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On October 10, the FDIC issued FIL-58-2018 which summarizes guidance provided by the CFPB on the implementation of partial exemptions from certain of HMDA’s reporting requirements for specific insured depository institutions and insured credit unions pursuant to Section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act. On August 31, as previously covered in InfoBytes here, the Bureau issued an interpretive and procedural rule to implement and clarify recent HMDA amendments and outline exemption qualification requirements. FIL-58-2018 reminds FDIC-supervised institutions subject to HMDA and Regulation C of the following clarifications made by the Bureau: (i) there are 26 data points covered by the partial exemptions and 22 other data points that all HMDA reporters must collect, record, and report”; (ii) loans counted towards partial exemption thresholds must otherwise be reportable under Regulation C; (iii) exception based on Community Reinvestment Act examination reports will be determined by the two most recent CRA ratings as of December 31 of the preceding calendar year; (iv) if an institution eligible for a partial exemption chooses not to report a universal loan identifier, it must report a non-universal loan identifier unique within the institution; and (v) institutions exempt from certain reporting requirements may still report exempt data fields so long as they “report all data fields associated with that data point.”
On October 9, the Department of Veterans Affairs (VA) published a status update in the Federal Register to inform the public that it will not publish a final rule to adopt provisions outlined in its May 2014 interim final rule (IFR). The IFR was issued to implement provisions of Dodd-Frank concerning ability-to-repay standards and qualified mortgages (QM) as defined under TILA. According to the status update, section 309 of Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) superseded certain elements of the IFR. Specifically, the EGRRCPA’s “seasoning and recoupment requirements for [Interest Rate Reduction Refinance Loans] effectively eliminated the category of rebuttable presumption QM.” The VA reminded program participates to refer to Circular 26-18-13, previously issued in May and covered by InfoBytes, which addressed “loan churning” of VA-guaranteed refinance loans and set out new requirements for VA eligibility as addressed by EGRRCPA. The VA commented that it will publish future rulemaking to supersede the IFR, but that in the meantime, the IFR remains in effect to the extent the provisions do not conflict, or are not superseded by, EGRRCPA.
On October 1, the Federal Reserve Board (Board) issued SR 18-7 to qualifying state member banks and U.S. branches and agencies of foreign banks outlining updated 18-month on-site examination eligibility criteria. As previously covered in InfoBytes, the Board, OCC, and FDIC issued an interim final rule effective August 29—as authorized by the Economic Growth, Regulatory Reform, and Consumer Protection Act—which qualifies banks with less than $3 billion in total assets (an increase from the previous threshold of $1 billion), provided they satisfy additional criteria. SR 18-7 separately lists the relevant eligibility criteria for state member banks and for U.S. branches or agencies of foreign banks, and requires that qualifying banks (i) not be subject to a federal banking agency’s formal enforcement proceeding or order; and (ii) not have experienced a change of control during the previous 12 months that would have required a full-scope examination. Additional eligibility criteria address component and composite examination ratings and risk-based capital ratios.
On September 21, the FTC announced the nationwide availability of free security freezes and one-year fraud alerts, which were authorized under the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). Specifically, Section 301 of EGRRCPA prohibits a national credit reporting agency from charging a fee to place, remove, or temporarily lift a security freeze. The law also allows parents to obtain a free credit freeze for any of their children who are under 16, and guardians, conservators, and those with a valid power of attorney can obtain a free freeze for the person for whom they have legal authority to act. Additionally, Section 301 extends the duration of the free fraud alert from 90 days to one year. Consumers are required to contact all three nationwide credit reporting agencies to place the security freeze, but only are required to contact one of the three for the fraud alert, as each bureau is obligated to notify the others of a fraud alert.
