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Regulatory Compliance Update. Heather line Utah credit union association October 26, 2013. 2014 Will Be. A W i l d Ride. AGENDA. Changes in 2013 2014 Mortgage Rules Upcoming Changes BSA Update Fair Lending Update. 2013 Changes. Minor disclosure changes IRS reporting for NRAs

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Regulatory compliance update

Regulatory Compliance Update

Heather line

Utah credit union association

October 26, 2013


  • Changes in 2013

  • 2014 Mortgage Rules

  • Upcoming Changes

  • BSA Update

  • Fair Lending Update

2013 changes
2013 Changes

  • Minor disclosure changes

  • IRS reporting for NRAs

  • ATM fee notices

  • New BSA forms

  • Mandatory escrow accounts for HPMLs

  • Remittance transfer disclosures

  • Credit card access rule

Disclosure changes
Disclosure Changes

  • Effective January 1, 2013

  • List the CFPB as the contact regulator on certain disclosures, including:

    • Adverse action notices

    • Risk based pricing notices

    • Credit card applications

    • Open-end account opening disclosures

Irs reporting for nras
IRS Reporting for NRAs

  • Effective January 1, 2013

  • Requires the reporting of deposit interest to the IRS for nonresident aliens

  • Rules:

    • Financial institutions (including credit unions) must file IRS Form 1042-S for interest (of $10 or more) paid to a nonresident alien.

    • The rule specifically covers nonresident aliens who are residents of a country with which the U.S. has an information-sharing agreement

New bsa forms
New BSA Forms

  • Effective April 1, 2013

  • Electronic filing of BSA forms required in June 2012

  • Revised forms for CTRs and SARs required on effective date

Atm fee disclosures
ATM Fee Disclosures

  • Effective March 26, 2013

  • Big win for credit unions and banks

  • Eliminates external fee notices on ATMs

  • Screen notices still required

  • Reduces frivolous lawsuits

Mandatory escrow accounts
Mandatory Escrow Accounts

  • Effective June 1, 2013

  • Applies to Higher-Priced Mortgage Loans

  • Requires mandatory escrow accounts for the first five years

Remittance transfer disclosures
Remittance Transfer Disclosures

  • Effective October 28, 2013

  • Applies to foreign remittance transfers

  • Requires a remittance transfer provider to provide a consumer sender:

    • Awritten disclosure provided prior to the initiating a transaction that includes the actual exchange rate, fees and taxes, and the amount of currency to be received by the recipient

    • A written receipt that includes the prepayment disclosure, information about error resolution, provider and regulator contact information, and the availability of the funds upon receipt

  • Small providers are exempt

Credit card access rule
Credit Card Access Rule

  • Effective November 4, 2013

  • Eases “independent ability to repay” underwriting rules from the credit card act for consumers over 21

  • Household income can be used to qualify for a credit card

2014 mortgage rules
2014 Mortgage Rules

  • Ability to Repay/Qualified Mortgage

  • Loan Servicing


  • Loan Originator Compensation

  • ECOA Valuations

  • HPML Appraisals

Atr qm the basics
ATR/QM The Basics

  • Creditors must make a reasonable, good-faith determination that a consumer has a reasonable ability to repay a mortgage loan.

  • Presumption of compliance if creditor originates a QM.

Ability to repay factors
Ability to Repay Factors

  • Current or reasonably expected income or assets that the consumer will rely on to repay the loan

  • Current employment status

  • Monthly mortgage payment

  • Monthly payment on any simultaneous loans secured by the same property

  • Monthly payments for property taxes and insurance that you require the consumer to buy, and certain other costs related to the property such as homeowners association fees or ground rent

  • Debts, alimony, and childsupport obligations

  • Monthly debt-to-income ratio

  • Credit history

Qualified mortgage features
Qualified Mortgage Features

  • Loan feature limitations

  • Loan term limits

  • Points and fee limits

  • Debt to income limits

Atr qm considerations
ATR/QM Considerations

  • Exceptions for small creditors and small creditors in rural and underserved areas.

  • Management must decide how many non-QMs the credit union will originate.

  • All mortgage loans must be underwritten using information that is verified by third party sources.

Servicing rules
Servicing Rules

All Servicers

Large Servicers Only

  • Error resolution and information requests

  • Forced placed hazard insurance

  • ARM disclosures

  • Prompt crediting

  • Payoff statements

  • Policies and procedures

  • Early intervention

  • Continuity of contact

  • Loss mitigation procedures

  • Periodic statements

Hoepa rule summary
HOEPA Rule Summary

  • Applies to High Cost Mortgage Loans

  • When you originate a high-cost mortgage, the creditor must:

    • Give additional disclosures

    • Avoid certain loan terms

    • Ensure the consumer receives additional protections, including homeownership counseling.

  • The updated rule:

    • Lowered the points and fees trigger

    • Expanded coverage

    • Added protections including homeownership counseling

Loan officer compensation summary
Loan Officer Compensation Summary

  • Prohibits a loan originator’s compensation from being based on the terms of a transaction.

  • Permits contributions to and benefits under designated tax-advantaged plans and certain bonuses and other compensation under non-deferred profits-based compensation plans based on mortgage-related business profits.

  • Prohibits loan originators in a transaction from being compensated by both a consumer and another person, such as a creditor.

Other rules related to loan officer compensation
Other Rules Related to Loan Officer Compensation

  • Include NMLS ID on certain loan documents

  • Mandatory arbitration clauses in mortgage contracts are prohibited

  • Prohibition on financing credit insurance premiums (some monthly premiums are ok)

Ecoa valuations1
ECOA Valuations

  • Within three days of application, notify the applicant of the right to receive a copy of appraisals/valuations

  • “Promptly” share copies of appraisals and other written valuations with the applicant.

  • Provide valuations upon completion or at least three days prior to closing (closed-end) or at account opening (open-end)

  • Applicant can waive right to received valuations prior to closing (still must must be delivered at closing)

Higher priced mortgage loan appraisals1
Higher-Priced Mortgage Loan Appraisals

  • Disclose to consumers within three business days after receiving the consumers’ applications that they are entitled to a free copy of any appraisal

  • Obtain a written appraisal performed by certified or licensed appraiser

  • Have the appraiser visit the interior of the property and provide a written report

  • Deliver copies of appraisals to applicants no later than three business days before consummation

  • Two appraisals required in “flipping” transactions

Upcoming changes
Upcoming Changes

  • New TIL/RESPA disclosures

  • Privacy Notices

  • More Tinkering

Bsa update
BSA Update

  • No new changes in regulation

  • Most common SARs:

    • Structuring/Money Laundering

    • Mortgage Loan Fraud

    • Check fraud

    • Unusual activity

  • New trends:

    • Elder abuse

    • Insider abuse

Fair lending update
Fair Lending Update

  • Increased focus from the NCUA

  • Separate fair lending exams scheduled

  • Targeting credit unions that submit HMDA data

  • Fair lending training for all employees

  • Examination of HMDA data to understand fair lending trends