Posts filed under ‘Compliance’

TRID Changes Issued To Federal Register

Good morning! I just wanted to give everyone a quick head’s up that our good friends at the CFPB have officially issued in the Federal register, several highly technical changes to the TRID disclosure requirements. These changes take effect on October 10, 2017 with mandatory compliance by October 1, 2018.

When I went to the Mortgage Banker Association’s Legal and Compliance Conference earlier this year, there was hope that this round of TRID requirements would clarify some of the bigger issues still hanging out there. I don’t think this collection of highly technical changes is exactly what anyone was hoping for but if you provide mortgages should certainly take the time to understand  these amendments.

The changes cover a wide range of areas including, but not limited to, clarification of how to disclose home construction loans; the calculation of disclosure tolerances involving certain services provided by affiliates and a mandate for  TRID disclosures in co-op sales. Be sure to take an extra jolt of powerful java before delving into this one. That’s what I did.

New Board Members Not to Be Named for Several Months

The Credit Union Times reported yesterday that the Trump administration is unlikely to nominate replacements for NCUA’s Board any time soon. The term of board member Randy Metsger ended two weeks ago and the seat of departed former chairman Debbie Matz remains vacant.

August 16, 2017 at 9:30 am Leave a comment

CU’s Go HELOC Crazy

I had a sense that more credit unions were getting involved with HELOC’s but I didn’t know how big the trend was until I read this article in today’s American Banker. The paper reports that the growth in credit union HELOC lending combined with an overall decline in the number of HELOC accounts has sent the share of HELOC’s owned by credit unions soaring. In fact, credit unions now hold 13.16% of the HELOC market up from 9.63% in 2015. The graph accompanying today’s blog underscores just how big the increase has been.

What’s even more interesting is the reason the article points to for the trend. While banks are still holding back the reigns with more conservative underwriting standards, credit unions are more comfortable with underwriting loans based in part on comfort with the member’s payment history. Ezra Becker, a senior Vice President at Trans Union Financial Service Business Unit points out, “credit unions do a good job working with member loyalty so they may be willing to make a loan that another institution may be unwilling to make.”

Now for a boring compliance reminder. This increased interest in HELOC’s is coming just as changes to HMDA regulations mean that any institution that makes more than 500 home equity loans a year as of January 1, 2018, and meets other compliance thresholds, will now have to report these loans.

OH, Canada!

The world is a bit more sensible this morning. As if things weren’t wacky enough, I noted in a recent blog that our level-headed friends to the North had banned credit unions from using the word banking in their advertising. Fortunately, it was recently announced that this ban will be put on hold pending further investigation.

Hampel Retires

Today, Bill Hampel, the credit union industry’s leading economist, is retiring after a mere 39 years of service.

In the immortal words of Charles de Gualle, “the graveyards of Europe are filled with indispensable men” but the void left by Hampel’s retirement will be a tough one for anyone to fill.  I only had the opportunity to meet Bill in passing a few times, but anyone who has tried to explain the impact of policies on credit unions to regulators, legislators, the general public or family members who still don’t understand that I don’t work for a union, owe a debt of gratitude to Bill. His economic analysis and ability to explain how the economy impacts credit union operations has been an invaluable resource that we are all going to miss.

August 15, 2017 at 8:44 am Leave a comment

TCPA Gets Even More Complicated

TCPA Gets Even More Complicated

The Court of Appeals for the 11th Circuit yesterday, revived a lawsuit by a consumer who claimed a bank violated the Telephone Consumer Protection Act by refusing her request that she not be called on her cell phone during work hours. This could be an operational nightmare.

First a quick refresher: The TCPA generally makes it unlawful for any business to make non-emergency calls using an automatic telephone dialing system without the receiving party’s prior consent. In recent years, Courts have ruled that consumers can orally revoke this consent. Schweitzer v. Comenity Bank addressed the issue of whether a consumer could partially revoke a bank’s authority to make automated phone calls.

