Compliance News

While the ultimate goal is to prevent or mitigate burdensome regulations, the reality is that regulation never stops, and therefore the need for credit unions to comply won’t either. The League remains a constant source for your credit union to understand rules and regulations that impact you.

Throughout the year, League staff research regulatory compliance questions posed by member credit unions and disseminate the answers. Educational sessions are held periodically to reinforce information distributed through InfoSight and Compblog Updates, as well as other written information.

In the News

CFPB Issues Fair Lending Guidance

New guidance recently issued by the Consumer Financial Protection Bureau (CFPB) is designed to help lenders avoid illegal discrimination against consumers receiving public housing assistance. According to the bureau, the guidance was issued to ensure non-discriminatory access to credit for applicants whose income includes vouchers from the Section 8 Housing Choice Voucher (HCV) Homeownership Program.

The bulletin also recommends that lenders clearly articulate underwriting policies regarding income derived from public assistance programs. This includes training of underwriters, mortgage loan originators and other involved in the origination process, as well as careful monitoring for compliance to such policies.   (news.cuna.org)

Mortgage-shopping Toolkit Available from CFPB

A new mortgage-shopping toolkit that includes forms that will be required starting Aug. 1 has been released by the Consumer Financial Protection Bureau (CFPB).

Creditors must provide the toolkit to mortgage applicants as a part of the application process, and the CFPB encourages other industry participants, including real estate professionals, to provide it to potential homebuyers.  The new toolkit is designed to replace an existing one that creditors are currently required to provide to mortgage applicants.

The bureau’s new Truth-in-Lending Act-Real Estate Settlement Procedures Act (TILA-RESPA) integrated disclosure rule includes new Loan Estimate and Closing Disclosure forms that lenders must provide starting Aug. 1. According to the CFPB, the new toolkit provides a step-by-step guide to help consumers understand the nature and costs of real estate settlement services, define what affordable means to them and find their best mortgage.

The CFPB says the release of the toolkit now is intended to give the mortgage industry time to order and receive or print the new toolkit and integrate electronic versions into their mortgage origination systems.   (CUNA News Now)

FFIEC: Statements on Compromised Credentials and Destructive Malware

The Federal Financial Institutions Examination Council (FFIEC) today released two statements about ways that financial institutions can identify and mitigate cyberattacks that compromise user credentials or use destructive software, known as malware. In addition, the FFIEC provided information on what institutions can do to prepare for and respond to these threats.   More information available here – ncua.gov.

CFPB: Payday Lending Proposal

The Consumer Financial Protection Bureau (CFPB) released a plan aimed at eliminating payday lending “debt traps,” and CUNA is evaluating it to determine if it accomplishes its goal without hindering credit unions’ efforts to provide credit to their members.

The new consumer protections would apply to payday loans, vehicle title loans, deposit advance products and certain high-cost installment and open-end loans.The proposal would cover both short-term credit products (which must be paid in full within 45 days), and long-term loans where the lender collects payments through access to the borrower’s bank accounts. One of the proposal’s main focuses is requiring a lender to determine a borrower’s ability to repay a loan before granting it.

For long-term loans, the CFPB is considering protections already used by the National Credit Union Administration for its payday alternative loan program. Those loans are capped at 28% interest and an application fee of no more than $20. The other approach the bureau is examining for long-term loans would cap a loan payment amount at no more than 5% of the borrower’s gross monthly income, and no more than two such loans can be made to a borrower within a 12-month period.

For short-term loans, lenders would have to verify a borrower’s income, financial obligations and borrowing history to determine the consumer’s ability to repay. There would be a 60-day “cooling off period” between loans–loans cannot be made within that period unless there is documentation the borrower’s circumstances have improved enough to repay without re-borrowing. Lenders also would not be allowed to keep consumers in debt on short-term loans for more than 90 days in a 12-month period. Rollover loans would be capped at two, followed by a mandatory 60-day cooling off period.

