Compliance Town Hall Year in Review and Year Ahead · Credit cap of 36% now includes: payday loans,...

Compliance Town Hall

Year in Review and Year Ahead

Eleanor Hopkins, NCCO

Product Manager, Compliance

December 15th , 2016

2This presentation does not provide legal advice.

Enhancement dates contained in this document

are provided as estimates only and can be

changed at any time at the sole discretion of Jack

Henry & Associates, Inc.


Speaker Information

Eleanor Hopkins, NCCO

Episys Product Manager, Compliance

Symitar, a Jack Henry & Associates Company

Tel: (619) 542 - 6839

E-mail: [email protected]


Agenda

2016 in Review

2017 Preview

Future

Product Announcements

Resources

Questions

2016 in Review


2016 in Review: Political Climate

CFPB Structure Ruled Unconstitutional (CFPB v. PHH

Corporation)

CFPB requested a rehearing– results are outstanding

2016 Election Results

Republican President-Elect Trump

Republicans dominate House and Senate



Many possible outcomes:

Restructuring of the CFPB?

Selecting a new CFPB director?

Restricting CFPB budget?

Repeal of Dodd-Frank?

Or repeal of provisions within Dodd-Frank (e.g. Durbin

Amendment)?

Regulatory relief for credit unions and banks?

Will big banks (e.g. Wells Fargo) still be held

accountable?



Possible moratorium on regulations in flight (ANPR,

PR)?

Difficult to manage a compliance program on speculation.

Recommendation: compliance should focus on the

finalized rules, keep an eye on the proposed, stay aware

of the politics.


2016 in Review: Wells Fargo

Fine $185 million – more than 2 million bank accounts

opened or applied for without customer knowledge

FBI and state federal investigation

Senate Banking hearing, “claw back executive pay”

In wake of scandal, Wells Fargo CEO John Stumpf

retired


2016 in Review: Wells Fargo

Impact to industry: CFPB issued a warning:

Don’t open an account without consent

Don’t misrepresent the benefits of a product

Don’t steer consumers towards less favorable products or

terms


Regulation Effective

Homeowner Flood Insurance Affordability Act of 2014 1/1/16

IRS 1098 Changes – Surface Transportation & Vet Health Care

Choice Act

Tax Yr 2016

Report in 2017

CFPB Further Amendments 2013 Mortgage Rules (Reg X & Z)

• QM Rule & DTI Calcs for QM

• Ability to Repay

• Small Creditor in Rural & Underserved

1/1/16

CFPB Reg Z Dollar Threshold – Same as Prior Year 1/1/16

DOE Student Loan Disbursement 6/1/16

NACHA Same Day Settlement 9/23/16

9/15/17

3/16/18

DOD Military Lending Act (MLA) 10/3/16

10/3/17

FinCEN 314(a) Update ?

2016 In Review: Rules Effective 2016


2016 in Review: IRS 1098 Changes

Surface Transportation and Veterans Health Care Choice

Improvement Act of 2015 made changes to IRS Form 1098

Principal at beginning of year

Origination Date

Address

Effective: 2016 data reported in 2017

Impact to Episys: Capture Mortgage Data for 1098

Reporting


2016 in Review: NACHA Same Day

Amend the NACHA Operating Rules to enable the same-

day processing of virtually any ACH payment.

Phase 1 – Same day settlement of credit entries and non

monetary entries:

Effective: September 23, 2016

Phase 2 – Same day debits and utility type payments:

Effective: September 15, 2017

Phase 3 – RDFI Must make funds available by 5:00 pm

local time:

Effective: March 16, 2018


2016 in Review: NACHA Same Day

Impact to Episys: None

Resources: For Clients > Products & Services > Core

Solution > Episys > Announcements & Alerts > Episys

and NACHA Same-Day Settlement Rule Update

https://forclients.jackhenry.com/Pages/default.aspx

https://forclients.jackhenry.com/products-and-services/Pages/default.aspx

https://forclients.jackhenry.com/products-and-services/Core-Solution/Pages/default.aspx

https://forclients.jackhenry.com/products-and-services/Core-Solution/Episys/Pages/default.aspx

https://forclients.jackhenry.com/products-and-services/Core-Solution/Episys/Announcements-Alerts/Pages/default.aspx


2016 in Review: DoD MAPR

The Department of Defense (DoD) expanded the Military Lending Act

(MLA) to prevent abusive lending practices for active duty service

members:

Credit cap of 36% now includes: payday loans, deposit advance

products, auto title and installment loans.

