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  • CFPB Releases Updated Compliance Management Procedures in Supervision and Examination Manual

    Agency Rule-Making & Guidance

    On August 30, the CFPB posted revisions to its Compliance Management Review Examination Procedures—part of its Supervision and Examination Manual—that is intended to provide guidance for institutions when developing and maintaining compliance management systems (CMS). The Bureau advises that to maintain legal compliance, institutions must integrate and support an effective CMS “into the overall framework for product design, delivery, and administration across their entire product and service lifecycle,” and are required to manage relationships with service providers to ensure compliance with applicable federal consumer financial laws. The CFPB notes that an effective CMS is comprised of two interdependent control components: (i) “Board and Management Oversight”; and (ii) a “Compliance Program,” including policies and procedures, training, monitoring and/or auditing, and consumer complaint response processes. Updates have been made to the Examination Report Template–which provides the scope of review and consumer compliance rating based on the findings of the exam—and the Supervisory Letter Template–which references matters requiring attention or that need to be corrected based on the Bureau’s review.

    Agency Rule-Making & Guidance CFPB Bank Compliance Vendor Management

  • OCC Updates Comptroller’s Licensing Manual to Provide Revised Guidance on Change in Bank Control Process

    Agency Rule-Making & Guidance

    On September 1, the OCC released OCC Bulletin 2017-33 announcing a new booklet to provide guidance for persons seeking to acquire control of national banks and federal savings associations. The “Change in Bank Control” booklet, which is part of the Comptroller’s Licensing Manual, provides, among other things:

    • an overview of evaluation criteria and considerations taken into account when the OCC reviews a notice of change;
    • timeframe requirements and information regarding the notice process;
    • the required contents of an application and application process; and
    • references and links to informational resources, including sample forms and documents and statutory/regulatory requirements.

    Reflected in the newly issued booklet are updates to procedures and regulations that have been implemented since 2007, including the integration of the Office of Thrift Supervision into the OCC in 2011 and the issuance of revised regulation 12 C.F.R. § 5 that went into effect July 1, 2015.

    Agency Rule-Making & Guidance OCC Licensing Comptroller's Licensing Manual

  • CFPB Issues Summary of Changes and Clarifications to 2017 TILA-RESPA Rule

    Agency Rule-Making & Guidance

    On August 30, the CFPB released “2017 TILA-RESPA Rule: Detailed Summary of Changes and Clarifications” to assist the mortgage industry in implementing the disclosure requirements of the CFPB’s recently finalized TILA-RESPA Rule. The summary provides an in-depth outline of modifications to the rule, and explains and corrects certain provisions.

    Topics covered by the summary include:

    • “Effective date and mandatory compliance date”;
    • “Coverage,” specifically with respect to cooperative units, trusts, and housing assistance loans;
    • “Good faith requirement (i.e., tolerances) and revised disclosures”;
    • “Shopping for settlement services”;
    • “Disclosure of principal reductions (also known as principal curtailments)”;
    • “Total of payments disclosure”;
    • “Simultaneous subordinate lien loans”;
    • “Construction loans”;
    • “Use of positive and negative numbers for certain disclosures in the Loan Estimate and Closing Disclosure”;
    • “Rounding”;
    • “Calculating cash to close”;
    • “Disclosure of payoffs of existing liens, and unsecured debt”;
    • “Disclosure of estimated value when no sales price or appraised value”;
    • “Separation of consumer and seller information on Closing Disclosures”;
    • “Other disclosures in the Loan Estimate”;
    • “Other disclosures in the Closing Disclosure”; and
    • “Other minor changes” (including correcting typographical errors).

    In addition to the summary, the CFPB also provided additional reference materials to help industry participants to comply with the rule. The rule becomes effective on October 10.

    Agency Rule-Making & Guidance CFPB RESPA TILA TRID Mortgages

  • Banking Agencies Offer Guidance Regarding Harvey Response

    Agency Rule-Making & Guidance

    On August 29, the OCC and FDIC each issued guidance and resources for national banks and federal savings associations aiding consumers affected by recent natural disasters.