The case involved a consumer who was delinquent on her credit card payments. When she got the card, she consented to allow Comenity Bank to call her cell phone. Normally I try to summarize these cases as briefly as possible but I can’t resist transcribing a chunk of the dialogue between the bank’s employee and our delinquent card holder. He couldn’t have teed this up any better for litigation if he was a law school professor. When she fell behind on her credit card payment, the bank called her on her cell phone and asked her to make a $35.00 payment. The following exchange took place:

Schweitzer said the following:

Unfortunately I can’t afford to pay [my past due payment] right now. And if you guys cannot call me, like, in the morning and during the work day, because I’m working, and I can’t really be talking about these things while I’m at work. My phone’s ringing off the hook with you guys calling me.

The employee replied that “[i]t’s a phone system. When it’s reporting two payments past due, it’s a computer that dials. We can’t stop the phone calls like that.”

The trial level court that reviewed the case dismissed the consumer’s lawsuit because she had clearly consented to the bank’s use of her cell phone. Furthermore, while the TCPA permits consumers to withdraw their consent, the rule of thumb has been that such withdrawals have to be complete. In this case, our consumer did not request that she no longer receive any phone calls, just that she not receive phone calls at specified times.

However, the 11th Circuit ruled that banks and other creditors should have the operational ability to know when a consumer has partially restricted their phone calls. I hope you can see now why this ruling is so potentially troubling. Currently, it is only directly binding on those of you who do work in states under the jurisdiction of the 11th Circuit but this decision is persuasive authority that could be adopted by other courts and is certainly something of which your collections people should be aware.

More Bad News on Taxi Medallions

This goes into the “don’t shoot the messenger” category but if your credit union is involved with taxi medallions, you should all take a look at the credit union watch blog’s latest analysis of the medallion industry available at: The news is not good and Keith’s analysis of industry trends has been spot-on.

August 11, 2017 at 9:06 am Leave a comment

Is Wells Fargo The Citizen Kane of Banking ?

Wells Fargo is in the news again. For those of us who would like to see the CFPB’s powers scaled back that is not a good thing.

The NY Times is reportingg this morning that more than 800,000 people who took out car loans from the banking behemoth were charged for auto insurance they  did not need, and some of them are still paying for it.  These  payments resulted in 274,000 delinquencies and 25,000 repossessions.

When wells’ Account opening shenanigans were uncovered regulators responded with guidance on properly incentivizing front line staff.  My guess is you will soon be seeing guidance on properly notifying members about collateral protection insurance.  It’s a quiet Summer Friday so use some of it to review your auto loan insurance requirements with an eye towards ensuring that members are receive proper notification.  Here is an opinion letter from NCUA authorizing credit unions to use such insurance .

One of my favorite scenes  in the movie Citizen Kane is when one of the reclusive mogul’s former advisers  explains that  it’s easy to make a lot of money if all you want to do is make a lot of money. Everyday all lending institutions,  irrespective of their size, have  to balance the cost of compliance against  the need to generate income.  Wells is an example of what happens when executive’s decide that it’s a lot easier to make money when you don’t follow the rules.

July 28, 2017 at 8:59 am Leave a comment

CFPB Proposes More Exemptions From HMDA

Not all the news that came out of the CFPB last week made me want to pull the remaining strains of hair out of my head. Most importantly, the Bureau proposed to  raise the threshold for HMDA reporting of Home Equity Lines of Credit.   The increased threshold would be effective until 2020.

In its 2015 amendments to Regulation C implementing HMDA, the Bureau established two distinct reporting thresholds which take effect on January 1st. First HMDA reporting is required for  institutions that originated at  least 25 covered closed-end mortgages in each of the preceding two years. This is a shift away from basing reporting requirements on an institution’s asset size. Secondly,  Institutions which originated at least  100 open-end lines of credit in each of the two preceding years have  to report this data.  HELOC reporting used to be  optional.

