Compliance Outlook. 2013 Fourth Quarter -. 2014 First Quarter. Program Overview. Fourth Quarter 2013 CFPB – International Remittance Transfers CFPB – Credit Access Rule NCUA Liquidity & Contingency Funding Plans NCUA Electronic Filing NCUA Charitable Donation Accounts
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Compliance Outlook 2013 Fourth Quarter - 2014 First Quarter
Program Overview • Fourth Quarter 2013 • CFPB – International Remittance Transfers • CFPB – Credit Access Rule • NCUA Liquidity & Contingency Funding Plans • NCUA Electronic Filing • NCUA Charitable Donation Accounts • FFIEC Social Media Guidance
Program Overview First Quarter 2014 • CFPB • Ability to Repay / Qualified Mortgages • Loan Originator Compensation • Valuations and Appraisal Requirements • HOEPA Rules • Mortgage Servicing
CFPB – International Remittance Transfers 10/28/2013 • 100 IRT Exemption • Disclosures • Temporary Exceptions
CFPB – Credit Access Rule • The credit access rule allows: • Joint-account income as an asset on credit applications. 11/4/2013
NCUA – Liquidity & Contingency Funding • FICUs with assets less than $50 million must maintain a basic written policy for managing liquidity and a list of contingent liquidity sources. • FICUs with assets over $50 million must have a contingency funding plan that sets out strategies for liquidity shortfalls in emergency situations. • FICUs with assets of $250 million or more must have access to a backup federal liquidity source for emergency situations. 3/31/2014
NCUA – Electronic Filing 1/1/2014
NCUA – Charitable Donation Accounts • FCUs are now permitted to create and fund charitable donation accounts (CDAs), which may contain otherwise “impermissible” investments. • CDAs are a hybrid charitable and investment vehicle, satisfying certain conditions. (721.3) • Funding is limited to 5% of the FCU’s net worth at all times for the duration of the CDAs, measured quarterly during the Call Report cycle. 12/19/2013
FFIEC Social Media Guidance Addresses the applicability of consumer protection and compliance laws, regulations, and policies to activities conducted via social media…… IMMEDIATE
CFPB – Dealer Mark-ups • Indirect Auto Lending • Credit unions that allow dealer mark-ups in their indirect lending program should be aware of details from a consent order to Ally Financial Inc. and Ally Bank.
CFPB – Ability to Repay (ATR) Must establish a consumer’s ability to repay: At a minimum creditors must consider 8 underwriting factors: • Current or reasonably expected income or assets; • Current employment status; • Monthly payment on the covered transaction; • Monthly payment on any simultaneous loan secured by same property; • Monthly payment for mortgage-related obligations; • Current debt obligations, alimony, and child support; • Monthly debt-to-income ratio or residual income; and • Credit history Must use reasonably reliable third-party records to verify the information they use to evaluate the factors.
CFPB – Qualified Mortgage (QM) Must establish a consumer’s ability to repay: There are qualified mortgage standards that if met provide the presumption that the credit union has established the ability to repay – consider it a “Safe Harbor”.
CFPB – Loan Originator Compensation • MLO cannot receive compensation on any of the mortgage loans’ terms or conditions. • No Dual Compensation – if the MLO receives compensation from the borrower in connection with a mortgage loan, s/he cannot receive compensation from their organization or another person for the same transaction.
CFPB – Loan Originator Compensation • MLO’s must be registered according to the SAFE Act. • MLO’s AND CREDIT UNIONS must include their name and NMLS ID on the following loan documents: • Credit application • Note or loan contract • Security instrument Generally include on documents that require a member’s signature.
CFPB – Valuation & Appraisal TILA • Applies to first lien or subordinate lien closed end loans secured by a member’s principal dwelling. • Higher Priced Mortgage Loan (HPML): • First lien with an APR that exceeds the APOR by 1.5% or more • First lien jumbo loan with an APR that exceeds the APOR by 2.5% or more. • Subordinate lien with an APR that exceeds the APOR by 3.5% or more http://www.ffiec.gov/ratespread/newcalc.aspx
CFPB – Valuation & Appraisal TILA - Appraisal Requirements: • Disclose within three business days after receiving the members’ applications that they are entitled to a free copy of their appraisal and can hire their own appraiser at their own expense for their own use. • Disclosure Requirement (Appendix C – Form C-9) “We may order an appraisal to determine the property’s value and charge you for this appraisal. We will promptly give you a copy of any appraisal, even if your loan does not close. You can pay for an additional appraisal for your own use at your own cost.”