    OCC Bulletin 2012-28. The OCC bulletin rescinds and replaces previously issued natural disaster guidance and encourages banks serving affected customers to consider the following: (i) “waiving or reducing ATM fees”; (ii) “temporarily waiving late payment fees or penalties for early withdrawal of savings”; (iii) assisting borrowers based on individual situations, when appropriate, by restructuring debt obligations or adjusting payment terms—not to generally exceed 90 days; (iv) “expediting lending decisions when possible”; (v) “originating or participating in sound loans to rebuild damaged property”; and (vi) communicating with state and federal agencies to help mitigate the effects. “Examiners will not criticize these types of responses as long as the actions are taken in a manner consistent with sound banking practices,” the OCC announced. The bulletin also provides additional resources on accounting and reporting issues and Qualified Thrift Lender requirements, among other things.

    FDIC FIL-38-2017. The FDIC financial institution letter (FIL) provides similar guidance for depository institutions assisting affected customers. FIL guidance includes the following suggestions: (i) “waiving ATM fees for customers and non-customers”; (ii) “increasing ATM daily cash withdrawal limits”; (iii) waiving items such as overdraft fees, time deposit early withdrawal penalties, availability restrictions on insurance checks, and credit card/loan balance late fees; (iv) “easing restrictions on cashing out-of-state and non-customer checks” as well as “easing credit card limits and credit terms for new loans”; (v) allowing borrowers to defer or skip some loan payments; and (vi) “delaying the submission of delinquency notices to the credit bureaus.” “Prudent efforts by depository institutions to meet customers' cash and financial needs generally will not be subject to examiner criticism,” the FIL noted. Also, the FDIC “encourages depository institutions to use non-documentary verification methods permitted by the Customer Identification Program requirement of the Bank Secrecy Act for affected customers who cannot provide standard identification documents.”

    The following agencies also issued guidance: Federal Reserve, Farm Credit Administration, and the National Credit Union Administration.

    Agency Rule-Making & Guidance Banking Consumer Finance Bank Secrecy Act FDIC OCC Federal Reserve Farm Credit Administration NCUA Disaster Relief

  • CFPB Publishes Final Rule Amending Annual Dollar Threshold in TILA Regulations

    Lending

    On August 30, the CFPB issued a final rule amending Regulation Z, which implements the Truth in Lending Act (TILA), under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), the Home Ownership and Equity Protection Act of 1994 (HOEPA), and the Dodd-Frank ability-to-repay and qualified mortgage provisions (ATR/QM). The CFPB is required to make adjustments to dollar amounts in the Regulation Z provisions implementing these laws based on the annual percentage change reflected in the Consumer Price Index effective June 1, 2017. For open-end consumer credit plans under TILA, the minimum interest charge disclosure threshold will remain unchanged at $1.00 in 2018. For open-end consumer credit plans under the CARD Act amendments, the adjusted dollar amount for the safe harbor for a first violation penalty fee will remain unchanged at $27 in 2018, and the adjusted dollar amount for the safe harbor for a subsequent violation penalty fee will remain unchanged at $38 in 2018. For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2018 will increase to $21,032, and the adjusted points and fees dollar trigger for high-cost mortgages in 2018 will be $1,052. To satisfy the underwriting requirements under the ATR/QM rule, the maximum thresholds for total points and fees for qualified mortgages in 2018 will be: (i) 3 percent of the total loan amount for loans greater than or equal to $105,158; (ii) $3,155 for loan amounts greater than or equal to $63,095 but less than $105,158; (iii) 5 percent of the total loan amount for loans greater than or equal to $21,032 but less than $63,095; (iv) $1,052 for loan amounts greater than or equal to $13,145 but less than $21,032; and (v) 8 percent of the total loan amount for loan amounts less than $13,145. The final rule is effective January 1, 2018.

    Lending Agency Rule-Making & Guidance CFPB TILA Credit Cards HOEPA Ability To Repay Qualified Mortgage Federal Register Regulation Z Mortgages

  • Federal Reserve Board Amends Policy on Payment System Risk

    Agency Rule-Making & Guidance

    On August 25, the Board of Governors of the Federal Reserve System (Board) published in the Federal Register an amendment to Part II of its Policy on Payment System Risk (PSR Policy) in order to “conform to enhancements to the Reserve Banks’ same-day automated clearinghouse (ACH) service.” Posting rules set forth in the PSR Policy govern the times that credits and debits are posted to institutions’ accounts at the Federal Reserve Banks and determine an institution’s intraday account balance and whether the institution has incurred a negative balance (i.e., a “daylight overdraft”).

