NAFCU Compliance Blog

NAFCU's Regulatory Compliance School Just Got Better - Regulatory Update Day

Written by Steve Van Beek

We've heard you!  For the past couple of years, we've received the following feedback about NAFCU's Regulatory Compliance School (paraphrased, of course):

"School is great and provided a solid foundation for understanding the regulatory requirements credit unions face on a daily basis.  BUT, the rules are changing so fast that it would be great to receive updates on what has just changed and what is changing next."

With this in mind, we've created Regulatory Update Day at NAFCU's 2013 Regulatory Compliance School (March 18-23 in National Harbor, Maryland).  

Regulatory Update Day (Thursday, March 21st) will provide:

• A clear understanding of what changes NCUA has in store for 2013 – including their Exam Focus

• An overview of the scope and applicability of the CFPB’s seven new mortgage regulations*

• A detailed look at the CFPB’s Qualified Mortgage/Ability-to-Repay requirements*

• Answers to Frequently Asked Questions on the mortgage rules from NAFCU’s compliance team*

• Insight from credit union attorneys and practitioners on how best to set up your implementation strategy

You can find more information on Regulatory Update Day here.  The three sessions with the "*" are sessions that are also part of NAFCU's Mortgage Reform Webcast Series.

The other 4 days of Compliance School will remain the same as will the opportunity to take the NAFCU Certified Compliance Officer (NCCO) exams.  Good luck!  

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And, all attendees at NAFCU's 2013 Regulatory Compliance School will receive NAFCU's 2013 GPS (coming soon!) as well as NAFCU's Scope & Applicability Charts.

Remember:  You do not need to be a NAFCU member credit union to attend NAFCU's conferences or webcasts.  In fact, you don't even need to work at a credit union.  Each School usually features a handful of consultants, vendors and other credit union "peeps" who support credit unions - in one way or another - on a daily basis.      

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A Few Housekeeping Reminders to Start off the Year

Written by Bernadette Clair, Regulatory Compliance Counsel

Welcome back! We hope everyone enjoyed the holidays and good times with family and friends.

Before delving into the New Year, we thought it might be useful to consolidate some of our recent blog posts highlighting compliance deadlines that have come and gone over the last week, so they don’t get lost in the shuffle.

SAFE Act Housekeeping Reminders.  The SAFE Act renewal period expired on December 31, 2012.  Credit unions and their MLOs must renew their registration during the annual renewal period each year.  Independent testing for compliance with the SAFE Act and its implementing regulations is also required annually, and may be conducted by credit union staff or an outside party.

TAG/NIBTA – Expiration of Unlimited Share Insurance Coverage.  Congress did not extend the unlimited share insurance coverage for noninterest-bearing transaction accounts, so this temporary coverage expired on December 31, 2012.  NCUA Letter to Credit Unions 12-CU-14 details steps for credit unions to take, such as communicating the change in insurance coverage to your membership and making sure account disclosures properly disclose the level of insurance coverage.

Reporting Nonresident Alien Interest.  IRS final regulations that went into effect April 19, 2012, require credit unions to report interest of $10 or more in the aggregate, paid to certain nonresident aliens on or after January 1, 2013.  The first filing will be required in 2014, for the tax year 2013.

CFPB Website Reference for Credit Card Application & Account Opening Disclosures.  As of January 1, 2013, your credit card disclosures need to reference the CFPB (in the past they mentioned the Federal Reserve). When the CFPB republished Regulation Z , sections 12 CFR 1026.60 (applications and solicitations) and 12 CFR 1026.6 (account opening disclosures) were changed to reflect the CFPB's authority over Regulation Z and credit cards.

Updates to Adverse Action Notices and Risk Based Pricing Notices.  Also as of January 1, 2013, credit unions must ensure their risk-based pricing notices refer to the CFPB as the appropriate federal regulatory authority.  Adverse action notices must also be updated to reflect either NCUA’s Office of Consumer Protection (OCP) for federal credit unions with assets under $10 billion or the CFPB for those with assets of $10 billion or more.

Updates to Adverse Action Notices and Risk Based Pricing Notices Required by January 1, 2013

Written by Michael Coleman, Regulatory Compliance Counsel

Regulation B - Adverse Action Notices

When the CFPB republished Regulation B into 12 CFR 1002, they updated Appendix A to Part 1002 to reflect the address for NCUA’s new Office of Consumer Protection (OCP), which is required to be listed on adverse action notices for credit unions under $10 billion in assets starting January 1, 2013.

The underlying requirement for including the agency address on adverse action notices comes from 12 CFR 1002.9(a)(2) and (b)(1).   

Appendix A to Part 1002  now includes this information for FCUs under $10 billion on assets:

"d. Federal Credit Unions: National Credit Union Administration, Office of Consumer Protection (OCP), Division of Consumer Compliance and Outreach (DCCO), 1775 Duke Street, Alexandria, VA 22314." 

