Regulators Release Updated Rulemaking Agendas

8/1/17

The Consumer Financial Protection Bureau (CFPB) and the National Credit Union Administration (NCUA) have released their updated rulemaking agendas, which have been published in the Unified Agenda. The Unified Agenda includes rulemaking actions in pre-rule, proposed rule, and final rule stages. In addition, the CFPB provided insights into their rulemaking here.

CFPB Rulemaking

CFPB rulemaking that stands out as having implications for credit unions includes:

Mortgage rules

The CFPB recently finalized follow-up rulemaking, making minor clarifications and providing further guidance to TRID.

In addition, the CFPB is making clarifications to facilitate compliance with the HMDA rules and reconcile HMDA and Regulation B requirements.

The CFPB has also proposed temporarily increasing the HMDA HELOC reporting threshold from 100 originated in each of the two previous calendar years to 500 originated in each of the two previous calendar years.

Business lending data

Section 1071 of the Dodd-Frank Act requires the CFPB to create rules that will require financial institutions to compile, maintain, and report information concerning credit applications made by women-owned, minority-owned, and small businesses. The CFPB is currently in the pre-rule stage and is focusing on outreach and research to understand the players, products, and practices in the small business lending market.

Arbitration agreements

The CFPB recently finalized their rule concerning the use of predispute mandatory arbitration agreements. While the rule does not prohibit the use of the arbitration agreements, it does restrict arbitration agreements from preventing consumers from joining in class action lawsuits. The CFPB received over 110,000 comments in response to the May 2016 proposed rule, and unless actions in Congress move forward, this rule will be effective on Mar. 17, 2018.

Payday, auto title, and similar lending products

In June of 2016, the CFPB released proposed rulemaking related to practices for payday loans, auto title loans, and other similar products. The proposed rule would require certain actions such as verifying a person’s ability to repay on these products, and various definitions of what the products are. The CFPB received over 1 million comments on this proposed rule, and is required to read and consider each comment that was received.

Regulation CC

At the end of May this year, the Federal Reserve Board (FRB) released final rule amendments to Regulation CC, which are intended to create a framework for electronic check collection and returns, along with new warranties for electronic checks. This amendment to the check processing will go into effect on July 1, 2018.

Other provisions are subject to the CFPB’s joint rulemaking, including the period for funds availability and revising model disclosures. The CFPB and FRB continue to work on these aspects with the intent to issue a final rule that includes provisions within the CFPB’s authority.

Debt collection

The CFPB continues to work on updating rulemaking related to the Fair Debt Collection Practices Act (FDCPA). The CFPB provided the Small Business Regulatory Enforcement Fairness Act panel with an outline and intend to issue a proposed rule later in 2017 concerning debt collectors’ communication practices and consumer disclosures. The CFPB intends to follow up with separate rulemaking regarding information flows between creditors and FDCPA collectors and about potential rules to govern creditors that collect their own debts.

Overdrafts

After several years of research, the CFPB is looking into potential changes with regards to overdraft programs.  They are currently engaged in consumer testing of revised opt-in forms and considering whether other regulatory changes may be warranted to enhance consumer decision-making.

Prepaid financial products

The CFPB recently extended the effective date of the prepaid financial product rule by six months, and have proposed amendments to address matters that have come up since the final rule first came out.

Credit Card Act

The CFPB is considering rules to modernize their database of credit card agreements to improve the submission process and make the database more efficient for both the industry and the CFPB. This would also allow consumers and the general public to access and analyze information more easily.

NCUA Rulemaking

Major NCUA rulemaking includes:

Supplemental capital

The NCUA issued an advanced notice of proposed rulemaking to gather information from on the utility and practicality of supplemental capital in the risk-based capital context.  The NCUA is awaiting public comment and will consider proposing a supplemental capital rule after reviewing public comments.

Designation of low-income status

This potential rulemaking would make the process of designating a credit union as “low-income” clearer and more manageable for credit unions.

Incentive-based compensation arrangements

The joint rulemaking regarding incentive-based compensation arrangements for larger financial institutions remains on the NCUA’s Unified Agenda. The proposed rule had three tiers, with stricter requirements for the largest financial institutions with over $250 billion in assets.

Loans in areas having special flood hazards

This additional joint rulemaking would implement the Biggert-Waters Flood Insurance Reform Act of 2012, which created requirements and provisions for the acceptance of private flood insurance.

Question of the Week

On our consumer loan applications, we have a box to indicate “individual” and a box to indicate “joint” so applicants can document their intent to apply for joint credit. Our internal auditor is concerned that having just these boxes on the application is not enough, and we should have a separate Notice of Intent to Apply for Joint Credit. Are the boxes on the application not enough to comply with Regulation B? Should we be getting the applicant(s) to sign a separate notice as well?

Here is what Reg B says about evidence of a joint application: A person’s intent to be a joint applicant must be evidenced at the time of application. Signatures on a promissory note may not be used to show intent to apply for joint credit. On the other hand, signatures or initials on a credit application affirming applicants’ intent to apply for joint credit may be used to establish intent to apply for joint credit. (See appendix B.) The method used to establish intent must be distinct from the means used by individuals to affirm the accuracy of information. For example, signatures on a joint financial statement affirming the veracity of information are not sufficient to establish intent to apply for joint credit.

You can also look at one of the model forms found in Reg B to see how they ask for the evidence on an application: Reg B model form.

Checking a box doesn’t provide the same kind of protections in terms of demonstrating the consent that you would find with a signature or initials.

Related Links:

12 CFR 1002.7(d)

Commentary to Reg B

Legal Briefs

National Credit Union Administration (NCUA)

The NCUA announced that it is hosting a webinar on its new Learning Management Service on Wednesday, August 16th. Credit unions that wish to attend the webinar can register here.

The NCUA announced that is has rescheduled the September open and closed board meetings from Thursday, September 21st to Thursday, September 28th.

Consumer Financial Protection Bureau (CFPB)

The CFPB issued a warning to consumers regarding companies misleading consumers about pay-by-phone fees. The CFPB states that consumers are not presented with other cheaper payment options.

The CFPB published a blog article regarding tools that help consumers purchase homes. Two if the tools included in the blog article are explainers for the Loan Estimate and Closing Disclosure. The tools are aimed at helping consumers ensure that their information is correct and that they understand the different features of the documents.

Federal Reserve Board (FRB)

The FRB issued a statement from the Federal Open Market Committee regarding its decisions to implement its monetary stance. The FOMC stated that it will maintain the target rate for the federal funds.

Federal Deposit Insurance Corporation (FDIC)

The FDIC issued FIL-32-2017, which provides guidance for banks in preparation for the changes in the SEC’s rule governing securities settlement cycle for security transactions conducted by most broker-dealers.

The FDIC issued FIL-31-2017, updating its Risk Management Manual of Examination Policies.

The FDIC issued FIL-30-2017, updating its Affordable Mortgage Lending Guide on State Housing Finance Agencies.

Department of Labor

The DOL published a Request for Information regarding the exemption from the minimum wage and overtime requirements for certain executive, administrative, professional, outside sales and computer employees.

Federal Housing Finance Agency (FHFA)

The FHFA issued a Credit Risk Transfer Progress Report which provides information on the single-family credit risk sharing by Fannie Mae and Freddie Mac.

The FHFA announced that interested rates on conventional mortgages increased from May to June.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of July 28, 2017. The last update prior to this was July 26, 2017.

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

Posted in Compliance News, Compliance News, NCUA.