CFPB – Valuation & Appraisal TILA - Appraisal Requirements: • Obtain a written appraisal performed by certified or licensed appraiser. • Appraisal must be written with an interior inspection. • Deliver copies of appraisals to applicants no later than three business days before consummation.
CFPB – Valuation & Appraisal ECOA – Valuations Requirements • Covers closed-end or open-end secured by 1st lien on a dwelling. • Within three business days of receiving a member’s application, notify the applicant of the right to receive a copy of appraisals/valuations. • Promptlyshare copies of appraisals and other written valuations with the applicant. • Promptlymeans upon completion or at least three business days before consummation (for closed end) or account opening (for open end), whichever is earlier.
CFPB – Valuation & Appraisal ECOA – Appraisal or written valuation to be provided: • An appraiser’s report with an estimate of the property’s value or opinion of value. • Internal document prepared that assigns a property value. • Report approved by a GSE describing the estimate developed by the GSE’s proprietary methodology or mechanism. • Automated valuation model report. • Broker’s opinion prepared by a real estate broker, agent or sales person to estimate the property’s value.
CFPB – High-Cost Mortgage & Counseling High-Cost Mortgages Rule applies to consumer credit transactions secured by a principal dwelling. What transactions are covered? • Purchase-money mortgages • Refinances • Closed-end home equity loans • Open-end credit plans (i.e., HELOCs)
CFPB – High-Cost Mortgage & Counseling High-Cost Mortgages - Special disclosures • Provided 3 days prior to consummation or account opening. • Loan will not be effective until consummation or account opening occurs. • Explain consequences of default. • Disclose loan terms such as APR, amount borrowed and monthly payment. • Variable rate – explain maximum monthly payment that may be required. Regulation Z – Appendix H (Sample H-16)
CFPB – High-Cost Mortgage & Counseling High-Cost Mortgages – Restriction on Terms The rule bans certain loan features: • Balloon payments – except in 3 circumstances: • Payment schedule is adjusted to accommodate member’s seasonal or irregular income. • Short term bridge loan to finance new home purchase for member selling existing home. • Credit union serving predominately rural or underserved areas and meets the ATR/QM rule. • Prepayment Penalties • Due on Demand Features
CFPB – High-Cost Mortgage & Counseling Homeownership Counseling • Prior to making a high-cost mortgage, the credit union must receive written certification that the member has received homeownership counseling on the advisability of the mortgage from a HUD approved counselor or state housing finance authority. • The counselor must confirm that the member received ALL of the high-cost mortgage / RESPA disclosures before they can issue the certificate.
CFPB – High-Cost Mortgage & Counseling Homeownership Counseling Credit unions must give applicants for federally related mortgages (whether or not it is high-cost) a written list of homeownership counseling organizations within 3 business days of receiving the application.
CFPB – Mortgage Servicing Mortgage Servicing – RESPA • Error resolution and information requests • Force-placed insurance • General servicing policies, procedures and requirements • Early intervention with delinquent members • Continuity of contact with delinquent members • Loss mitigation
CFPB – Mortgage Servicing Mortgage Servicing – TILA • Interest rate adjustment notices for ARMs • Prompt crediting of payments and responses to requests for payoff amounts • Periodic statements for mortgage loans
CFPB – Mortgage Servicing Small Servicer Exemption • Periodic statements • Prohibition on forced-place insurance where a servicer could continue the member’s existing hazard insurance by advancing funds to escrow under certain conditions • General servicing policies and procedures requirements • Early intervention provisions • Continuity of contact provisions • Some Loss mitigation provisions
Thank you for joining us for this overview of the Credit Union Compliance Connection. Stay Tuned……..