Credit unions over $10 billion in assets need to include the CFPB's name and address:

“1. Banks, savings associations, and credit unions with total assets of over $10 billion and their affiliates: Bureau of Consumer Financial Protection, 1700 G Street NW., Washington DC 20006. Such affiliates that are not banks, savings associations, or credit unions also should list, in addition to the Bureau: FTC Regional Office for region in which the creditor operates or Federal Trade Commission, Equal Credit Opportunity, Washington, DC 20580.”

State-chartered credit unions should check the address on their notices and determine if it matches the FTC address in #9 from Appendix A. 

For additional details, check out this January 13, 2012 blog post

Regulation V - Risk-Based Pricing Notices

Regulation V was also updated when the CFPB republished Regulation V in 12 CFR 1022 and will require the CFPB's website address on risk-based pricing notices after January 1, 2013.  

The requirement comes from 12 CFR 1022.73(a)(1)(viii) which mandates that credit unions provide this on their risk-based pricing notices:

"(viii) A statement directing consumers to the Web site of the Bureau to obtain more information about consumer reports;"

After January 1, 2013 - credit unions need to make sure they have the updated language referencing the CFPB.  Appendix H to Part 1022 has the model forms where you can see the risk-based pricing notice requirements.  

For additional details, check out this June 7, 2012 blog post.

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Redskins – I am a huge Skins fan, and as anyone who is familiar with the trials and tribulations of being a sports fan in DC knows, it’s not easy being green (or burgundy and gold in this case). But I am one of those optimistic Redskins fans. The Skins have a shot at the playoffs this year, and have two huge games to close out the season (against the Eagles and then the Cowboys, fingers crossed). It’s not certain if Robert Griffin III will start this weekend, but even if he doesn’t, I’m optimistic that Captain Kirk will continue to perform. I also like to focus on the good things from the season. Like the fact that even when RG3 fumbles, we score touchdowns (sorry New York readers). Go Skins! 

Risk-Based Pricing Webinar & FAQs; NAFCU Compliance Webcast

Written by Steve Van Beek

In February 2011, the Philadelphia Federal Reserve conducted a webinar on risk-based pricing notices.  The archived webinar is still available and the Questions & Answers from the webinar were included in the First Quarter 2012 Consumer Compliance Outlook.    

Below are two that might be of interest:

• Must risk-based pricing notices be provided for denied applicants?  Section 1022.72(a) of Regulation V (12 C.F.R. 1022) specifies when a creditor must provide a risk-based pricing notice to a consumer applying for credit, subject to exceptions in 1022.74.  If an application is denied and an adverse action notice is provided, a risk-based pricing or exception notice is not required.  See 1022.74(b).

• If the same rates are charged to all approved applicants for a particular product, do notices need to be provided?  As discussed in 1022.74(a), if a lender offers one rate for a product and the applicant either receives that rate or is denied, no risk-based pricing or exception notice is required for approved applicants but an adverse action notice is still required for denied applicants.

Additional Q&As are available here.  The CFPB's risk-based pricing rules are located in Subpart H to Regulation V (1022.70 - 75).  

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NAFCU Compliance Webcast.  On July 11th, Carrie Hunt, NAFCU's Vice President of Regulatory Affairs and General Counsel, and I will be presenting a NAFCU webcast that will prepare you for upcoming regulatory changes - from NCUA and the CFPB.  We'll talk about some of the following - which may change as the regulators publish new information between now and July 11:

• Preparing your credit union for numerous, fast-paced regulatory changes;
• How to track and monitor the CFPB's rulemakings;
• Potential changes to overdraft protection and prepaid cards;
• Upcoming comprehensive changes to mortgage lending regulations; and
• Five common struggles with Credit CARD Act compliance.

Learn more here - sign up by July 5th and Save $100!

Three Small Changes Required by January 1, 2013

Written by Steve Van Beek

Today, I wanted to highlight three technical changes to your disclosures that need to be made prior to January 1, 2013.  I'd recommend trying to get these updated and changed early as there will surely be numerous rulemakings coming from the CFPB in the second half of 2012.  Also, these changes might require working with your forms providers so it makes sense to build in a little extra implementation time.

Regulation Z - Credit Card Application & Account Opening Disclosures

Sections 12 CFR 1026.60 (applications and solicitations) and 12 CFR 1026.6 (account opening disclosures) were changed during the CFPB's republishing to reflect the CFPB's authority over Regulation Z and credit cards.  

After January 1, 2013, your credit card disclosures would need to reference the CFPB (in the past they mentioned the Federal Reserve).  You can see the small change by viewing the Fed's prior G-10(B) model form with the CFPB's current G-10(B) model form.    

Additional details and discussion available in this January 10, 2012 blog post.  

Regulation B - Adverse Action Notices

The CFPB's republishing of Regulation B also resulted in a required change - by January 1, 2013 - for Federal Credit Unions.  FCUs under $10 billion in assets need to change their notices to include NCUA's Office of Consumer Protection.  FCUs over $10 billion in assets would need to include the CFPB's address.  

State-chartered credit unions should check the address on their notices and determine if it matches the FTC address in #9 from Appendix A.  FCUs can also find the appropriate address in Appendix A of Regulation B.  

