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On September 30, the OCC issued updates to four booklets of the Comptroller’s Handbook: Bank Supervision Process, Community Bank Supervision, Federal Branches and Agencies Supervision, and Large Bank Supervision. Among other things, the updates include (i) the interim final rule for the expanded 18-month supervisory cycle for certain institutions (covered by InfoBytes here); (ii) a revised OCC report of examination policy based on the revised Federal Financial Institutions Examination Council report of examination policy; (iii) the revisions to the OCC’s enforcement action policies (covered by InfoBytes here); and (iv) changes to the OCC’s credit underwriting assessment.
On July 25, the OCC announced the issuance of a fully revised “Corporate and Risk Governance” booklet for the Comptroller’s Handbook, as well as limited updates to the “Internal and External Audits” booklet for examiners completing core assessments affected by audit functions. Among other things, the revised “Corporate and Risk Governance” booklet is intended to provide examiners with a summary of corporate and risk governance, related risks, the board’s role and responsibilities in corporate and risk governance, strategic planning, and examination procedures. The revised booklet identifies the following as the primary risk categories associated with corporate and risk governance: (i) strategic; (ii) reputation; (iii) compliance; and (iv) operational. Updates to both booklets incorporate references to relevant OCC issuances and auditing standards published since the booklets were last issued, reflect the integration of federal savings associations into certain regulations, and make clarifying edits regarding supervisory guidance, sound risk management practices, legal language, and the roles of the bank’s board and management.
On May 7, the OCC announced an update to the RESPA booklet of the Comptroller’s Handbook. Among other things, the revisions to the booklet reflect updates to Regulation X made by the CFPB in recent years, including (i) the establishment and implementation of a definition of “successor in interest;” (ii) compliance with certain servicing requirements when a person is a debtor in bankruptcy; and (iii) clarifications and revisions to the provisions regarding force-placed insurance notices, policy and procedure requirements, and early intervention and loss mitigation requirements.
On March 15, the OCC announced an update to the Recovery Planning booklet of the Comptroller’s Handbook. Among other things, the revised booklet explains the purpose of effective recovery planning and provides guidance for OCC examiners to use when assessing the “appropriateness and adequacy of [a] covered bank’s recovery planning process and the integration of that process into the covered bank’s overall risk governance framework.” The updates reflect revisions made to the agency’s rule on enforceable guidelines, published December 27, 2018, which increased the average total consolidated assets threshold from $50 billion to $250 billion for covered insured national banks, federal savings associations, and federal branches that are required to comply, unless determined otherwise. Additionally, a bank must now comply with the guidelines within 12 months after it first becomes subject to the guidelines.
On December 27, the OCC released Bulletin 2018-48, which announces an update to the “Student Lending” booklet of the Comptroller’s Handbook to include information about the rehabilitation programs for private education loans authorized under Section 602 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act), signed into law in May 2018. Section 602 amends the Fair Credit Reporting Act to give student loan borrowers the option to request the removal of student loan default information from their credit report, if, among other things, (i) the lender offers a Section 602 rehabilitation program that has been approved by the bank’s appropriate federal regulator; (ii) the borrower meets the bank’s program criteria, including a demonstrated willingness and ability to repay the loan; and (iii) the borrower has not previously removed a default on the same loan. Although the Act does not require lenders to offer a Section 602 rehabilitation program, those that do are entitled to a safe harbor from claims of inaccurate reporting for removing a default.
The Bulletin also details the process for obtaining regulatory approval for a Section 602 rehabilitation program. The Bulletin notes that banks intending to establish a Section 602 program must seek written approval from their supervisory office concerning the proposed program, and that the office will review the program to ensure it is consistent with the Act’s minimum requirements, other applicable laws and regulations, and safe and sound banking principles. The OCC will provide feedback or notify the bank of its decision within 120 days of the request.
On October 15, the OCC issued Bulletin 2018-38, which updates, among other things, the “Trade Finance and Services” booklet of the Comptroller’s Handbook previously issued in April 2015. The booklet provides guidance for OCC examiners to use in connection with the examination and supervision of national banks and federal savings associations that engage in international trade finance and services activites, including “letters of credit, guarantees, acceptances, open account financing, other specialized trade financing, financial supply chain solutions, prepayment, advising, trade collections, bank-to-bank reimbursement services, insourcing/outsourcing trade processing, and hedging services.”