OCC seeks comments on notice of proposed rulemaking to raise recovery planning standards threshold to $250 billion
On September 19, the OCC issued a notice of proposed rulemaking to revise its 2016 guidelines on recovery planning standards for insured national banks, insured federal savings associations, and insured federal branches. The OCC seeks to raise the average total consolidated assets threshold from $50 billion to $250 billion, and give banks above the threshold 12 months instead of 18 months to comply with the guidelines. The proposed rule would also make technical amendments to remove outdated compliance dates. According to the OCC, a threshold increase would tailor the focus on “institutions that present greater systemic risk to the banking system.” The proposal is also consistent with the scope of the FDIC and Federal Reserve Board’s resolution planning threshold, which was raised from $50 billion to $250 billion as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act.
Comments on the proposal are due by November 5.
On September 12, the FDIC issued a notice of proposed rulemaking (NPRM) and request for comments on the treatment of certain institutions’ reciprocal deposits to implement Section 202 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). According to the accompanying Financial Institution Letter, FIL-47-2018, Section 202 of EGRRCPA amends Section 29 of the Federal Deposit Insurance Act to except a capped amount of reciprocal brokered deposits from treatment as brokered deposits for certain insured depository institutions. Under the proposal, well-capitalized and well-rated institutions are not required to treat reciprocal deposits as brokered deposits up to the lesser of 20 percent of their respective total liabilities or $5 billion. Additionally, institutions that are not well capitalized or well rated also may exclude reciprocal deposits from their brokered deposits by maintaining reciprocal deposits at or below a special cap equal to the average amount of their reciprocal deposits held at quarter-end during the last four quarters preceding the quarter that the institution fell below well capitalized or well rated. Comments are due within 30 days of publication in the Federal Register.
CFPB issues updated FCRA model disclosures to implement Economic Growth, Regulatory Relief, and Consumer Protection Act amendments
On September 12, the CFPB issued an interim final rule to comply with the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Act”) (previously Senate bill S. 2155). Section 301(a)(1) of the Act amends the FCRA to add section 605A(i), which requires consumer reporting agencies to provide national security freezes free of charge to consumers. Additionally, the new section requires that whenever a consumer is provided a “summary of rights” under section 609, the summary must include a notice regarding the right to obtain a free security freeze. The Act also amends FCRA section 605A(a)(1)(A) to extend from 90 days to one year the minimum time that a credit reporting agency must include an initial fraud alert on a consumer’s file.
The interim final rule, which is effective on September 21, amends the model forms in Regulation V to comply with the Act. The interim file rule also permits various compliance alternatives to mitigate the impact of the changes to these forms, including allowing the use of the 2012 model forms so long as a separate page provided in the same transmittal contains the new information required.
Comments on the interim final rule will be due 60 days after publication in the Federal Register. Links to the English and Spanish versions of the revised Summary of Consumer Rights and revised Summary Consumer Identity Theft Rights, covered by Section 609 of the FCRA, are available here.
OCC seeks comments on notice of proposed rulemaking to enhance business flexibility for federal savings associations
On September 10, the OCC issued a notice of proposed rulemaking to implement section 206 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (previously Senate bill S. 2155), which amended the Home Owners’ Loan Act to permit federal savings associations (covered savings associations) with total consolidated assets of $20 billion or less, as of December 31, 2017, to elect to operate with national bank powers. Among other things, the proposed rule would require covered savings associations to divest, conform, or discontinue nonconforming subsidiaries, assets, and activities so as not operate in a manner that would be impermissible for national banks. Covered savings associations would also be subject to the same duties, restrictions, penalties, liabilities, conditions, and limitations that would apply to a similarly located national bank without requiring a charter conversion. The OCC further noted that even if a covered savings association’s assets exceed $20 billion after it makes the election, it will continue to receive covered savings association treatment. In addition, to reduce unnecessary burdens, covered savings associations are able to using federal savings association procedures, as opposed to national bank procedures, if the application of those procedures would not result in substantively different outcomes. Comments will be accepted for 60 days following publication in the Federal Register.
