NAFCUs Annual Regulatory Compliance Update November 6, 2014 2:00 - - PowerPoint PPT Presentation
NAFCUs Annual Regulatory Compliance Update November 6, 2014 2:00 3:30 p.m. ET Presented by: JiJi Bahhur , NCCO, Director of Regulatory Compliance Bernadette Clair , NCCO, CAMS, Senior Regulatory Compliance Counsel Eliott C.
– CFPB’s Mortgage Regulations – Derivatives – Access to Emergency Liquidity/Central Liquidity Facility – Loan Participations – Stress Testing and Capital Planning – Voluntary Liquidation
– Interest Rate Risk – Cybersecurity Threats – Money Services Business and Private Student Lending
– Loan Participation Rule – Credit Union Service Organization Rule – CFPB’s Ability to Repay – Qualified Mortgage Standards
an exam”
within statutory capital and prompt corrective action (PCA) regulations with new risk-based capital (RBC) requirements
classifications and require higher minimum levels of capital for federally-insured natural person credit unions with concentrations of assets in real estate loans, member business loans (MBLs) or higher levels of delinquent loans
– More restrictive than the risk-weighting at the FDIC under Basal III – Does not accurately capture risks associated with non-delinquent first mortgage real estate loans, investments, MBLs, and CUSOs
individual federally-insured natural person credit union to hold higher levels of risk-based capital based on supervisory concerns raised by agency examiners.
– What’s wrong with that? – NCUA can increase credit union’s individual RBC requirement through the examination process if it subjectively believe the credit union needs additional capital based on the credit union’s balance sheet risk.
– Establish a threshold requirement that an association not be formed primarily for the purpose of expanding membership – Expand the “totality of the circumstances” test by adding an eighth factor regarding corporate separateness – Grant automatic approval into the credit union’s FOM to certain categories of groups
– Preamble of the final rule highlights NCUA OCP’s ongoing process of reviewing associational groups on a case-by-case basis to determine compliance with current associational common bond requirements. – If NCUA finds these associations no longer meet the totality of the circumstances test, it will remove them from the credit union’s field of membership.
– Opposition to threshold determination; inappropriate and unnecessary because of existing rules – QAR could usurp associations that were previously approved under the Chartering and Field of Membership manual
– Exception: FCUs can obtain a waiver to exceed 5%.
– Remove the requirement to have FCUs seek NCUA’s approval before exceeding 5% investment into fixed assets.
Management program, which includes: (1) a written board policy, (2) board oversight, and (3) ongoing internal controls.
– Allow FCUS to set their own investment limits
– The current rule requires FCUs to occupy a premises (expansions) it acquires within one year, unless the board adopts a resolution that contains definitive plans for full
– Establish a single time period for partial occupancy of premises acquired for future expansion. – Eliminates the requirement to apply for a waiver from the partial occupancy rules within 30 months of property acquisition.
– NAFCU has been working on getting the NCUA to update this rule. See NAFCU’s Dirty Dozen.
sold in secondary markets (but it cannot be a security).
limited to acquiring and financing the assets.
CUSO activity.
FCU in the event of insolvency.
regulations, specifically 12 C.F.R. § 722.3(a)(5), by expanding the current exemption for certain transactions involving existing extension of credit.
– This proposal would allow a FCU to refinance or modify a real estate-related loan without having to obtain an appraisal if: (1) there is no advancement of new monies (excluding monies to cover closing costs); or (2) if there is adequate collateral protection, even with the advancement
amendment to the definition of the term “application.”
– It just removes a parenthetical quote regarding Regulation B.
– Proposed rule requires credit unions with assets of more than $1 billion,
flood insurance for any loans secured by residential improved real estate or a mobile home. – Requires credit unions to accept private flood insurance meeting the statutory definition to satisfy the mandatory purchase requirement. – Includes new and revised sample notice forms and clauses.
– Delayed implementation date – January 1, 2016 – Narrowed scope of escrow requirement
– Up to a maximum of $2,000 per day may be assessed for each day a required report is “minimally” late or contains uncorrected false/misleading information if the late or false/misleading filing is unintentional and the credit union has reasonable procedures in place to avoid such errors. – Up to a maximum of $20,000 per day may be assessed for each day a required report is late or contains false/misleading information if the late or false/misleading filing is not covered by the “unintentional” safe harbor outlined in number one above. – Up to a maximum of $1 million (or 1 percent of total assets, whichever is less) per day may be assessed if a FICU knowingly or with reckless disregard for accuracy submits a false or misleading report and fails to correct it.
Consumer Financial Protection Bureau (CFPB)
Protection Bureau (CFPB) under the Real Estate Settlement Procedures Act (RESPA)
Protection Bureau (CFPB) under the Truth In Lending Act (TILA)
Requirements from CFPB
Consumer Financial Protection Bureau (CFPB)
– Economic Updates – Supervisory Committee Training Modules – Fraud Series
– Extends temporary pricing disclosures exception. – Transfers received or sent to a U.S. military installation are considered received in a “State” in the U.S.; therefore, excluded from remittance applications. – Whether remittance is for personal, family, or household purpose may be determined by ascertaining primary purpose of account. – Faxes are writings. – Provider can include remittance-specific consumer website as the website disclosed on receipt.
– Allows CFPB to oversee larger nonbank international money transfer providers.
privacy notices to customers.
privacy notice online under certain conditions.
post online in lieu of mailing the privacy notice.
– If the member has opt-out rights, they must receive the annual notice by mail. – If the member does not have an opt-out right, then notice on the website is fine.
details, or JiJi’s blog post on October 22, 2014.
(1) Institution of any action by the consumer in connection with the loan; (2) Receipt by the creditor, assignee, or servicer of written notice from the consumer that the transaction’s total points and fees exceed the cap; or (3) The consumer becomes 60 days past due on the legal
– Confirmed speculation that the CFPB was interested in checking account disclosures and polices. – Forum discussed the CFPB was interested in how financial institutions implement checking account screening policies and how these policies/practices affect consumers.
banks and credit unions, (2) consumers access to these “special” reports, and (3) how they are being used by banks and credit unions.
– NAFCU believes that the CFPB is monitoring this with a careful eye.
– Credit union must ask for the no-action letter – Credit union must offer an innovative financial product or service
regulations
– Credit union must explain how the program will work
market.
instructing borrowers on how to give payment instructions to servicers.
– Defined as “the amount of risk posed by a financial institution’s activities and connections, notwithstanding risk- mitigating controls in place.”
– Risk management and oversight; – Threat intelligence and collaboration; – Cybersecurity controls; – External dependency management; and – Cyber incident management and resilience.
JiJi Bahhur, jbahhur@nafcu.org Bernadette Clair, bclair@nafcu.org Eliott C. Ponte, eponte@nafcu.org
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