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  • OCC issues guidance on appraisal management company registration

    Agency Rule-Making & Guidance

    On September 16, the OCC issued Bulletin 2019-43, “Appraisals: Appraisal Management Company Registration Requirements,” which reminds covered institutions of the new registration requirement for appraisal management companies (AMC) that became effective on August 10. Specifically, under 12 CFR 34, subpart H, AMCs are now required to register with the state or states in which they do business; however, an AMC that is owned and controlled by an insured depository institution and regulated by the OCC, Federal Reserve Board, or FDIC is not subject to the registration requirement. The Bulletin reminds covered institutions that they should conduct sufficient due diligence to confirm that third-party AMCs are registered as required, including (i) checking the Appraisal Subcommittee of the Federal Financial Institutions Examination Council’s (ASC) national AMC registry; (ii) checking the relevant state’s AMC registry if the AMC is not listed on the national registry; and (iii) if no electronic registry check is available, requesting evidence of registration directly from the AMC. Moreover, if a covered institution determines that a federally related transaction is in a state that is not registering AMCs, an institution may instead use an individual appraiser, a staff appraiser employed by the institution, a smaller AMC not subject to the regulation, or a federally regulated AMC.

    Agency Rule-Making & Guidance OCC Appraisal

  • CFPB issues final No-Action Letter policy, sandbox policy, and trial disclosure policy

    Agency Rule-Making & Guidance

    On September 10, the CFPB issued three final innovation policies, the No-Action Letter (NAL) Policy, Compliance Assistance Sandbox (CAS) Policy, and Trial Disclosure Program (TDP) Policy. Director Kraninger noted that the new policies will “improve how the Bureau exercises its authority to facilitate innovation and reduce regulatory uncertainty. . .contribut[ing] to an environment where innovation can flourish—giving consumers more options and better choices.” In September 2018, the Bureau published the proposed TDP policy (covered by InfoBytes here), and in December 2018, the Bureau published the proposed NAL and CAS policies (covered by InfoBytes here). Highlights of the final policies include:

    • NAL. The NAL policy provides a NAL recipient reassurance that the Bureau will not bring a supervisory or enforcement action against the company for providing a product or service under the covered facts and circumstances. After an application is considered complete, the Bureau will grant or deny the request within 60 days. The Bureau intends to publish NALs on its website and, in some cases, a version or summary of the application. The Bureau may also publish denials and an explanation of why the application was denied. The policy notes that disclosure of information is governed by the Dodd-Frank Act, FOIA and the Bureau’s rule on Disclosure of Records and Information, which generally would prohibit the Bureau from disclosing confidential information.
    • CAS. The CAS policy will evaluate a product or service for compliance with relevant laws and will offer approved applicants a “safe harbor” from liability for certain covered conduct during the testing period under TILA, ECOA, or the EFTA. The CAS was originally proposed as the “Proposed Sandbox Policy,” and included, in addition to the now listed carve-outs, exemptions by order from statutory provisions of ECOA, HOEPA, and the Federal Deposit Insurance Act (FDIA). The final CAS policy does not include the exemption program. The Bureau noted that, based on the comments received on the proposal, it will issue, at a later date, a new proposal to establish a program for exemptions by order through a separate notice-and comment rulemaking.
    • TDP. The TDP policy creates the “CFPB Disclosure Sandbox,” which carries out the requirements of Section 1032(e) of the Dodd-Frank Act. The Bureau’s first TPD policy was finalized in 2013, allowing for approved company disclosures to be deemed in compliance with, or exempted from, applicable federal disclosure requirements during the testing period. Under the previous policy, the Bureau did not approve a single company program for participation. The updated TDP policy streamlines the application process, including providing formal determinations within 60 days of deeming an application complete. The policy provides procedures for requesting extensions of successful testing programs, as the Bureau expects most testing periods will start at two-years.

