Legal Briefs

Consumer Financial Protection Bureau (CFPB)

The CFPB has proposed a procedural rule on supervising nonbanks that pose risks to consumers. The proposed rule sets forth the procedures by which the CFPB may subject a nonbank covered person to the CFPB’s supervisory authority of requiring reports and conducting exams. Comments are due by July 24th, 2012.

National Credit Union Administration (NCUA)

The NCUA released the results of the May 24 board meeting. The board covered the elimination of RegFlex and extension of RegFlex to federal credit unions, an update to Supervisory Committee Duties due to the elimination of RegFlex, new rules requiring loan workout policy and loan non-accrual policy, changes to TDR tracking and reporting and the Insurance fund which stands at a 1.32% equity ratio.

The NCUA issued a final rule regarding the elimination of the RegFlex program and the extension of RegFlex provisions to all federal credit unions. The final rule allows all federal credit unions to:

  • Make charitable contributions to charities of their choosing.
  • Accept non-member deposits, up to the greater of 20 percent of shares or $3 million, from local governmental entities or other credit unions.
  • Use a six-year time horizon (instead of three years) to partially occupy unimproved property acquired for future expansion.
  • Obtain certain exceptions to constraints on purchasing whole loans from other federally insured credit unions.
  • Enter into borrowing-repurchase transactions in which the purchased securities have maturities exceeding the maturity of the borrowing-repurchase agreement, provided the investment value does not exceed net worth and subject to certain constraints.
  • Purchase private-label commercial mortgage-related securities, subject to certain net worth constraints and safety and soundness investment criteria.
  • Invest in zero-coupon securities, subject to certain net worth and investment maturity limits.

The NCUA issued IRPS 12-1. The IRPS makes changes technical to the Guidelines for the Supervisory Review Committee due to the elimination of RegFlex. Comments are due by June 30, 2012, and the IRPS will be effective on August 30, 2012.

The NCUA issued final rules regarding Loan Workouts and Nonaccrual Policy, and the Regulatory Reporting of Troubled Debt Restructured Loans. As a result of the changes approved by the Board, credit unions will now be able to modify loans without having to immediately classify TDRs as delinquent. Specific changes include:

  • Requiring federally insured credit unions to adopt and adhere to written policies that govern loan workout arrangements that assist borrowers. Compliance date October 1, 2012.
  • Allowing credit unions to calculate the past due status of all loans consistent with loan contract terms, including amendments made to loan terms through a formal TDR. Compliance date June 30, 2012.
  • Eliminating the dual and often manual delinquency tracking burden on credit unions for managing and reporting TDR loans.
  • Reaffirming current industry practices by requiring credit unions to discontinue interest accrual on loans past due by 90 days or more and to establish requirements for returning such loans to accrual status. Compliance date October 1, 2012.

Office of Foreign Assets Control (OFAC)

The OFAC SDN list was updated again. Last update: May 30, 2012.

Washington State Division of Credit Unions (DCU)

The DCU released DCU Bulletin B-12-02. Beginning June 7, 2012, the Washington State’s one page mortgage disclosure is no longer required because the disclosures that comply with the federal Real Estate Settlement Act (RESPA) are deemed to be compliant with the disclosures that were required under RCW 19.144.020.

Financial Crimes Enforcement Network (FinCEN)

FinCEN has released ruling FIN-2012-R001. The ruling covers the application of the Money Service Business rule to bank holding companies that issue official checks. The holding companies would be defined as an MSB and would need to follow the MSB rules.

Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Advocacy News, Compliance News, Federal, NCUA.