The updated booklet (i) incorporates references to relevant OCC issuances published since April 2015; (ii) reflects the integration of federal savings associations into certain regulations; and (iii) makes “clarifying edits regarding supervisory guidance, sound risk management practices, legal language, or the roles of the bank’s board or management.”
On September 26, the OCC issued Bulletin 2018-31, which updates the “Truth in Lending Act” (TILA) booklet of the Comptroller’s Handbook, which previously was issued in December 2014. The booklet provides guidance for OCC examiners to be used in connection with the examination and supervision of national banks and federal savings associations, which offer or extend consumer credit products covered by TILA. The updates reflect changes made to Regulation Z, TILA’s implementing regulations, since the booklet’s previous release, and includes procedures implementing the CFPB’s TILA-RESPA integrated disclosure rule (TRID). Additional updates include, among other things, (i) special provisions on certain construction loans; (ii) special provisions relating to small creditors and rural or underserved areas; (iii) changes regarding appraisals for higher-priced mortgage loan exemptions; (iv) updates to mortgage origination examination procedures; and (v) updates to mortgage servicing rules and the small creditor definition.
With the issuance of the new booklet, the OCC rescinds (i) OCC Bulletin 2014-61, “Truth in Lending Act: Revised Comptroller’s Handbook Booklet and Rescissions”; (ii) The TILA sections of OCC Bulletin 2015-27, “Revised Interagency Examination Procedures for Consumer Compliance”; and (iii) OCC Bulletin 2015-42, “Initial Examinations for Compliance With TILA-RESPA Integrated Disclosure Rule.”
On September 12, the OCC issued Bulletin 2018-28, which updates the “Deposit-Related Credit” booklet of the Comptroller’s Handbook previously issued March 2015. The booklet provides guidance for OCC examiners to be used in connection with the examination and supervision of national banks and federal savings associations who offer small-dollar, unsecured deposit-related credit products and services, such as check credit, overdraft protection, and deposit advance products. The booklet also includes, among other things, (i) updated guidance following the rescission of OCC Bulletin 2013-40, “Deposit Advance Products: Final Supervisory Guidance,” (previously covered by InfoBytes here) and the issuance of OCC Bulletin 2018-14, “Installment Lending: Core Lending Principles for Short-Term, Small-Dollar Installment Lending” (previously covered by InfoBytes here); (ii) information concerning limitations and requirements for consumer credit products extended to active-duty servicemembers covered by the Military Lending Act; (iii) integrated citations to third-party risk management guidance and procedures; (iv) information pertaining to new products and services, including sound due diligence practices; and (v) prohibitions against unfair, deceptive, or abusive acts or practices under Dodd-Frank.
On August 31, the OCC issued Bulletin 2018-26, which updates the “Other Real Estate Owned” booklet of the Comptroller’s Handbook and provides guidance for examiners on the acquisition, reporting, management, and disposition of other real estate owned (OREO) held by supervised banks and federal savings associations. The OCC commented that while the booklet’s focus is on foreclosed real property, the guidance may also “apply to other types of foreclosed (repossessed) property, such as consumer and commercial goods, financial instruments, and intangible assets.” Foreclosed assets for reporting purposes include “loans where a bank has received physical possession of a borrower’s assets, regardless of whether formal proceedings take place.” Additional updates include (i) accounting changes for OREO sales by public and non-public business entities; (ii) interim guidance for federal savings associations on the OREO holding period; and (iii) clarifications concerning supervisory guidance and risk management practices, including third-party risk management guidance issued since the booklet was last published in 2013.
On August 28, the OCC issued Bulletin 2018-25, which provides guidance regarding the role of informal or implied expressions of support from foreign governments (implied sovereign support) in determining a borrower’s obligor and facility credit risk ratings. The Bulletin expands on Appendix E of the “Rating Credit Risk” booklet of the Comptroller’s Handbook and encourages banks to analyze, among other things, the sovereign’s legal and financial obligations and the relationship between the obligor and the sovereign. The OCC notes that the obligor’s importance to the sovereign’s local economy does not necessarily demonstrate “willingness to provide an obligor with financial support.” Additionally, the Bulletin provides guidance regarding bank policies regarding the use and application of implied sovereign support to determine a final regulatory risk rating. The OCC states that a sound policy would incorporate the following three elements: (i) defined criteria on how a risk rating may be changed for an obligor due to recognition of implied sovereign support; (ii) methods for determining whether implied sovereign support will be considered in the risk rating decision, including periodic reevaluations of the assessment; and (iii) appropriate documentation standards, including a tracking process that promotes “consistent and appropriate” application of the defined criteria.
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