    The Bureau also announced the first NAL issued under its new policy in response to a request by HUD on behalf of more than 1,600 housing counseling agencies (HCAs) that participate in HUD’s housing counseling program. The NAL states that the Bureau will not take supervisory or enforcement action under RESPA against HUD-certified HCAs that have entered into certain fee-for-service arrangements with lenders for pre-purchase housing counseling services. Specifically, the Bureau will not take such action against a HCA for including and adhering to a provision in such agreements conditioning the lender’s payment for the housing counseling services on the consumer making contact or closing a loan with the lender, even if that activity could be construed as a referral under RESPA, provided that the level of payment for the services is no more than a level that is commensurate with the services provided and is reasonable and customary for the area. The Bureau issued a template for lenders to seek a NAL for such arrangements, which includes certain anti-steering certifications that (i) the consumer will choose between comparable products from at least three different lenders; (ii) the funding is based on services rendered, not on the terms or conditions of any mortgage loan or related transaction; and (iii) no endorsement, sponsorship, or other preferential treatment will be conveyed to the lender for entering into the arrangement. According to the Bureau, the NAL, “is intended to facilitate HCAs entering into such agreements with lenders and will enhance the ability of housing counseling agencies to obtain funding from additional sources.” In addition to the template, the Bureau has made the HUD NAL application publicly available as well.

    Agency Rule-Making & Guidance CFPB Disclosures No Action Letter Regulatory Sandbox Dodd-Frank Fintech

  • FDIC updates Consumer Compliance Examination Manual

    Agency Rule-Making & Guidance

    On September 10, the FDIC announced updates to its Consumer Compliance Examination Manual (CEM). The CEM includes supervisory policies and examination procedures for evaluating financial institutions’ compliance with federal consumer protection laws and regulations. The recent updates include, among other things, (i) changes to the sections and questions of the Fair Lending Scope and Conclusions Memorandum; and (ii) incorporation of the private flood insurance final rule’s provisions pertaining to the mandatory and discretionary acceptance of private flood insurance by financial institutions.

    Agency Rule-Making & Guidance FDIC Supervision Examination

  • CFPB updates HMDA webinars

    Agency Rule-Making & Guidance

    On August 29, the CFPB updated two HMDA webinars to reflect amendments made by the Economic Growth, Regulatory Relief, and Consumer Protection Act, and the interpretive and procedural rule issued by the CFPB in August 2018. (Previous InfoBytes coverage on the amendments and the interpretive and procedural rule available here.) The Bureau also released a new HMDA webinar to provide an overview “on reporting certain application or covered loan features, pricing information, features of the property, and transaction indicators.”

    Agency Rule-Making & Guidance CFPB HMDA EGRRCPA

  • CFPB updates auto finance section of the Supervision and Examinations Manual

    Agency Rule-Making & Guidance

    On August 28, the CFPB updated its examination procedures for automobile finance in its Supervision and Examinations Manual. The procedures are comprised of seven modules and each examination will cover one or more modules. Prior to using the procedures, examiners will complete a risk assessment and examination scope memorandum, which will assist in determining which of the seven modules the exam will cover: (i) company business model; (ii) advertising and marketing; (iii) application and origination; (iv) payment processing and account maintenance; (v) collections, debt restructuring, repossession, and accounts in bankruptcy; (vi) credit reporting, information sharing, and privacy; and (vii) examiner conclusions and wrap-up.

    Agency Rule-Making & Guidance CFPB Supervision Examination Risk Management Auto Finance

  • FFIEC urges standardized cybersecurity approach

    Agency Rule-Making & Guidance

    On August 28, the FFIEC issued a press release emphasizing the benefits of implementing a standardized cybersecurity preparedness approach. The FFIEC noted that firms who adopt a standardized approach are “better able to track their progress over time, and share information and best practices with other financial institutions and with regulators.” Highlighted are several standardized tools for financial institutions to use when assessing and improving their level of cybersecurity preparedness, including the FFIEC Cybersecurity Assessment Tool, the Financial Services Sector Coordinating Council Cybersecurity Profile, the National Institute of Standards and Technology Cybersecurity Framework, and the Center for Internet Security Critical Security Controls.

