Consumer Financial Protection Bureau Proposes Changes to Home Mortgage Disclosure Act Reporting Thresholds on Home-Equity Lines of Credit
July 18, 2017
The Consumer Financial Protection Bureau (CFPB) issued a proposal to make changes to the reporting requirements for credit unions that issue home-equity lines of credit (HELOCs). Under the final Home Mortgage Disclosure Act (HMDA) rule, credit unions would be required to report HELOCs if they made 100 such loans in each of the two past years. The new proposal would increase the threshold to 500 HELOCs through the calendar years 2018 and 2019 while the CFPB considers whether to make the new threshold permanent.
The CPFB is seeking comment on whether to postpone collection of this information for smaller-volume institutions so that the CPFB can study whether the threshold should be adjusted permanently. The CPFB estimates that the temporary 500-loan threshold would still capture about three-quarters of the home-equity lending market, down from about 88 percent at the 100-loan threshold.
The proposed rule is available here.
The public comment period is open until July 31, 2017. The Bureau will issue a separate proposal with a longer notice and comment process to consider adjustments to the permanent threshold at a later date.
Question of the Week
What is the NCUA’s regulation on record retention?
Credit unions often look to NCUA for guidance on the appropriate length of time to retain various types of operational records. NCUA does not regulate in this area, but as an aid to credit unions, it has published this appendix of suggested guidelines for record retention.
a) What format should the credit union use for retaining records?
NCUA does not recommend a particular format for record retention. If the credit union stores records on microfilm, microfiche, or in an electronic format, the stored records must be accurate, reproducible, and accessible to an NCUA examiner. If records are stored on the credit union premises, they should be immediately accessible upon the examiner’s request; if records are stored by a third party or off-site, then they should be made available to the examiner within a reasonable time after the examiner’s request. The credit union must maintain the necessary equipment or software to permit an examiner to review and reproduce stored records upon request. The credit union should also ensure that the reproduction is acceptable for submission as evidence in a legal proceeding.
b) Who is responsible for establishing a system for record disposal?
The credit union’s board of directors may approve a schedule authorizing the disposal of certain records on a continuing basis upon expiration of specified retention periods. A schedule provides a system for disposal of records and eliminates the need for board approval each time the credit union wants to dispose of the same types of records created at different times.
c) What procedures should a credit union follow when destroying records?
The credit union should prepare an index of any records destroyed and retain the index permanently. Destruction of records should ordinarily be carried out by at least two persons whose signatures, attesting to the fact that records were actually destroyed, should be affixed to the listing.
d) What are the recommended minimum retention times?
Record destruction may impact the credit union’s legal standing to collect on loans or defend itself in court. Since each state can impose its own rules, it is prudent for a credit union to consider consulting with local counsel when setting minimum retention periods.
A record pertaining to a member’s account that is not considered a vital record may be destroyed once it is verified by the supervisory committee. Individual Share and Loan Ledgers should be retained permanently. Records, for a particular period, should not be destroyed until both a comprehensive annual audit by the supervisory committee and a supervisory examination by the NCUA have been made for that period.
e) What records should be retained permanently?
Official records of the credit union that should be retained permanently are:
- Charter, bylaws, and amendments.
- Certificates or licenses to operate under programs of various government agencies, such as a certificate to act as issuing agent for the sale of U. S. savings bonds.
- Current manuals, circular letters and other official instructions of a permanent character received from the NCUA and other governmental agencies.
Key operational records that should be retained permanently are:
- Minutes of meetings of the membership, board of directors, credit committee, and supervisory committee.
- One copy of each NCUA 5300 financial report or its equivalent.
- One copy of each supervisory committee comprehensive annual audit report and attachments.
- Supervisory committee records of account verification.
- Applications for membership and joint share account agreements.
- Journal and cash record.
- General ledger.
- Copies of the periodic statements of members, or the individual share and loan ledger. (A complete record of the account should be kept permanently.)
- Bank reconcilements.
- Listing of records destroyed.
f) What records should a credit union designate for periodic destruction?
Any record not described above is appropriate for periodic destruction unless it must be retained to comply with the requirements of consumer protection regulations. Periodic destruction should be scheduled so that the most recent of the following records are available for the annual supervisory committee audit and the NCUA examination.
Records that may be periodically destroyed include:
- Applications of paid off loans.
- Paid notes.
- Various consumer disclosure forms, unless retention is required by law.
- Cash received vouchers.
- Journal vouchers.
- Canceled checks.
- Bank statements.
- Outdated manuals, canceled instructions, and nonpayment correspondence from the NCUA and other governmental agencies.
National Credit Union Administration (NCUA)
The NCUA announced that it has rescheduled its closed meeting for July. The closed meeting will be held on Wednesday, July 19th. The open meeting will still be held on July 20, 2017. The NCUA released the agenda for the open meeting, which states that the board will review the share insurance fund quarterly report, proposed rule to Part 701 addressing emergency mergers, 2017 mid-session budget, closing of the stabilization fund, and share insurance fund equity distributions.
Consumer Financial Protection Bureau (CFPB)
The CFPB announced that it issued a proposed rule that would amend the HELOC reporting threshold from 100 HELOCs in the past two years to 500 HELOCs in the past two years.
Federal Reserve Board (FRB)
The July issue of FedFlash is now available.
FRB Chair Janet Yellen delivered the FRB’s Semiannual Monetary Policy Report to Congress. Yellen’s remarks focused on the current economic situation and outlook as well as monetary policy.
The FRB released minutes from its June discount rate meetings.
Office of Foreign Assets Control (OFAC)
OFAC has updated the SDN list as of June 29, 2017. The last update prior to this was June 26, 2017.
Questions? Contact the Compliance Hotline at 1.800.546.4465, or firstname.lastname@example.org.