Regulators Release Updated Rulemaking Agendas

The published unified agenda includes rulemaking actions in pre-rule, proposed-rule, and final-rule stages.

12/3/2019

The Consumer Financial Protection Bureau and the National Credit Union Administration 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. Below are future items on the unified agendas that have not yet had final rules proposed.

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

HMDA Rules

The CFPB intends to release a final rule establishing permanent thresholds below which HMDA reporting would not be required for both closed-end mortgage transactions and open-end mortgage transactions (HELOCs).

In addition, the CFPB intends to release rulemaking regarding certain data fields that are being collected and reported under HMDA.

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 intends to release a rule to remove the underwriting provisions entirely from the Payday, Vehicle Title, and Certain High-Cost Installment loan rule.

Debt Collection

The CFPB continues to work on updating rulemaking related to the Fair Debt Collection Practices Act (FDCPA). The CFPB released proposed rule changes to the FDCPA and extended the comment period on the proposed rule.

Remittance Transfers

The CFPB requested information related to the remittance transfer rule regarding the use of estimates, which will be expiring on July 21, 2020. The unified agenda indicates that the CFPB will be releasing a proposed rule to make some changes to the remittance transfer rule.

Qualified Mortgage Definition Under Regulation Z

One of the temporary categories of a Qualified Mortgage (QM) under Regulation Z’s ability to repay requirements are loans that are eligible for purchase or guarantee by either Fannie Mae or Freddie Mac.  This category of QMs is scheduled to expire no later than Jan. 10, 2021. The CPFB currently plans to allow the Temporary GSE QM loan category to expire and is considering whether to revise Regulation Z’s general qualified mortgage definition in light of this planned expiration.

Higher-Priced Mortgage Loan Escrow Exemption

Per the requirements from Section 108 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) the CFPB is working on rulemaking to increase the financial institution exemption threshold from the mandatory escrowing requirements of the higher priced mortgage rules from the current $2 billion in assets to $10 billion in assets.

Property Assessed Clean Energy Financing

Section 107 of the EGRRCPA requires the CFPB to create regulations for “Property Assessed Clean Energy” (PACE) financing.

Major NCUA rulemaking includes:

Subordinate Debt; Regulatory 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 considering the public comments received and moving toward a proposed rule.

Golden Parachute and Indemnification Payments

The NCUA Board proposes to revise its regulation regarding the prohibition against a federally insured credit union from making golden parachute and indemnification payments to an institution-affiliated party under certain circumstances. The proposed rule improves the organization and clarity of the regulation and includes a section on merger-related financial arrangements.

Purchase, Sale and Pledge of Loans

The NCUA is working on a proposed rule to clarify federal credit unions’ authority to purchase, sell, and pledge loans.

Credit Union Service Organizations (CUSOs)

The NCUA is proposing a rule to expand the permissible lending activities for CUSOs under part 712.

Investment and Deposit Activities

The NCUA believes there are certain provisions in Part 703 that are overly restrictive and unnecessary from a safety and soundness perspective. The revised Part 703 will provide credit unions with more flexible investment options.

Compensation in Connection with Loans to Members and Lines of Credit to Members

The NCUA issued an advance notice of proposed rulemaking to solicit comments on potential modifications to the agency’s regulations governing compensation in connection with loans and lines of credit to members.

Incentive-Based Compensation Arrangements

The NCUA and other federal banking regulators are working together to re-propose an updated version of the 2016 incentive-based compensation rule proposal which would implement section 956 of the Dodd-Frank Act.

Rate Ceiling for Federal Credit Union Loans

The NCUA is planning on issuing an advance notice of proposed rulemaking to solicit comments related to the interest rate ceilings for loans granted by federal credit unions.

Transition to CECL

The NCUA is developing a proposed rule to address the implementation by federally insured credit unions to the new CECL methodology required by GAAP. Consistent with regulations issued by the Federal banking agencies, the proposed rule would temporarily mitigate the adverse consequences of the day-on capital adjustments required by CECL. For credit unions, CECL compliance will be on Jan. 1, 2023.

Question of the Week

Q. Can the credit union exercise its right of offset against an Interest on Lawyer Trust Account?

A. No, a credit union does not have the right of offset against an IOLTA. This is because the IOLTA is a trust account set up by a lawyer to hold funds in trust for the lawyer’s clients. The funds do not belong to the lawyer.

Legal Briefs

National Credit Union Administration (NCUA)

Residential Real Estate Appraisals

NCUA Board approved a proposed rule to increase the threshold below which appraisals would not be required for residential real estate-related transactions from $250,000 to $400,000.

Interpretive ruling and policy statement 19-1

NCUA Board is rescinding the current IRPS 08-1 and issuing a revised and updated IRPS to reduce regulatory burden. The Board is amending and expanding the current de minimis exception to reduce the scope and number of offenses that will reduce an application to the Board. Specifically, the final IRPS will not require an application for convictions involving insufficient funds checks of aggregate moderate value, small dollar simple theft, false identification, simple drug possession, and isolated minor offenses committed by covered persons as young adults.

Updated Unified Agenda

The NCUA and other federal regulators have released the Fall 2019 update of their rulemaking agenda. Rulemaking items include Rate Ceiling for FCU loans, Incentive-Based Compensation Arrangements, CUSOs, Subordinated Debt, Real Estate Appraisals, and Transition to CECL

Consumer Financial Protection Bureau

Assessment and Comment on TRID Effectiveness

The CFPB is requesting public comment on its plans for assessing the TILA/RESPA Integrated Disclosures (TRID) rule, as well as certain recommendations and information that may be useful in conducting the planned assessment.

Updated Rulemaking Agenda

The CFPB and other federal regulators have released the Fall 2019 update of their rulemaking agenda. Rulemaking items include Business Lending Data, Debt Collection Rule, Qualified Mortgages, Remittance Transfers, HMDA changes, and Payday Lending rules.

Washington State Attorney General

Fourth Annual Data Breach Report

Attorney General Bob Ferguson released his fourth annual data breach report. The report shows that data breaches increased by nearly 20 percent in 2019. The report also shows that breaches affected fewer Washingtonians in 2019 due to the relative size of the breaches. The mega-breach reported by Equifax in 2018 affected more than 3.2 million Washingtonians.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of Nov. 26. The last update prior to this was Nov. 22.

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