    Changes to the PSR Policy include the following:

    • An ACH derived returns function to enable institutions to generate returns via FedLine Web using information from the forward ACH items received through FedACH. The function is intended for institutions that lack the ability to generate returns on their own. Because the derived returns function uses information not available until the day after the processing day for forward ACH items, the Reserve Banks will provide users of the function an interim solution: a same-day paper return option for same-day forward entries greater than $10,000.
    • Clarification of posting times for paper returns and paper notifications of change of prior-dated items. Because these items are manually processed by Reserve Bank staff during normal business hours, the Board has announced that posting will now only occur at 5:00 p.m. The PSR Policy has been modified to remove the 8:30 a.m. posting time. However, depending on when the Reserve Banks receive FedLine Webs returns and FedLine Web notifications of change, these items will continue to be posted at 8:30 a.m. and 5:00 p.m.

    Details regarding amendments to the “Procedures for Measuring Daylight Overdrafts,” including specific details corresponding to the 8:30 a.m., 1:00 p.m., and 5:30 p.m. transaction posting times, are also included in the Board’s policy statement.

    Agency Rule-Making & Guidance Federal Reserve ACH Electronic Transfers Federal Register

  • HUD Releases Mortgagee Letter Providing Home Equity Conversion Mortgage Servicing Implementation Guidance

    Agency Rule-Making & Guidance

    On August 24, HUD published Mortgagee Letter 2017-11, which provides directions for FHA-approved mortgagees to implement certain servicing policy changes outlined in the Federal Housing Administration: Strengthening the Home Equity Conversion Mortgage Program Final Rule (HECM Final Rule), published in the Federal Register in January 2017. The HECM Final Rule’s servicing requirements (including the additional guidance set forth in Mortgagee Letter 2017-11), will take effect for all FHA case numbers assigned on or after September 19, 2017. The Mortgagee Letter furnishes additional details on the following areas of servicing policy included in the HECM Final Rule: (i) “Default for Unpaid Property Charges”; (ii) “Sale of Property Securing a Due and Payable HECM”; and (iii) “Cash for Keys Incentive and Relocation Incentive.”

    Agency Rule-Making & Guidance HUD FHA Mortgage Servicing Federal Register Home Equity Loans HECM

  • FFIEC Releases Guidelines on HMDA Data Testing and Resubmission Standards

    Agency Rule-Making & Guidance

    Earlier this week the Federal Financial Institutions Examination Council (FFIEC) issued new FFIEC Home Mortgage Disclosure Act Examiner Transaction Testing Guidelines (guidelines). Examiners will use the new guidelines to assess the accuracy of the HMDA data recorded and reported by financial institutions and determine when an institution must correct and resubmit its HMDA Loan Application Register. The guidelines will apply to data collected beginning January 1, 2018. As further explained in a CFPB blog post issued the same day, this will be the first time all federal HMDA supervisory agencies—including the CFPB, FDIC, Federal Reserve, NCUA, and the OCC—will adopt uniform guidelines, which are designed to ensure HMDA data integrity (HMDA data includes certain information financial institutions are required to collect, record, and report about their home mortgage lending activity). The purpose for collecting the HMDA data is to evaluate housing trends and issues to monitor lending patterns, assist agencies with fair lending and Community Reinvestment Act examinations, and help identify discriminatory lending practices. According to a FDIC financial institution letter (FIL-36-2017) released on August 23, the highlights of the guidelines include, among other things, a data sampling process, error threshold levels, tolerance levels for minor errors, and the ability of examiners to direct a financial institution to make appropriate change to its compliance management system to prevent recurring HMDA data errors.

    As previously discussed in InfoBytes, in 2016 the CFPB issued a request for public feedback on the resubmission of mortgage lending data reported under HMDA.