Credit cap excludes: residential mortgages, loans secured by property

being purchased.

Military APR modified to include certain fees as part of the calculation

Effective October 3, 2016 (open and closed loans)

Effective October 3, 2017 (credit cards)

Impact to Episys : Rate Cap for Military APR; Credit

Card MAPR; ELA Enhancements

Target: 2016.00, 2017.00


Military Lending Act Timeline

Dec

R 2016.01Nov

Oct

MLA effective

• Dfct1117650 fix

• ELA update

Sept

• Rate Cap for Military APR

June

R 2016.00

Dec

R 2017.01

Oct

MLA Credit Cards

effective

June

R 2017.00Feb

2016

2017

• Rate Cap for Military APR –Part 3

• Credit Card MAPR CAP

• ELA Update

Credit

Retrieval -

Military

Lending Act of

2016


2016 in Review: FINCEN 314 (a) changes

FinCEN modified the 314(a) report to include IP Addresses,

email addresses and website addresses as part of a

search.

Effective: September 1, 2016 for law enforcement, no

specifications for formal effective date provided for Fis

Impact to Episys: FinCEN 314(a) PowerOn Specfile

Modification

Target: Available now for download and in Jan SP

Products & Services > Core Solution > Episys >

Release Information > PowerOn Programs

2016 in Review: Enhancements



Release 2016.00

NCUA Share Insurance Report Update

Rate Cap for Military APR

Capture Mortgage Data for 1098 Reporting


NCUA Share Insurance Report Update

Updates the NCUA Share Insurance Report calculations

to ensure accurate share insurance coverage and of

members and premiums paid.



Rate Cap for Military APR

Enhance Episys to support the 36% rate cap

expansion under DoD amendments to the

Military Lending Act

New flag to indicate MAPR qualified loan and or person

ID loans at risk for MAPR 36% threshold limit

MAPR includes Reg Z Fees and more, this project will

provide the means to id those new fees

Insurance and Fees charged to the share for a loan are

addressed





Support new data requirements for mortgage loan

reporting on IRS form 1098 for tax year 2016.

Provide the ability to store the outstanding principal at

beginning of calendar year

Provide the ability to store the full property address (street,

city, state and zip) and description (such as parcel

number)




Actions for You:

Load Release 2016.00

Update the new fields before December 31st, 2016

Property Information fields

Beginning Year Loan Balance field

Trial Balance Report

PowerOn specfile: UPDATE.BEGGINNING.BALANCE

Resources: For Clients > Products & Services > Core

Solution > Episys > Announcements & Alerts

https://forclients.jackhenry.com/Pages/default.aspx

https://forclients.jackhenry.com/products-and-services/Pages/default.aspx

https://forclients.jackhenry.com/products-and-services/Core-Solution/Pages/default.aspx

https://forclients.jackhenry.com/products-and-services/Core-Solution/Episys/Pages/default.aspx



Release 2016.01

Expire Temp Passwords

Amendments to the 2013 Mortgage Rules:

Statements, DQ, and Formatting (Part 1)

2016 IRS Reporting Changes

FinCEN 314(a) PowerOn Specfile Modification



Expire Temporary Passwords

Provide the ability to expire temporary passwords

after a reasonable time.

The User Temp Password Exp Hours parameter to

Miscellaneous Parameters.

The Temp Password Expiration Date field to the User record.

The Temp Password Expiration Time field to the User

record.



Expire Temporary Passwords

Actions for You:

Update the new parameter User Temp Password Exp

Hours in Miscellaneous Parameters to a value from 1 to 96



Statements, DQ, and Formatting (Part 1)

Provide the option to include an explanatory note below various

segments of the periodic statement. First piece of solution for

regulation, non functional pieces added to database

Data changes required to support statement message and

statement loan notes

Statement note option

New loan record fields

New Parameter manager category

Actions for You:

None



2016 IRS Reporting Changes

Annual IRS paper forms, electronic forms and COLA

changes.

Actions for You:

Recommended steps for 1098 Reporting of mortgage

information



FinCEN 314(a) PowerOn Specfile

Modification

Updated the RB.FINCEN PowerOn Specfile to

include member email address in the search criteria

and results report.

