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Financial Services Law Insights and Observations


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  • CFPB Finalizes Rule to Update Reporting Requirements of the HMDA

    Consumer Finance

    On October 15, the CFPB finalized a rule amending Regulation C to update the reporting requirements of the HMDA. The final rule changes what data financial institutions must provide to Federal agencies. Data points to be reported under the final rule include: (i) information on applicants, borrowers, and the underwriting process, including age, credit score, debt-to-income ratio; (ii) information about the property securing the loan, such as property value and additional information on manufactured and multifamily housing; (iii) information on the features of the loan, such as pricing information, loan term, interest rate, introductory rate period, non-amortizing features, and the type of loan; and (iv) unique identifiers, including the property address, loan originator identifier, and a legal entity identifier for the financial institution. For more on this rule, please read BuckleySandler's Special Alert.

    CFPB HMDA Agency Rule-Making & Guidance

  • Special Alert: CFPB Issues Guidance Regarding Marketing Services Agreements

    Consumer Finance

    On October 8, 2015, the Consumer Financial Protection Bureau (“CFPB”) published a compliance bulletin providing guidance to mortgage industry participants regarding the permissibility of marketing services agreements (“MSAs”) under the Real Estate Settlement Procedures Act (“RESPA”).The bulletin summarizes the CFPB’s “grave concerns” that settlement service providers have been improperly using MSAs to circumvent RESPA’s restrictions on the payment of kickbacks and referral fees in exchange for real estate settlement services.

    According to the bulletin, while MSAs are purportedly designed to permit individuals or entities to pay service providers bona fide compensation for goods, facilities, or services actually provided—which is expressly permitted under RESPA—in some cases, MSAs are actually used as a cover for illegal referral fee arrangements. The bulletin further notes that even facially-compliant MSAs can be implemented in a manner that ultimately results in the impermissible exchange of compensation for referrals of settlement service business, often as a result of the significant financial pressures that exist for participants in the mortgage and settlement service markets. The CFPB’s guidance emphasizes the dangers posed to consumers by MSA arrangements that hide or indirectly or inadvertently facilitate the unlawful exchange of payment for referrals of settlement service business, including potential increases in mortgage pricing and negative impacts on consumers’ ability to freely shop for mortgages and mortgage-related settlement services.

    Click Here to View the Full Special Alert


    Questions regarding the matters discussed in this Alert may be directed to any of our lawyers listed below, or to any other BuckleySandler attorney with whom you have consulted in the past.


    CFPB RESPA Agency Rule-Making & Guidance

  • Federal Banking Regulators Schedule EGRPRA Outreach Meeting in Chicago


    On September 28, the Federal Reserve, the FDIC, and the OCC announced that the latest outreach meeting under the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) will be held on October 10 in Chicago, Illinois. The meeting will feature panel presentations from industry insiders and consumer advocates. Senior officials from the Federal Reserve, OCC, and FDIC are also scheduled to attend. This meeting will be the fifth of six outreach meetings focused on identifying outdated or burdensome regulatory requirements imposed on financial institutions. The sixth and final meeting is expected to take place on December 2 in Washington, D.C. Previous InfoBytes coverage on EGRPRA can be found here.

    FDIC Federal Reserve OCC Bank Compliance Community Banks Bank Supervision Agency Rule-Making & Guidance

  • FinCEN to Withdraw 2011 Proposed Rule Against Lebanon-Based Bank

    Federal Issues

    On September 28, FinCEN announced its intention to withdraw its February 2011 Notice of Finding and Notice of Proposed Rulemaking identifying a Lebanon-based bank as a “financial institution of primary money laundering concern” under Section 311 of the USA PATRIOT Act. The bank had been linked with Hezbollah and found to be involved in international narcotics and money laundering networks. Accordingly, through the Notice of Finding, FinCEN sought to impose certain “special measures” on the bank which are designed to, among other things, weaken foreign banks suspected of money laundering and financing terrorism, as well as protect American financial institutions. However, given that the bank’s license was revoked in September 2011 by Lebanon’s central bank, the Banque du Liban, and all of its assets were subsequently liquidated, the bank no longer exists as a foreign financial institution and, as such, is no longer subject to the prohibitions set forth in the proposed rule. The withdrawal of FinCEN’s Notice of Finding does not require a comment period and will be effective upon publication in the Federal Register.

