Regulators Release Updated Rulemaking Agendas

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.

5/22/18

Picture of Photo grid woman pressing a graphic symbol on a touchscreen with CFPB and NAUA LogosThe Unified Agenda includes rulemaking actions in pre-rule, proposed rule, and final rule stages. The CFPB provided additional insights into the rulemaking in a news release about the Spring 2018 rulemaking agenda.

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

HMDA rules

The CFPB plans to consider whether to make the HELOC reporting threshold which is currently at 500 permanent. The Bureau plans a review of the transactional coverage tests and the rule’s discretionary data points.

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 issued an RFI in 2017 to determine the types of credit products offered and the types of data available. The information received will help the CFPB determine how to implement the rule efficiently while minimizing burdens on lenders.

Payday, auto title, and similar lending products

The CFPB announced that it intends to engage in rulemaking to reconsider the 2017 final rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans. Most of the provisions of the current rule do not require compliance until August 2019.

Regulation CC

Some provisions of Regulation CC 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 jointly 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 SBREFA panel with an outline in 2016. The CFPB is preparing a proposed rule focused on FDCPA collectors that may address such issues as communication practices and consumer disclosures.

Major NCUA rulemaking includes:

Supplemental Capital

The NCUA issued an advanced notice of proposed rulemaking to gather information on the utility and practicality of supplemental capital in the risk-based capital context. The NCUA is considering the public comments received and moving toward a proposed rule.

Loans in Areas Having Special Flood Hazards-Private Flood Insurance

Additional joint rulemaking is underway to implement the Biggert-Waters Flood Insurance Reform Act of 2012 which created requirements and provisions for the acceptance of private flood insurance.

Commercial Real Estate Appraisals

The NCUA is preparing a proposed rule that would increase the threshold level below which appraisals would not be required for commercial real estate transactions and create parity with the appraisal requirements of other regulated financial institutions.

Chartering Manual – Community Chartering

The NCUA Board previously proposed amending its chartering and field of membership rules to give applicants for community charter approval the opportunity to submit a narrative to establish common interests or interaction among residents of the area it proposes to serve, thus qualifying the area as a well-defined local community. The Board also proposed to increase up to 10 million the population limit on a community consisting of a statistical area or portion thereof. In addition, the Board proposed permitting a credit union to designate a portion of the area as its community without regard to division boundaries when such area is subdivided into metropolitan divisions. The NCUA is working towards finalizing the rule.

Payday Alternative Loans

The NCUA is preparing an amendment to its general lending rule to provide federal credit unions with an additional option to offer Payday Alternative Loans (PALs). This proposal would not replace the current PALs rule, but rather would be an alternative, with differing terms and conditions, for FCUs to offer PALs to their members. Specifically, this proposal (PALs II) would differ from the current PALs rule by modifying the minimum and maximum amount of the loans, eliminating the minimum membership requirement, and increasing the maximum maturity for these loans. All other features of the current PALs rule would be incorporated into PALs II. The proposal would also pose specific questions to solicit comments and feedback from interested stakeholders on the possibility of creating a third alterative (PALs III), which could include differing fee structures, loan features, maturities, and loan amounts.

Federal Credit Union Bylaws

The NCUA is preparing an advanced notice of proposed rulemaking to provide stakeholders with an enhanced opportunity to comment on changes to the Federal Credit Union Bylaws.

Requirements for Insurance, NCUSIF

The NCUA Board previously proposed amending its share insurance requirements rule to clarify the calculation of share insurance fund equity distributions. The NCUA is working towards finalizing this rule.

Compliance Question of the Week

Can a credit union or member stop payment on a cashier’s check, tellers’ check, or certified check?

The short answer is no. This is because a third party can enforce a cashier’s check if they are a “holder in due course”. In order to be considered a holder in due course, the holder must have taken the instrument for value, in good faith, without notice of any claims against the instrument, and without notice that the instrument was fraudulent. If a credit union wrongfully refuses to pay a cashier’s check, the holder can assert the right to enforce the check and may be entitled to compensation for expenses and possible damages.

There is, however, an exception if the credit union’s member claims that the cashier’s check has been lost, destroyed, or stolen. If this happens, the member must identify the check with reasonable certainty, complete a declaration of loss, and promise to indemnify the credit union for any loss. Once the member completes these steps, the cashier’s check can be re-issued. It is important to note that the original check has not actually been stopped. If someone receives the original check under circumstances where (s)he is considered a holder in due course, the credit union must pay the original check.

Resources

Legal Briefs

National Credit Union Administration (NCUA)

The NCUA announced that the video of its April Board Meeting is now available.

The NCUA released the agenda for its May 24th Board Meeting.

Consumer Financial Protection Bureau (CFPB)

The CFPB updated its Small Entity Compliance Guide and forms for TRID to reflect the amendments regarding the use of the Closing disclosure to reset tolerances.

Federal Reserve Board (FRB)

FRB Governor Lael Brainard delivered a prepared speech regarding digital currencies at the Decoding Digital Currency Conference.

The FRB released the Record of Meeting for the May 2018 meeting of the Federal Advisory Council and Board of Governors.

Financial Crimes Enforcement Network (FinCEN)

FinCEN issued ruling FIN-2018-R002 which provides a 90-day limited exceptive relief regarding products and services that automatically rollover or renew.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of May 18, 2018. The last update prior to this was May 17, 2018.

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