On September 10, the OCC notified national banks, federal savings associations, and federal branches and agencies of the interim final rule issued jointly by the OCC, Federal Reserve, and FDIC allowing qualified insured depository institutions with less than $3 billion in total assets to be eligible for an 18-month on-site examination cycle. (See previous InfoBytes coverage here.) In addition to meeting the asset threshold, qualifying banks must also (i) have a rating of one or two; (ii) be well capitalized and well managed; (iii) not be subject to a federal banking agency’s formal enforcement proceeding or order; and (iv) not have experienced a change of control within the previous 12 months. The OCC further noted that it reserves the authority to maintain more frequent examinations for banks if necessary or appropriate. The interim final rule, issued pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act (previously Senate bill S. 2155), took effect August 29. Comments on the interim final rule must be received by October 29.
On August 31, the CFPB issued an interpretive and procedural rule to implement and clarify the HMDA amendments included in Section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act) (previously Senate bill S. 2155). Section 104(a) of the Act amends section 304(i) of HMDA by adding partial exemptions from some of HMDA’s reporting requirements for certain insured depository institutions and insured credit unions. Specifically, banks and credit unions that originate fewer than 500 open-end lines of credit in each of the two preceding calendar years and/or 500 closed-end mortgages in each of the two preceding calendar years are exempt from HMDA’s expanded data disclosures. The exemption does not apply to nonbanks and does not exempt institutions from HMDA reporting altogether. Notwithstanding the new partial exemptions, the insured institution must comply with HMDA’s expanded data disclosures if it received a rating of “needs to improve record of meeting community credit needs” during each of its two most recent CRA examinations or a rating of “substantial noncompliance in meeting community credit needs” on its most recent CRA examination. These partial exemptions to HMDA took effect when the Act became law on May 24, 2018.
In response to industry questions on the application of the exemptions, the Bureau released an interpretive and procedural rule. The following are key highlights of the rule:
- Institutions exempt from certain reporting requirements may still report exempt data fields so long as they “report all data fields within any exempt data point for which they report data.” For example, if a partially exempt institution reports a data field that is part of the property address, the institution must report all other data fields that are part of the property address (e.g., city, state, zip code). The Bureau notes that institution may be particularly inclined to report exempt data fields with their 2019 submissions, as 2018 data collection was already in process when the Act took effect;
- To count towards the 500 loan or line of credit threshold, loans and lines of credit must be otherwise HMDA-reportable loans;
- The partial exemption applies to new data points that were implemented by the Bureau’s 2015 HMDA Final Rule, but institutions covered by the partial exemption are still required to report the 22 data points previously established by the Federal Reserve Board;
- The rule provides requirements for a non-universal loan identifier for any partially exempt loan or application; and
- The CRA ratings used to determine whether the CRA reporting exception applies are the two most recent CRA ratings as of December 31 of the preceding calendar year.
The Bureau notes that it intends to initiate a notice-and-comment rulemaking to incorporate these interpretations and procedures into Regulation C at a later date.
Additionally, the Bureau also released updates to the Filing Instructions Guide (FIG) for HMDA data collected in 2018 to incorporate the Act as implemented and clarified by the interpretive rule.
- Jonice Gray Tucker to join CFPB panel at CBA’s Washington Forum
- Jonice Gray Tucker to moderate “Pandemic relief response and lasting impacts on access, credit, banking, and equality” at the American Bar Association Business Law Section Spring Meeting
- Jeffrey P. Naimon to discuss "Post-pandemic CFPB exam preparation" at the Mortgage Bankers Association Spring Conference & Expo
- Jonice Gray Tucker to discuss "Making fair lending work for you" at the Mortgage Bankers Association Spring Conference & Expo
- Jonice Gray Tucker to discuss "Reading the tea leaves of President Biden’s initial financial appointees" at LendIt Fintech
- Moorari K. Shah to discuss “CA, NY, federal licensing and disclosure” at the Equipment Leasing & Finance Association Legal Forum
- Jonice Gray Tucker to discuss "Compliance under Biden" at the WSJ Risk & Compliance Forum
- Jonice Gray Tucker to discuss “The future of fair lending” at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference