CFPB Interpretive Rule on Successors-in-Interest

The Consumer Financial Protection Bureau (CFPB) has issued an interpretive rule to clarify the Regulation Z ability-to-repay requirements and successor-in-interest situations where the successor is acquiring the title to a property due to the death of the primary mortgagee.

The interpretive rule explains that because an heir has already acquired the title to the home, adding the heir as a borrower on the mortgage does not trigger the ability-to-repay requirements. The rule does not require the creditor to determine the heir’s ability to repay the mortgage before formally recognizing the heir as the borrower. As the named borrower, the heir may more easily obtain account information, pay off the loan, or seek a loan modification.

The interpretive rule can also apply to other transfers, including transfers to living trusts, transfers during the life from parents to children, transfers resulting from divorce or legal separation, and other family-related transfers.

Compliance Question of the Week

Can a credit union put a hold on funds from a deposited check after the date of deposit if there is reason to believe the check will not clear?         

Yes, a hold can be placed if the credit union has reasonable cause to believe it will not have the ability to collect on the deposited check. Reasonable cause requires the facts exist that would cause a well-grounded belief by a reasonable person.

If there is reasonable cause and the credit union puts a hold on the funds, the credit union must provide the depositor with written notice, generally at the time of deposit. However, if the credit union becomes aware of information after the check is deposited causing doubt that the check will clear, the credit union must mail or deliver the notice within the first business day following the day the facts become known. The notice must include:

  • A number or code, not to exceed four digits that identifies the customer’s account;
  • The date of the deposit;
  • The amount of the deposit that is being delayed;
  • The reason the exception was invoked; and
  • The time period within which the funds will be available for withdrawal.

Related Links:

12 CFR 229.13

Legal Briefs

National Credit Union Administration (NCUA)

NCUA Chair Debbie Matz released a statement regarding the listening sessions that are now complete and stressed that information shared in the listening sessions regarding the risk-based capital rule will be taken into consideration.

The video of the NCUA’s June board meeting is now available.

Consumer Financial Protection Bureau (CFPB)

The CFPB proposed a policy that would allow consumers to opt-in to making the narrative of their complaints part of the CFPB’s complaint database and would be seen by the public.

Federal Reserve Board (FRB)

FRB Chair Yellen delivered the FRB’s Semiannual Monetary Policy Report to Congress.

The FRB has released the minutes of June’s Discount Rate Meetings.

U.S. Department of the Treasury (Treasury)

During the Institutional Investor’s 4th Annual “Delivering Alpha Conference,” Treasury Secretary Lew called on the financial sector to strengthen its cybersecurity by using the Obama Administration’s cybersecurity framework for their systems.

Financial Crimes Enforcement Network (FinCEN)

FinCEN has released a new SAR update that covers SAR statistics.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of July 16, 2014. The last update prior to this was July 15, 2014.

Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Compliance News.