the Fair Credit Reporting Act, Servicemembers Civil Relief Act, and other regulations or laws that would be important to your shop. 

This way, if the Internet goes down, you'll still have a few arrows in your quiver.  And sometimes that's all it takes.

Additional Research Tools

Much like that turkey/stuffing/cranberry sandwich that is scheduled for consumption this afternoon, there are certain websites that are "old favorites" of the Compliance Guy.  Here are a few.

• This site lists all of the Federal Reserve's Regulations. B, D, E, M, Z, and CC are all here.  And when you click on a particular regulation, it takes you to another page which gives you the choice to read the regulation, recent amendments, or current proposals to alter the regulation.  Good stuff, people.
• This site is a good starting point for the Federal Register.  This one lists all of the Federal Registers for this year.  You can even use this site to get daily Federal Register notifications.  (The Compliance Guy has never found the last one to be all that useful.)
• Here is where the Compliance Guy starts his UCC research.  This free service, however, does not include  "Official Comments."  After each UCC code section, the drafters also penned the Official Comment, which describes what they tried to accomplish in a particular section.  It also gives examples and even an occasional historical perspective.  When I need to dig deeper, I turn to book or manual with these comments.
• NCUA's Regulations, Legal Opinions and Laws page is also wonderful.  From this page, I often jump to the Proposed Regulation and Recent Final Regulation pages. 
• Finally, this page will take you to the FFIEC's HMDA website.  If you have any HMDA-related question, this webpage will contain the answer.  Somewhere.

Have a great weekend!

Tis the Season

OK, I know most of you are hustling to get out of work early today.  I'll keep this short.  For the rest of the week, I'll chime in with things for which I am thankful.  Of course, I'm thankful for my family, friends, health, and of course, my Mandy. 

But as a compliance officer, I am very thankful for certain websites that make it easier to do my job.

First, I am thankful for Bankers Online.  This website is a must-read for Compliance Junkies.  Specifically, the Compliance Guy loves the their Infovault.  Their work is no substitute for your own, but after I research an issue, I always like to whether they have chimed in on the subject.  (A word of warning - they do not always look at things from the credit union perspective.  Than again, that's not their job.  That's our job.  That being said, I find these sites to be very useful.)

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.

***

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.)

NAFCU Member Call-In

Next Tuesday, November 27, NAFCU will provide a political, regulatory, legislative and economic wrap-up to 2007.  We'll even dust off our crystal ball to see if we can give a glimpse of what is coming up in 2008.  The member call-in is free for NAFCU members, and it should be useful for those tracking compliance and regulatory-related issues.  It will start at 4 p.m. Eastern, and should last an hour.  Members can sign up here.  Before signing up, you may want to check if others are your credit union are already participating.