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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