Heather lineUtah credit union association
October 26, 2013
Regulatory Compliance Update
2014 Will Be . . . .
A Wild Ride
AGENDA
Changes in 20132014 Mortgage RulesUpcoming ChangesBSA UpdateFair Lending Update
2013 Changes
Minor disclosure changes
IRS reporting for NRAsATM fee noticesNew BSA formsMandatory escrow
accounts for HPMLsRemittance transfer
disclosuresCredit card access rule
Disclosure Changes
Effective January 1, 2013List 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
Effective January 1, 2013Requires the reporting of deposit interest to
the IRS for nonresident aliensRules:
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
Effective April 1, 2013Electronic filing of BSA forms required in
June 2012Revised forms for CTRs and SARs required
on effective date
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
Effective June 1, 2013Applies to Higher-Priced Mortgage LoansRequires mandatory escrow accounts for the
first five years
Remittance Transfer Disclosures
Effective October 28, 2013Applies to foreign remittance transfersRequires a remittance transfer provider to provide
a consumer sender: A written 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
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
Ability to Repay/Qualified Mortgage
Loan ServicingHOEPALoan Originator
CompensationECOA ValuationsHPML Appraisals
Ability to Repay/Qualified Mortgage
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
Current or reasonably expected income or assets that the consumer will rely on to repay the loan
Current employment statusMonthly mortgage paymentMonthly 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 child support obligations Monthly debt-to-income ratio Credit history
Qualified Mortgage Features
Loan feature limitations
Loan term limitsPoints and fee limitsDebt to income limits
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.
Mortgage Servicing Rules
All ServicersAll Servicers Large Servicers OnlyLarge Servicers Only
Error resolution and information requests
Forced placed hazard insurance
ARM disclosuresPrompt creditingPayoff statements
Policies and procedures
Early interventionContinuity of
contactLoss mitigation
proceduresPeriodic statements
Servicing Rules
HOEPA
HOEPA Rule Summary
Applies to High Cost Mortgage LoansWhen 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 Originator Compensation
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
Include NMLS ID on certain loan documentsMandatory arbitration clauses in mortgage
contracts are prohibitedProhibition on financing credit insurance
premiums (some monthly premiums are ok)
ECOA Valuations
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 Appraisals
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
New TIL/RESPA disclosures
Privacy NoticesMore Tinkering
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
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