    Agency Rule-Making & Guidance HMDA Mortgages CFPB FDIC Federal Reserve NCUA OCC CRA

  • CFPB Issues Final Rule Amending 2015 HMDA Rule

    Agency Rule-Making & Guidance

    On August 24, the CFPB issued a final rule amending Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The changes are primarily for the purpose of clarifying the new data collection and reporting requirements published in October 2015, with most of the clarifications and revisions taking effect January 1, 2018. The CFPB released a proposed version of the clarifications  on April 13 (April Proposed Rule)—on which it solicited public comments—to address technical errors, ease the burden of certain reporting requirements, and clarify certain key terms. A detailed look at the April Proposed Rule was provided in an InfoBytes Special Alert earlier this year. An additional request for comments was issued July 14 on proposed amendments to ease the burden on community banks and credit unions by temporary raising the HMDA reporting threshold for open-end lines of credit. (See previous InfoBytes coverage here.) The CFPB adopted the April Proposed Rule and July amendments largely as written, however, a limited number of substantive changes were made. In order to assist filers, the CFPB released a comprehensive summary of the changes and reference charts to help institutions determine whether they are covered by Regulation C for 2017 or 2018 and beyond. The CFPB also released updated filing instruction guidelines for data collected in 2017 and 2018. The guidelines list changes to the reported data fields and valid values, and covers guidance for HMDA data collected in 2017 and thereafter that must be submitted to the CFPB on March 1 of each calendar year following the year of data collection.

    Highlights of changes made to the rule include:

    • Amendments to Regulation C that temporarily increase the threshold for the collection and reporting of data about open-end lines of credit, for a period of two years. Financial institutions originating fewer than 500 open-end lines of credit in either 2018 or 2019 will not be obligated to begin collecting such data until January 1, 2020. During this time, the Bureau will consider whether to make the increase permanent;     
    • Clarification to several aspects concerning the collecting and reporting of race and ethnicity information, including (i) that applicants are not required to select an aggregate race or ethnicity category as a precondition to selecting a race or ethnicity subcategories; (ii) that applicants may provide a particular “other” ethnicity or race in the free-form field, whether or not the applicant selects the “Other Hispanic or Latino,” “Other Asian,” or “Other Pacific Island” subcategory; and (iii) how financial institutions should report ethnicity—following the outlined methods—if an applicant selects more than five ethnicity categories and subcategories combined; and
    • Clarification to certain key terms defined in the 2015 HMDA Rule, including “temporary financing, automated underwriting system, multifamily dwelling, extension of credit, income, and mixed-use property.”

    Buckley Sandler will release a more comprehensive analysis of the rule and its impact on financial institutions next week.

    Agency Rule-Making & Guidance HMDA Mortgages Fair Lending CFPB

  • Federal Banking Regulators Issue Proposal to Simplify Capital Requirements to Provide Regulatory Relief to Community Banks

    Agency Rule-Making & Guidance

    On August 22, the Federal Reserve, FDIC and OCC issued a proposed rule that capital requirements set to take effect in January 2018 would be suspended under a proposed rule for banking organizations not subject to the advanced approaches capital rules, such as community and midsized banks— generally those with less than $250 billion in total assets and fewer than $10 billion in foreign exposure. The federal banking regulators proposed the suspension as they develop a proposal that would simplify capital requirements to reduce regulatory burden. Banks subject to the advance approaches capital rules will still be required to comply with the capital rule requirements taking effect January 1, 2018. The proposal would pause the fully phased-in Basel III requirements regarding the treatment of mortgage servicing assets, certain deferred tax assets, investments in the capital instruments of unconsolidated financial institutions, and minority interests (see FDIC Financial Institution Letter FIL-34-2017). According to a press release issued by the FDIC, “the transitional treatment for those items is scheduled to be replaced with a different treatment on January 1, 2018.” FDIC Vice Chairman Thomas M. Hoenig issued a statement supporting the proposal but pushed for the need to provide additional relief for community banks such as predicating relief based on banking activities and tangible equity rather than asset size.

    Comments on the proposed rule are due 30 days after publication in the Federal Register.

    Agency Rule-Making & Guidance Basel Federal Reserve FDIC OCC Mortgages Community Banks Bank Regulatory

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