For additional details, check out this January 13, 2012 blog post.    

Regulation V - Risk-Based Pricing Notices

Regulation V was also tweaked during the Great Regulatory Republishing of 2011 and will require the CFPB's address on risk-based pricing notices after January 1, 2013.  

The requirement comes from 12 CFR 1022.73(a)(1)(viii) which mandates that credit unions provide this on their risk-based pricing notices:

"(viii) A statement directing consumers to the Web site of the Bureau to obtain more information about consumer reports;"

The commentary to Appendix H indicates that credit unions can use the reference to the Federal Reserve until January 1, 2013 as the disclosure about the Fed is considered an "acceptable change":

"ix. Until January 1, 2013, substituting “For more information about credit reports and your rights under Federal law, visit the Federal Reserve Board's Web site at www.federalreserve.gov, or the Federal Trade Commission's Web site at www.ftc.gov. ” for “For more information about credit reports and your rights under Federal law, visit the Consumer Financial Protection Bureau's Web site at www.consumerfinance.gov/learnmore. ”"

After January 1, 2013 - credit unions need to make sure they have the updated language referencing the CFPB.  Appendix H has the model forms where you can see the risk-based pricing notice requirements.  

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An interesting twist is that the CFPB's webpage - www.consumerfinance.gov/learnmore - doesn't have any new information for consumers and they just link to existing information from other agencies.  If those agencies failed to protect consumers, how is providing the same information going to change this?  

Updated Agency Contact Information – Risk-Based Pricing & Adverse Action Notices

Written by Bernadette Clair, Regulatory Compliance Counsel

I thought we’d keep it light today and tomorrow and highlight a few housekeeping changes credit unions need to check off by January 1, 2013.

With the CFPB’s republishing of Regulation B in 12 CFR 1002, Regulation V in 12 CFR 1022, and Regulation Z in 12 CFR 1026, a few forms need to be updated with current agency contact information.  We’ve blogged on some of these before, but thought it would be helpful to have them all in one place.

Risk-Based Pricing Notices.  The CFPB’s republishing of Regulation V into 12 CFR 1022 included updates to model forms in several Appendices, including the risk-based pricing notices in Appendix H.  For example, Model form H-1 now reflects the CFPB’s website address:

“For more information about credit reports and your rights under Federal law, visit the Consumer Financial Protection Bureau's website at www.consumerfinance.gov/learnmore.”

Adverse Action Notices.  The CFPB's republishing of Regulation B into 12 CFR 1002 updated Appendix A to reflect the new address for NCUA's Office of Consumer Protection (OCP).  The CFPB's Appendix A now includes the following (for FCUs under $10 billion on assets):

"d. Federal Credit Unions: National Credit Union Administration, Office of Consumer Protection (OCP), Division of Consumer Compliance and Outreach (DCCO), 1775 Duke Street, Alexandria, VA 22314." 

Note:  Credit unions over $10 billion need to include the CFPB's name and address. 

We blogged in depth about this update to the adverse action notice on January 13, 2012. 

We'll continue looking additional changes tomorrow.

NCUA Meeting; Vendor Risk Management; Current Issues in Credit Unions

Written by Steve Van Beek

Just a couple of quick items for your Tuesday.

NCUA Cancels Board Meeting.  Last week, NCUA announced it would cancel its April Board meeting.  This is the second canceled meeting in 2012 for NCUA.  Hopefully, it means NCUA is putting extra effort and attention on reducing the regulatory burden on credit unions.  

Consumer Compliance "Outlook Live."  Yesterday we mentioned the resource Consumer Compliance Outlook from the Philadelphia Federal Reserve.  This group also provides free webinars and recently announced a May 2nd webinar on Vendor Risk Management.    

There are also archived webinars available for viewing:

• Consumer Compliance Hot Topics (December 15, 2011)
• Fair Lending Issues and Hot Topics (November 2, 2011)
• Real Estate Owned (REO) Disposition Risks and CRA Opportunities (October 4, 2011)
• Proposed Ability to Repay Standards for Mortgage Loans (May 26, 2011)
• Loan Originator Compensation (March 17, 2011)
• Risk Based Pricing Notices (February 17, 2011)
• Tips for Reporting Accurate HMDA and CRA Data  (November 17, 2010)
• Consumer Compliance “Top Ten” Lists  (May 20, 2010)
  

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Current Issues in Credit Unions.  The latest Current Issues in Credit Unions podcast (Episode #69) is now available for download and listening.  You can find the agenda as well as past episodes here.    

Rob Rutkowski of Weltman, Weinberg & Reis does a great job with organizing and conducting these podcasts (including the live taping at our 2011 Compliance Seminar - Episode 64).

Rob will also be presenting at two upcoming NAFCU webcasts in April:

• April 11, 2012 (Tomorrow!):  Complying with Regulation B under the CFPB: Protecting Your Credit Union from Unlawful Lending
• April 25, 2012:  Managing Risks for Online Deposit Accounts (Early Bird Pricing ends April 18th)