U.S. District Court Blocks DOL’s Overtime Rule Nationwide

The preliminary injunction blocks the implementation of the Department of Labor’s (DOL) new overtime rules which would have gone into effect on December 1.

The preliminary injunction prevents the DOL from enforcing the overtime rule which increased the salary threshold test for employees to qualify as overtime exempt employees.

The order does create uncertainty for employers who have taken steps to comply with the new rule.  As it stands, at this time employers are not required to pay overtime per the new rules.  But, if the DOL chooses to appeal the injunction and is successful, employers should be prepared to implement the changes.

Credit unions may wish to consult with their HR legal counsel regarding this matter.

Earlier this week, Kelly Tilden, employment lawyer at Farleigh Wada Witt, provided analysis of the Texas court’s injunction and related advice. Read more here from Farleigh Wada Witt.

Compliance Question of the Week

Can a medical condition be considered when determining loan eligibility?

No, medical conditions cannot be used as criteria for determining loan eligibility. The Fair Credit Reporting Act (FCRA) generally prohibits creditors from obtaining and using medical information in connection with the determination of a member’s eligibility, or continued eligibility, for credit.  However, a creditor can obtain and use medical information as long as:

  • The information is the type of information routinely used in making credit eligibility determinations, such as information relating to debts, expenses, income, benefits, assets, collateral, or the purpose of the loan, including the use of proceeds;
  • The creditor uses the medical information in a manner and to an extent that is no less favorable than it would use comparable information that is not medical information in a credit transaction; and
  • The creditor does not take the consumer’s physical, mental, or behavioral health, condition or history, type of treatment, or prognosis into account as part of any such determination.

The FCRA provides several examples of when use of this information would be permissible and impermissible. Here is an example of permissible use of medical information:

Example of permissible use: A consumer includes on an application for credit information about two $20,000 debts. One debt is to a hospital; the other debt is to a retailer. The creditor contacts the hospital and the retailer to verify the amount and payment status of the debts. The creditor learns that both debts are more than 90 days past due. Any two debts of this size that are more than 90 days past due would disqualify the consumer under the creditor’s established underwriting criteria. The creditor denies the application on the basis that the consumer has a poor repayment history on outstanding debts. The creditor has used medical information in a manner and to an extent no less favorable than it would use comparable non-medical information.

Example of impermissible use: A consumer meets with a loan officer of a creditor to apply for a mortgage loan. While filling out the loan application, the consumer informs the loan officer orally that she has a potentially terminal disease. The consumer meets the creditor’s established requirements for the requested mortgage loan. The loan officer recommends to the credit committee that the consumer be denied credit because the consumer has that disease. The credit committee follows the loan officer’s recommendation and denies the application because the consumer has a potentially terminal disease. The creditor has used medical information in a manner inconsistent with the exception by taking into account the consumer’s physical, mental, or behavioral health, condition, or history, type of treatment, or prognosis as part of a determination of eligibility or continued eligibility for credit.

Therefore, your credit union can consider the member’s medical debts and expenses when determining the ability to repay the debt.  However, the information regarding their medical condition cannot be used to determine eligibility for credit.

Related Links:

12 CFR 717.30

12 CFR 1022.30

Legal Briefs

National Credit Union Administration (NCUA)

The NCUA released the due dates for the 2017 Call Reports.

Consumer Financial Protection Bureau (CFPB)

The CFPB announced that the Higher-Priced Mortgage Loan exemption threshold will remain at $25,500 through December 31, 2017.

The CFPB announced that the Regulation M (Consumer Leasing) exemption threshold will remain at $54,600 through December 31, 2017.

Federal Reserve Board (FRB)

The FRB released the minutes from its November Community Depository Institutions Advisory Council meeting.

The FRB released the meeting minutes from its November Federal Open Market Committee meeting.

Federal Deposit Insurance Corporation (FDIC)

The FDIC issued FIL-78-2016, announcing that it will co-host, along with the OCC, FRB, and CFPB, an interagency webinar focusing on the Military Lending Act and Interpretive Rule. The webinar is scheduled for Thursday, December 1, 2016 at 12pm PST. Interested participants can register for the webinar here.

Federal Housing Finance Agency (FHFA)

The FHFA announced an increase to the maximum conforming loan limits for Fannie Mae and Freddie Mac in 2017. In 2017, the maximum loan limit for one-unit properties will be $424,100.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of November 22, 2016. The last update prior to this was November 18, 2016.

Questions? Contact the Compliance Hotline: 1.800.546.4465, [email protected].