    FinCEN Bank Secrecy Act Patriot Act Agency Rule-Making & Guidance

  • CFPB Publishes Final Rule Amending Various Annual Dollar Threshold Adjustments

    Consumer Finance

    On September 21, the CFPB issued a final rule amending certain dollar thresholds for provisions implementing amendments in Regulation Z, which implements the Truth in Lending Act (TILA), under the CARD Act, HOEPA, and ATR/QM. The CFPB is required to adjust based on the annual percentage change reflected in the Consumer Price Index in effect on June 1, 2015. For 2016, the minimum interest charge disclosure threshold will remain unchanged. Permissible penalty amounts will remain $27 for the first late payment; however, for each subsequent violation within the following six months, the allowed penalty amount will decrease from $38 to $37. Similarly, the CFPB is adjusting the combined points and fees trigger-threshold for compliance with HOEPA to $1,017. Lastly, to satisfy the underwriting requirements under the ATR/QM rule, a covered transaction will not be considered a QM unless the combined points and fees do not exceed 3 percent of the total loan amount for a loan greater than or equal to $101,749; $3,052 for a loan amount greater than or equal to $61,050 but less than $101,749; 5 percent of the total loan amount for a loan greater than or equal to $20,350 but less than $61,050; $1,017 for a loan amount greater than or equal to $12,719 but less than $20,350; and 8 percent of the total loan amount for a loan amount less than $12,719.

    The rule becomes effective on January 1, 2016.

    CFPB Agency Rule-Making & Guidance

  • CFPB Finalizes Rule Allowing Small Creditors to Increase Lending in Rural and Underserved Areas

    Consumer Finance

    On September 21, the CFPB issued a final rule, amending certain mortgage rules and comments relating to lending activities by small creditors in rural and underserved areas. Initially proposed in January 2015, the final rule, among other things (i) increases the loan origination limit for determining eligibility for small-creditor status from 500 loans to 2,000 non-portfolio loans; (ii) includes the assets of the creditor’s affiliates, which regularly make covered transactions, in calculation of the creditor’s assets to determine whether the creditor is within the $2 billion threshold for small-creditor status; (iii) restores the one-year look back period in place of the three-year look back period for the time period that determines whether a creditor is operating predominantly in rural or underserved areas; (iv) revises escrow exemptions to prevent creditors from losing eligibility for the escrow exemptions as a result of escrow accounts before the effective date of the rule; (v) broadens the definition of “rural” to include (a) counties that meet the current definition of rural county, and (b) census blocks that are not in an urban area (as defined by the Census Bureau); (vi) adds safe harbor provisions to facilitate the determination of “rural” by permitting automated address search tools provided by the CFPB and the Census Bureau; and (vii) extends the temporary two-year transition period, which permits certain small creditors to make balloon-payment qualified mortgages and balloon-payment high-cost mortgages (whether or not they operate predominantly in rural or underserved areas), to include applications received by April 1, 2016.

    The final rule will take effect on January 1, 2016.

