Consumer Financial Protection Bureau Issues FAQ on Credit Reporting Under the CARES Act

The FAQ comes in addition to a previously issued statement informing lenders of credit reporting requirements.

6/23/2020

Compliance imageThe Consumer Financial Protection Bureau recently issued a FAQ to help address credit reporting requirements under the CARES Act, including considerations for furnishers when reporting consumers as current as required by the CARES Act.

The FAQ builds on a statement that the CFPR previously issued, which informed lenders that they must comply with the credit reporting requirements of the CARES Act. The FAQ also clarifies that reporting that a consumer is affected by a natural or declared disaster is not a substitute for complying with the CARES Act credit reporting requirements. In addition, the FAQ addresses the Bureau’s guidance that provides temporary and targeted flexibility in the event credit reporting agencies or the furnisher experience challenges as a result of the pandemic in investigating consumer disputes. All CRAs and furnishers remain responsible for conducting reasonable investigations of consumer disputes in a timely fashion. The Bureau’s statement makes clear that the Bureau expects CRAs and furnishers to make good faith efforts to investigate disputes as quickly as possible.

Questions 7, 8, and 9 in the CFPB FAQ may be of particular interest.

Question of the Week

Q. What is a “For the Benefit Of” account? How would I set one up?

A. For the Benefit Of (FBO) account is a form of Totten Trust or In Trust For (ITF) account. The trustee owns the account and the funds in it. The other person would be listed as the beneficiary of the account. For example, the account would be titled “Jane Doe FBO John Doe”. Jane would be the owner and John would be the beneficiary. Jane would negotiate any checks coming into the account and use those funds for the benefit of Jane. Because these accounts are set up as informal Totten Trusts, there would not be any trust documentation.

Legal Briefs

National Credit Union Administration

Additional Guidance Regarding Servicing Hemp-Related Businesses
The NCUA issued Letter to Credit Unions 20-CU-19, which provides additional information to credit unions that are servicing, or considering servicing, legal hemp-related businesses. The letter is an advisory and provides no new expectations or requirements for credit unions. The guidance provides an overview of the 2018 Farm Bill as well as a FAQ regarding hemp production.

Remittance Transfers under the Electronic Fund Transfer Act
The NCUA issued Regulatory Alert 20-RA-05 which explains the changes the CFPB made to the remittance transfer rule, including the increase in the safe harbor threshold.

Reasonable Proximity Analysis
The NCUA issued a legal opinion letter which delves into the term ‘reasonable proximity’ as used in the Federal Credit Union Act and if that term includes a geographic limitation that is a specific distance. The opinion is that the NCUA will continue to assess this geographic component on a case-by-case basis free of a mileage limit.

Automated Loan Underwriting System – Segregation of Duties for Loan Officers
The NCUA issued a legal opinion letter on whether a member service representative is prohibited from inputting data into an FCU’s automated loan underwriting system (ALUS) and then disbursing the funds if the ALUS approves the loan.  The conclusion of the legal opinion is that the Federal Credit Union Act does not prohibit such a scenario, provided that appropriate controls and safeguards are in place.

Phased Approach to On-site Operations
The NCUA issued Letter to Credit Unions 20-CU-20 which outlines the NCUA’s phased transition plan for the resumption of on-site operations.

Consumer Financial Protection Bureau 

Consumer Reporting and the CARES Act
The CFPB published a statement and an additional FAQ that address the credit reporting requirements of the CARES Act.

Updated Remittance Transfer Small Entity Compliance Guide
The CFPB has published updates to the Remittance Transfers Small Entity Compliance Guide which reflect the recent amendments to the Remittance Transfers Rule.

CFPB Launches Pilot Advisory Opinion Program
The CFPB launched a pilot advisory opinion (AO) program to publicly address regulatory uncertainty in the CFPB’s existing regulations. The pilot AO will allow entities seeking to comply with regulatory requirements to submit a request where uncertainty exists.

Supreme Court of the United States 

SCOTUS ruled on Title VII’s civil rights protections coverage of LGBTQ
The SCOTUS has ruled that Title VII’s civil rights protections extend to LGBTQ employees. Many states have already amended their fair employment practices laws expressly to prohibit employment discrimination based on the sexual orientation and gender identity or expression.

Federal Housing Administration 

FHA extends Foreclosure and Eviction Moratorium for Single Family Homeowners
The FHA announced a two-month extension of its foreclosure and eviction moratorium through August 31, for homeowners with FHA-insured Single Family mortgages.

Internal Revenue Service 

Relief for taxpayers affected by COVID-19 who take distributions or loans from retirement plans
The IRS released Notice 2020-50 to help retirement plan participants affected by the COVID-19 emergency take advantage of the CARES Act provisions providing enhanced access to plan distributions and plan loans.

Small Business Administration 

SBA and Treasury Announce Enhanced Transparency Regarding the Paycheck Protection Program
The SBA and Treasury announced that in agreement with the leaders of the U.S. Senate Small Business Committee, that the agencies will make public additional data regarding the Paycheck Protection Program. The SBA will disclose business names, addresses, NAICS codes, zip codes, business types, demographic data, non-profit information, jobs supported, and loan amount for loans over $150,000.

Washington State Department of Financial Institutions

Amended Guidance to Washington State Regulated Mortgage Loan Servicers Regarding Support for Consumers Impacted by COVID-19
The DFI issued revised guidance which urges all mortgage servicers to continue to take reasonable and prudent actions through September 30, subject to the requirements of any related guarantees or insurance policies, to support those adversely impacted by the COVID-19 emergency.

Office of Foreign Assets Control 

OFAC has updated the SDN list as of June 18. The last update prior to this was June 8.

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