Compliance Center: CFPB Releases Bulletin on Obligations When Dealing With Section 8 Housing Vouchers

The Consumer Financial Protection Bureau (CFPB) issued CFPB Bulletin 2015-02 to remind creditors of their obligations under the Equal Credit Opportunity Act (ECOA) to provide non-discriminatory access to credit for mortgage applicants using income from the Section 8 Housing Choice Voucher (HCV) Homeownership Program.

The Section 8 HCV Homeownership Program was created to assist low-income, first-time homebuyers in purchasing homes. Through the Section 8 HCV Homeownership Program, the participating Public Housing Authority may provide an eligible consumer with a monthly housing assistance payment (HAP) to help pay for homeownership expenses associated with a housing unit purchased in accordance with HUD’s regulations.

The ECOA and Regulation B prohibit creditors from discriminating in any aspect of a credit transaction against an applicant “because all or part of the applicant’s income derives from any public assistance program.” Excluding or refusing to consider these vouchers as a source of income, or accepting the vouchers only for certain types of transactions may violate the ECOA and Regulation B.

A credit union’s clear articulation of underwriting policies regarding income derived from public assistance programs; training of underwriters, mortgage loan originators, and others involved in mortgage loan origination; and careful monitoring for compliance with such underwriting policies can all help the credit union manage fair lending risk in this area and comply with the requirements of ECOA and Regulation B.

Compliance Question of the Week

How do I protect my credit union from liability if I take a power of attorney?

To protect a credit union from liability, the person holding the power of attorney should fill out an affidavit stating several facts: 

  • First, that the person presenting himself or herself as the attorney-in-fact and signing the affidavit or declaration is the person named in the power of attorney. 
  • If the attorney-in-fact is named in the power of attorney as a successor attorney-in-fact, the affidavit should include the circumstances or conditions stated in the power of attorney that have occurred that would cause that person to become the acting attorney-in-fact. 
  • Further, that to the best of the attorney-in-fact’s knowledge, the principal is still alive and at the time the power of attorney was signed, the principal was competent to execute the document and was not under undue influence to sign the document. 
  • In addition, that all events necessary to making the power of attorney effective have occurred. 
  • The affidavit must also state that the attorney-in-fact does not have actual knowledge of the revocation, termination, limitation, or modification of the power of attorney or of the attorney-in-fact’s authority. 
  • That the attorney-in-fact does not have actual knowledge of the existence of other circumstances that would limit, modify, revoke, or terminate the power of attorney or the attorney-in-fact’s authority to take the proposed action. 
  • If the attorney-in-fact was married to the principal at the time of execution of the power of attorney, then at the time of signing the affidavit or declaration, the marriage of the principal and the attorney-in-fact has not been dissolved or declared invalid. 
  • Lastly, that the attorney-in-fact is acting in good faith pursuant to the authority given under the power of attorney.

Resources

Legal Briefs

National Credit Union Administration (NCUA) 

The NCUA announced that it has translated portions of its public website into Spanish. The Spanish pages include the NCUA’s home page, landing pages, and press releases.

The NCUA announced its second 2015 grant round for low-income designated credit unions. The four grants available during this round include Building and Capacity Growth, Digital Growth, Fraud Prevention and Cybersecurity, and New Product Service Development. The grant applications will be accepted from June 1 through June 30, 2015.

The NCUA has published its agenda for the May 21, 2015 Board Meeting.

Consumer Financial Protection Bureau (CFPB)

The CFPB released Bulletin 2015-2, reminding creditors to provide non-discriminatory access to credit for mortgage applicants using HUD’s Section 8 HVC Program. 

CFPB Director Cordray delivered prepared remarks at the Field Hearing on Student Loans. Cordray announced that the CFPB is launching a public inquiry into student loan servicing practices.

The CFPB released a blog post alerting consumers to the protections that their Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), and VA Benefits have from garnishment orders.

Federal Trade Commission (FTC)

The FTC released a new online resource for identity theft victims. The resource is aimed at making it easy for identity theft victims to report it and provides checklists that walk victims through the recovery process.

Federal Deposit Insurance Corporation (FDIC)

Martin J Gruenberg, Chairman of the FDIC, delivered a speech to the Peterson Institute for International Economics on the steps that the FDIC is taking to develop a framework for any future failures of large, complex, and systematically important financial institutions. The goal under the framework is to avoid taxpayer bailouts and market breakdowns.

FDIC Chairman Gruenberg delivered a speech to the American Association of Bank Directors focusing largely on the safety and soundness of the banking system. Gruenberg’s speech touched on governance challenges, including cyber and strategic risk, and corporate governance expectations.

Financial Crimes Enforcement Network (FinCEN)

FinCEN has announced that it has created another way to file FBAR reports, for those that must file. Filers can file using the standard PDF or the new online form.

FinCEN announced that it held its first awards ceremony to recognize law enforcement agencies using BSA data effectively to obtain successful prosecution.

Federal Housing Finance Agency (FHFA)

FHFA Director Watt delivered prepared remarks at the 2015 Federal Home Loan Banks Directors Conference. Watt’s remarks focuses on recent results and activities of the FHFA, the FHFA’s role in the banking system, and areas of focus for the FHL Banks.

The FHFA released an Update on the Structure of the Single Security.  This release is an update on the 2014 Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac that discussed the goal of developing a single mortgage-backed security Fannie Mae and Freddie Mac could issue.

Federal Reserve Board (FRB)

The FRB has published the Federal Open Market Committee’s tentative 2016 meeting schedule.

The FRB issued a Report to Congress on the Use of ACH System and Other Payment Mechanisms for Remittance Transfers to Foreign Countries.

The May edition of FedFlash is now available.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of April 28, 2015. The last update prior to this was April 23, 2015.

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance, Federal.