For the second and third consecutive short-term loans, the bureau is considering two options. One would require the principal decrease with each loan, so that it is repaid after the third loan, or require the lender provide a no-cost “off-ramp” after the third loan, to allow the consumer to pay the loan off over time without further fees.  (CUNA News Now)

Promoting Youth Savings Programs: Guidance from NCUA

The National Credit Union Administration, along with the other four federal financial regulators, issued guidance Tuesday designed to encourage all financial institutions to offer youth savings programs. The guidance contains answers to frequently asked questions regarding young consumers’ accounts, as well as compliance information for opening such accounts. The guidance does not create any new regulatory policy or establish new industry expectations. In addition to the NCUA, the guidance also was sent out by the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corp.                        (CUNA News Now)

NCUA: Small CU Threshold Proposal Approved

The NCUA Board recently approved a proposal to raise the definition of a small credit union from assets less than $50 million to assets less than $100 million, saying the estimated proposed change would allow an additional 745 credit unions to receive consideration for regulatory relief under the Regulatory Flexibility Act.

NCUA staff said it found that smaller federally insured credit unions had slower deposit growth, slower membership growth and slower growth in loan originations. NCUA staff also told the board small federally insured credit unions typically have higher operating expenses.

Board Member Mark McWatters supported the proposal, but said he preferred raising the asset threshold to less than $250 million to cover more credit unions.        (cutimes.com)

NCUA: 2015 Regulation Review List

Public comments are now being accepted by the NCUA on the agency’s list of regulations it will review in 2015.

Most notable among the more than 30 regulations the agency will review this year are:

  • Field of membership modifications, including the Chartering and Field of Membership Manual;
  • Loans and lines of credit to members as well as services for nonmembers within the field of membership;
  • Designation of low-income status, which includes the acceptance of secondary capital accounts by low-income designated credit unions;
  • Federal credit union ownership of fixed assets; and
  • Community Development Revolving Loan Fund access for credit unions.

Since 1987, the NCUA has conducted a rolling review on a regular basis, covering one-third of its regulations each year in an attempt to streamline, modernize or eliminate regulations where appropriate.     (CUNA News Now)

 Comments may be filed by email or standard mail and must be received by Aug. 3. Commenters using email should send to OGCMail@NCUA.gov with the subject line “Regulatory Review 2015.” The address for mailing comments is Regulatory Review 2015, Office of General Counsel, NCUA, 1775 Duke Street, Alexandria, VA 22314-3428.             (ncua.gov)

IOLTA Bill Questions

The passage of the Credit Union Share Insurance Fund Parity Act has raised a number of questions from credit unions about its potential applications, questions summarized by the CUNA in a letter to the NCUA.

The bill was signed into law in December. While it allows IOLTAs to be covered by the NCUSIF, it also provides coverage for “other similar escrow accounts,” according to the bill’s text. Credit unions have inquired as to whether this includes accounts such as prepaid funeral accounts and realtor escrow accounts.

CUNA also asked the NCUA to address questions on:

  • Expectations from the agency regarding the types of records that need to be maintained to keep track of beneficial owners of IOLTAs and similar accounts, and who is expected to maintain the records;
  • Bank Secrecy Act (BSA) compliance requirements on IOLTAs and similar accounts, since those accounts can hold nonmember funds; and
  • Whether IOLTAs and similar accounts are exempt from NCUA regulations that limit public unit and nonmember shares to 20% of the credit union’s total shares or $3 million, whichever is greater.

Credit unions have also asked if the NCUA will use its authority to resolve questions about pass-through insurance of prepaid card programs. CUNA urged the agency to allow member businesses to offer payroll cards to employees, regardless of whether individual employees are members of the credit unions. The FDIC has determined that such accounts receive the same insurance coverage as other deposit accounts, and CUNA has urged the NCUA to follow suit.      (CUNA News Now)

 

 

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