Actions for You:

Download updated RB.FINCEN

Load January SP

Resources: Products & Services > Core Solution >

Episys > Release Information > PowerOn Programs



Resources: Episys Release Information

Resource Details Where To Find It

NACHA SameDay FAQ

JHA’s position on the Same Day ACH changes & FAQ

For Clients > Products &

Services > CoreSolution > Episys > Announc

ements & Alerts > Episys and NACHA Same-

Day Settlement Rule Update

SymitarRegulatory News Report

Quarterly compliance newsletter – glimpse into regulations Symitar is monitoring.

For Clients > Compliance > Compliance Newsletters

SymitarCompliance Projects Summary

High level summary of all compliance enhancements in process as well as a handful of compliance hot topics

For Clients > Products & Services > Core Solution > Documentation > Compliance

Release Overview Class

Video replay that offers a high level review of enhancements

For Clients > Products & Services > Core Solution > Episys > Release Information > Episys Releases > Release Documentation

Release Executive Summary

List of enhancements in the release

For Clients > Products & Services > Core Solution > Episys > Release Information > Episys Releases > Release Documentation

2017 Preview


Regulation Effective

TCPA Amendments 1/15/17

NACHA Same Day 9/15/17

NACHA – Third Party Sender Registration 9/27/17

The Consumer Data Industry Association (CDIA)

– National Consumer Assistance Plan

9/15/2017

CFPB Prepaid Consumer Accounts 10/1/17

10/1/18

CFPB Amendments to the 2013 Mortgage Servicing Rule 10/19/17

4/19/18

DoD Military Lending Act (MLA) 10/3/16

10/3/17

CFPB HMDA 1/1/17

1/1/18

Revised Uniform Residential Loan Application (URLA) 1/1/2018

2017 Preview: Rules Effective 2017


2017 Preview: TCPA Amendments

Telephone Communication Protection Act (TCPA)

The amendment creates a special exemption for debt

collection calls made by the US government or it’s contractor

to collect a debt owed or guaranteed by the US.

Credit Unions, even if they service a federal loan, do not

qualify as a contractor.

Effective: January 15, 2017



2017 Preview: Consumer Data Guide

Credit Bureaus implemented the National Consumer

Assistance Plan to improve collection of accurate

consumer data, while increasing transparency for

consumers.

For accounts opened after 9/15/2017, data furnishers

must report:

Full Name, Generation Code, Suffix

Address

Full SSN

DOB

Effective 9/15/2017



2017 Preview: Amendments to the 2013

Mortgage Servicing RuleClarification on delinquency, requests for information

related to Fannie/Freddie loans, amendments to force-

place insurance disclosures and model forms, early

intervention obligations, clarification on loss mitigation,

prompt payment crediting and more.

Effective: October 19, 2017 & April 19, 2018

Impact to Episys: Amendments to the 2013 Mortgage

Rules: Statements, DQ, and Formatting

Targeted Releases 2016.01, 2017.00 and 2017.01

Resources: Updated CFPB Small Entity Compliance Guide


2017 Preview: HMDA

Home Mortgage Disclosure Act (HMDA) (Reg. C).

Expanded loan type reporting and additional data for

reporting loan applications

Age & credit scores

Points, fees & APR offered vs benchmark

Terms for: prepayment penalty, loan, introductory

interest rates, collateral value

Effective: January 1, 2018

Impact to Episys: HMDA Reporting Modifications

HMDA Data Entry Screen

Targeted Release 2017.00


2017 Preview: HMDA

Special notes on HMDA data elements:

Legal Entity Identifier (LEI)

Would be unique to the institution – and likely needs to be

stored somewhere with Branch Information.

Universal Loan Identifier (ULI)

Is unique to the loan, and probably should be on the loan

record

Impact to Episys: HMDA Reporting Modifications


2017 Preview: HMDA, URLA Changes

CFPB adopted a final Rule supporting Fannie Mae’s

changes to the Uniform Residential Loan Application

(URLA) and Collection of Expanded Home Disclosure Act

Information about Ethnicity and Race in 2017 (under Reg

B).

For now 1992 URLA meets provisions of Reg B.

Effective: you MAY gather data in 2017

Impact to Episys: None, Episys does not support

Fannie Mae loans

2017 Preview: Enhancements



Release 2017.00

Amendments to the 2013 Mortgage

Rules: Statements, DQ, and Formatting (Part 2)

Rate Cap for Military APR (Part 2)

Credit Card MAPR Cap

HMDA Reporting Modifications




Statements, DQ, and Formatting

Final charge off statement

DQ section – adding custom temp loss

mitigation information

Close proximity rule (intervening text)

Statement requirements for a loan in temporary

loss mitigation, acceleration

Effective: October 19, 2017



Rate Cap For Military APR (Part 2)

Enhance Episys to support the 36% rate cap

expansion for open-end and closed-end loans

under DoD amendments to the Military Lending

Act.