    CFPB Agency Rule-Making & Guidance

  • OFAC Updates Cuban Assets Control Regulations Easing Sanctions on Cuba

    Federal Issues

    On September 18, OFAC issued a final rule amending the Cuban Assets Control Regulations (CACR) to reflect policy changes previously announced by the Obama administration. With respect to financial transactions, the amendments, among other things, (i) permit certain additional persons subject to U.S. jurisdiction to open and maintain bank accounts in Cuba to use for authorized purposes; (ii) removes limitations on donative remittances to Cuban nationals, on certain authorized remittances that authorized travelers may carry to Cuba, and on the amount of remittances that a Cuban national permanently resident in Cuba who is departing from the U.S. may carry to Cuba; (iii) adds a new general license authorizing remittances from Cuba and Cuban nationals to the United States; (iv) adds a new general license authorizing the unblocking and return of certain previously blocked remittances and funds transfers in certain circumstances; and (v) authorizes U.S. depository institutions to maintain accounts for Cuban nationals while the Cuban-national account holder is located outside the United States, provided that the account holder may only access the account while lawfully present in the United States, and removes a cap on payments from blocked accounts held by Cuban nationals in the United States in a nonimmigrant status to use for living expenses. The amendments also relax restrictions previously set forth in the telecommunications and internet sector, on travel between the U.S. and Cuba, and other various activities. Revisions to the CACR take effect on September 21, 2015.

    At the same time, OFAC published a set of new and revised FAQs addressing the changes set forth in the updated CACR.

    Sanctions OFAC Agency Rule-Making & Guidance

  • U.S. District Court Grants FBME Preliminary Injunction; Effective Date of FinCEN's "Special Measure Five" Final Rule Delayed

    Consumer Finance

    On August 28, FinCEN issued a notice regarding the agency’s July 29 final rule imposing “special measure five” against FBME Bank Ltd. (“FBME”), which would prohibit financial institutions from opening or maintaining correspondent accounts or payable through accounts for or on behalf of FBME. Per FinCEN’s most recent notice, the originally scheduled effective date of August 28, 2015 has been postponed. On August 7, FBME filed suit in the United States Court for the District of Columbia and moved for a preliminary injunction, which the Court granted on August 27. The Court “ordered the parties to meet and confer as to an expedited briefing schedule on the merits of FBME’s Complaint and to file a joint proposed schedule, or separate schedules if mutual agreement cannot be reached.” The rule will not take effect until a final judgment is entered.

    FinCEN Agency Rule-Making & Guidance

  • California Department of Business Oversight Issues Opinion Letter Declaring Foreign Check Clearing Services Not Subject to State's Money Transmission Act

    State Issues

    On August 24, the California Department of Business Oversight issued a redacted opinion letter clarifying that foreign check clearing services are not considered money transmission subject to the Money Transmission Act. In order to fall under the state’s Financial Code’s definition of money transmission, a financial institution must receive money or monetary value for transmission within the United States. Emphasizing the domestic prerequisite outlined in the code, the DBO’s opinion indicates that if a bank establishes an exchange rate for an American financial institution that has received a check for deposit written against a foreign bank, the exchange rate service provided by the bank is considered a foreign check clearing service and not “receiving money or monetary value in the United States.” Accordingly, such check clearing activity does not fall under the California Financial Code’s definition of money transmission.

    Check Cashing Money Service / Money Transmitters Agency Rule-Making & Guidance

  • FinCEN Issues NPRM Establishing BSA/AML Requirements for Investment Advisers


    On August 25, FinCEN issued a Notice of Proposed Rulemaking (NPRM) seeking to adopt minimum Bank Secrecy Act (BSA) and anti-money laundering (AML) standards that would be applicable to investment advisers. Under the proposal, investment advisers would be required to implement AML programs and report suspicious activity, among other safeguards. The NPRM states that the proposal would cover investment advisers registered or required to register with the SEC. The proposal would also add such investment advisers to the definition of “financial institution.” This would result in investment advisers being required to file currency transaction reports and to comply with recordkeeping and other requirements applicable to financial institutions. With respect to supervisory authority, FinCEN stated that it would delegate its authority to the SEC for purposes of examining investment advisers for compliance with the proposed requirements.

    Anti-Money Laundering FinCEN SEC Bank Secrecy Act Investment Adviser Agency Rule-Making & Guidance


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