    Agency Rule-Making & Guidance FFIEC Privacy/Cyber Risk & Data Security

  • FDIC adds to risk management exam policies

    Agency Rule-Making & Guidance

    On August 27, the FDIC issued Financial Institution Letter FIL-47-2019 announcing an update to its Risk Management Manual of Examination Policies to incorporate a new section titled “Risk-Focused, Forward-Looking Safety and Soundness Supervision.” According to the letter, the new section covers the FDIC’s “long-standing examination philosophy” that the focus of supervision should be on areas that present the greatest risk. The letter notes that the risk-focused approach is “forward-looking,” with the intent to look beyond the condition of an institution at a specific point in time to just how well the institution will be able to respond to a changing market and assist examiners in identifying and correcting “weaknesses in conditions or practices before they impact an institution’s financial condition.”

    Agency Rule-Making & Guidance FDIC Supervision Examination Risk Management

  • Fed updates private flood insurance interagency examination procedures

    Agency Rule-Making & Guidance

    On August 22, the Federal Reserve Board (Fed) issued CA 19-10, which provides updates to the interagency examination procedures for the Flood Disaster Protection Act (FDPA). The updated guidance is applicable to all Fed-supervised institutions with total consolidated assets of $10 billion or less, and supersedes CA 16-1’s FDPA examination procedures. Specifically, the updated procedures address new sections from a final interagency rule issued in February concerning the acceptability of private flood insurance (previously covered by InfoBytes here). Additionally, the updated procedures provide guidelines for lending institutions when considering a mutual aid society flood protection plan. The Fed notes that “state member banks may not typically analyze mutual aid society plans in the course of their lending activities,” and reminds lenders that acceptance standards for mutual aid society plans will vary depending on the state.

    Agency Rule-Making & Guidance Federal Reserve Flood Insurance Examination Flood Disaster Protection Act Mortgages

  • FDIC to ease deposit-rate restrictions on less than well capitalized institutions

    Agency Rule-Making & Guidance

    On August 20, the FDIC announced a notice of proposed rulemaking (NPR) concerning interest rate restrictions applicable to less than well capitalized insured depository institutions. The NPR provides additional flexibility for these institutions to compete for funds and amends the methodology for calculating the national rate, national rate cap, and local rate cap for specific deposit products. According to the FDIC, the NPR is intended to “provide a more balanced, reflective, and dynamic national rate cap.” Specifically, under the NPR, the “national rate would be the weighted average of rates paid by all insured depository institutions on a given deposit product, for which data are available, where the weights are each institution's market share of domestic deposits,” while the national rate cap for particular products will be set at the higher of either (i) the 95th percentile of rates paid by insured depository institutions weighted by each institution’s share of total domestic deposits; or (ii) the proposed national rate plus 75 basis points. The NPR also will “simplify the current local rate cap calculation and process by allowing less than well capitalized institutions to offer up to 90 percent of the highest rate paid on a particular deposit product in the institution’s local market area.”

    Additionally, the FDIC seeks comments on alternative approaches to setting the national rate caps. According to the FDIC, “[s]etting the national rate cap too low could prohibit less than well capitalized banks from fairly competing for deposits and create an unintentional liquidity strain on those banks competing in national markets. . . . Preventing such institutions from being competitive for deposits, when they are most in need of predictable liquidity, can create severe funding problems.”

    Comments on the NPR are due 60 days after publication in the Federal Register.

    Agency Rule-Making & Guidance FDIC Interest Rate

  • OCC finalizes assessment fee refunds

    Agency Rule-Making & Guidance

    On August 21, the OCC published in the Federal Register a final rule providing partial assessment refunds to banks under OCC jurisdiction that exit the OCC’s jurisdiction within the prescribed timeframe. As previously covered by InfoBytes, in March, the OCC proposed to maintain semiannual assessment fee payments, but allow for partial refunds equal to the prospective half of the assessment for banks that leave the OCC’s jurisdiction between the date of the applicable Call Report and the date of collection. The final rule was adopted without substantive changes to the proposed rule and is effective as of September 20.

    Agency Rule-Making & Guidance OCC Assessments

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