Rate Cap for Military APR (Part 2)Ensure consistent work flows for loan application process to support

newly required information.

Ensure that the Application Person record has the four new fields (Act.

Duty V Date; Act. Duty Start Date; Act Duty Sep Date; Act Duty).

Ensure the Application Record has the new Military APR Status field.

Ensure that RD.LOAN.CALCULATE.MAPR and Reg Z calculates the

Interest from Statement Date +1 thru Transaction End Date.

Ensure the closed-end loan MAPR/APR calculations in the Loan

Projection Screen are accurate for 360 Actual and Variable Payment

Loans.

Provide the ability to call Projections calculation of MAPR from a

specfile.



Credit Card MAPR

For Credit Cards, enhance Episys to support the 36% rate

cap expansion under DoD amendments to the Military

Lending Act.

Provides the ability to exclude or include fees that are

not “reasonable” and or “bonafide” in the MAPR

calculation for credit cards.



2017 Preview: HMDA

HMDA Reporting Modifications

Provides the ability to store new HMDA reporting data

elements in Episys.

HMDA Data Entry Screen

Enhanced Lending Application (ELA)

Resources: For Clients > Products & Services > Core Solution > Episys

> Announcements & Alerts > Home Mortgage Disclosure Act (HMDA)

Data Collection Enhancements



Release 2017.01

Amendments to the 2013 Mortgage

Rules: Statements, DQ, and Formatting (Part 3)

SBA 1502 Reporting Enhancement

FinCEN Customer Due Diligence

2017 IRS Reporting Enhancement




Statements, DQ, and Formatting

Enhances the mortgage statement to meet

regulatory amendments, including treatment of

delinquencies, charged off loans, early

intervention, close proximity and loss mitigation.

Successor in Interest

Bankruptcy

Effective: April 19, 2018



SBA 1502 Reporting Enhancement

Project provides fixes for several SBA 1502

Reporting defects involving incorrect data being

reported.



FinCEN Customer Due DiligencePurpose: clarify and strengthen customer due

diligence (CDD) obligations of financial institutions.

Know and verify the identities of beneficial owners who

own, control, and profit from the companies they service.

Beneficial owner is either

A. Ownership - 25% or more equity interest

B. Control – maintains significant responsibility to control, manage

or direct the legal entity

Effective: 5/11/2018



IRS 2017 Reporting

Updates for 2017 IRS reporting changes to the

IRS forms and electronic files

Future


Future: FASB CECL

FASB ALL Standards Change – Current

Expected Credit Losses (CECL)

Financial Accounting Standards Board (FASB) modified

the methodology accounting for impairment of financial

instruments that will result in an increase loan loss

provisions

Old methodology: Incurred Loss Model, fund the ALLL

via provision expense after loss is incurred or probable

New methodology: Current Expected Credit Loss

(CECL), recognize expected lifetime losses at

origination


Future: FASB CECL

How will you be impacted?

Loan loss allowance could be significantly greater under

the new method

Increase in provision will decrease net income and

capital

Increase in costs and time to prepare and audit the ALLL

Recommend finding a solution and begin data

gathering early.

Effective: December 15, 2021

Impact to Episys: None – all data elements are

on the core


Future: Enhanced Cyber Risk

Management

Joint Agency – Cyber Management

Enhanced cybersecurity risk-management and resilience

standards that apply to largest and interconnected

entities of $50 billion and greater.

Effective: TBD (Proposed 10/26/16)



Future: Fed Reserve ISO 20022

Federal Reserve Financial Services is leading an

investigation on adopting International Standards of

Organization (ISO) 20022 standards for both ACH and

Wire Transactions.

Effective: TBD

Impact to Episys: changes to Wires, ACH and

new Clearing House payment options


Future: CFPB Reg CC

Amendments to condition a depositary bank’s right of

expeditious return on the depositary bank agreeing to

accept returned checks electronically either directly or

indirectly from the paying bank; amendments to funds

availability schedule; and revisions of the model forms

used to disclose funds availability policies.

Effective: TBD

Impact to Episys: Reg CC Flexible Check

Holds enhancement


Future: CFPB Payday Loans

Payday, Vehicle Title, and Certain High-Cost Installment

Loans

Proposed rule to provide new protections for consumers

for short term high cost loans. Includes requirements to

ensure borrower can repay the loan, restrictions if

borrower has certain outstanding loans, and limitations

on repayment withdrawals.

Effective: TBD

Impact to Episys: none expected


Future: CFPB Overdraft

The CFPB has engaged in research regarding overdraft

practices involving the opt-in process for ATM and one-

time debit card transactions, overdraft coverage limits,

transaction posting order practices, overdraft and

insufficient funds fee structure, and involuntary account

closures. They have also begun consumer testing

initiatives relating to the opt-in process.

Effective: TBD

Impact to Episys: TBD

Future Enhancements


Future Enhancements

Telephone Consumer Protection Act

Reg CC Flexible Checkhold Options

… and more to come


Future Enhancements: TCPA

The Telephone Consumer Protection Act (TCPA),enacted in

1991, limits the use of phone calls and text messages for

both telemarketing and informational purposes –

particularly with pre-recorded phone calls (robo-dialing).

Future enhancement will provide the ability to store

affirmative consent for telephone contact via a

specified phone number on the core.

Targeted Release: 2018.00


Future Enhancements: Reg CC

Reg CC Flexible Checkhold Options

This enhancement will update Reg CC parameter

checkhold options to correspond with pending CFPB

changes.

Provide flexible check hold options.

Update check hold day verbiage (local/non-local)

Targeted Release: 2018.00

Product Announcements


OFAC PowerOn® Specfile

Product End of Support


Bridger Insight®

XG SLA

• February 2016

Integration and phase

out SLA

• August 2016

End of support

for OFACspecfiles

• December 2017

OFAC specfiles

pulled from Episys®

• Release 2018.00



Shop for a new solution: December 2016 – December 2017




Contact

If you have any questions about the Episys® Identity and

Sanctions Screening Integration or LexisNexis® OFAC

Bridger Insight® XG products, please email the Symitar

Inside Sales Team at [email protected].

Resources: Episys Now

https://pages.jackhenrymail.com/episys

mailto:[email protected]



ProfitStars® CECL Calculator


ProfitStars Financial Performance Suite

For further product information contact:

Lesley Karstens

[email protected]

Resources: Episys Now


mailto:[email protected]


Resources


Resources: Episys Compliance

InformationResource Details Where To Find It

Symitar Compliance Town Hall Webinars

Quarterly webinar on compliance topics, future projects and resources for your credit union

Episys NOW

URL: https://pages.jackhenrymail.com/episys

SSAE 16 Episys SSAE 16 audit results of Episys and Outlink

For Clients > Compliance > Audit/Examination Information

Symitar Vendor Management FAQ

Useful document to reference during your NCUA examinations


Security White Papers & Position Statements

Responses to new security threats and vulnerabilities, recommendations for best practices

For Clients > Products & Services > Core Solution > Episys > Announcements & Alerts > Show Archived Items

Episys Discussion Boards

Client only discussion forum where you can connect with your credit union peers

For Clients > Collaboration > Discussion Boards > Episys Discussion Boards

JHA CybersecurityPreparedness

JHA’s Cybersecurity Program and Oversight



Resources: Industry Compliance

Resource Details Where to find it

CFPB Amendments to the Mortgage Servicing Rules Compliance Guide: Updated

Incorporates amendments

made to mortgage servicing

provisions in Regulation X

and Regulation Z by the

2016 Mortgage Servicing

final rule.

https://s3.amazonaws.com/file

s.consumerfinance.gov/f/docu

ments/201611_cfpb_Mortserv

_guide_v3.pdf

CFPB Fall 2016 Rule Making Agenda

Helps you forecast what

regulatory changes will

come next

Reginfo.gov

FFIEC’s FAQ for Cybersecurity Assessment Tool

Provides support,

clarification for the

Cybersecurity Assessment

Ffiec.gov

NCUA MLA exam procedures

Outlines how credit unions

will be evaluated for MLA

compliance

NCUA.gov



Contact

Eleanor Hopkins

Episys Product Manager, Compliance

Symitar, a Jack Henry & Associates Company

Tel: (619) 542 - 6839

E-mail: [email protected]

Do you have any questions?

This presentation does not provide legal advice.

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Compliance Town Hall Year in Review and Year Ahead · Credit cap of 36% now includes: payday loans,...

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