As the Bureau explained last week in the preamble to its most recent proposal “Under this proposal, for calendar years 2018 and 2019, a financial institution that originates between 100 and 499 open-end lines of credit in either of the two preceding calendar years would not be required to collect, report, and disclose data on open-end lines of credit. Absent further amendments by the Bureau, beginning in calendar year 2020, such a financial institution would be required to do so.”

There are other exceptions as well so remember to take a look at the new 1003.3  to  see how it impacts your credit union.

While it’s always good to see a willingness to compromise this is the type of half step that typifies the Bureau’s approach to its mandate relief authority. Why is the Bureau requiring HELOC’s to be reported by credit unions and smaller community banks  in the first place?  After all HELOC’s did not have to be reported under HMDA until the Bureau changed the regulations in 2015.  The purpose of HMDA is to spot discriminatory  lending practices that keep qualified persons from getting a home on fair terms.  Do we really need to start developing an additional legal framework for open-ended lines of credit that are used to finance everything from a college tuition to a new roof for the house?

July 17, 2017 at 8:48 am 1 comment

CFPB Issues Guidance on Important Effective Dates

The CFPB  last week issued important guidance about the effective dates to amendments to its mortgage servicing rules. This is definitely something you should talk over with your vendor and/or IT person.

In 2016, the CFPB finalized important amendments to its original mortgage servicing  and RESPA rules . The  amendments touched  on a broad range of subjects, from the identification and treatment of Successors in Interest  in estates with mortgaged property, to the legality of reaching out to  delinquent homeowners who declare  bankruptcy.

Different parts of the rule were to take effect on October 19, 2017 and April 19, 2018.  Both of these dates fall on a Thursday, a fact  that Siri just  confirmed  for me.  If I’m not careful between Siri and Alexa I’m in danger of becoming a functional illiterate but I digress.

Some quick-witted compliance folks were apparently able to explain to the CFPB why Thursdays are never a good day to have new rules take effect. As the Bureau That Never Sleeps explained in last week’s  guidance  “for many servicers, the Thursday effective dates could afford less than a full day—from the close of business overnight on each of the preceding Wednesdays—to update and test systems in order to be compliant with the 2016 amendments. If servicers do not have sufficient time to complete these tasks, their systems may be more likely to produce errors, which could expose servicers and consumers to risk.”

The Bureau’s guidance explains that  regulatory action will not be taken against servicers  that comply with the amendments as early as October 16, 2017  and April 16, 2018 respectively. This means that you will have the previous weekend to test-drive your systems. That might ruin your football Sunday but  if you are a Jet fan you should already be looking for excuses to avoid watching them play.

Have a great July 4th. .

July 3, 2017 at 8:49 am Leave a comment

NY Clarifies Station Requirements For State Charters

The NYS Department of Financial Services clarified in guidance issued yesterday that state chartered credit unions can operate temporary facilities, such as mobile service units, tents, booths, tables without first applying for permission from the DFS. As someone who has tried to advise credit unions on this issue it is a welcome clarification.

Section 461 of New York’s banking law requires state charters to apply for permission anytime they change location or open station within the state.  The process is cumbersome and must be accompanied by a board resolution. Yesterday’s guidance explains that this requirement does not apply to a state charter that simply wants to set up a temporary location to   sign up new members, receive loan and credit card applications, and  advise members and potential members about the products and services offered by the credit union.

Credit unions must, however, provide advance notice of their plans to the DFS and provide a schedule showing upcoming times and locations where the temporary facility will operate, the number and title of qualified individuals who would be involved in offering such services, and any further information the Department may require. Furthermore, the facilities cannot engage in most  banking activities. For example, they cannot be used to accept loan payments, conduct wire transfers, accept deposits, make withdrawals, issue ATM debit or credit cards, or accept any payments.


CFPB Finalizes Technical Amendments

The CFPB has issued a final rule making what it describes as “several non-substantive corrections” to 2016 amendments to the servicing regulations. Yours truly has not read the regulations but I wanted to get the word out.

Besides, it reminds me of one of the lessons I learned from my old boss at the Legislature who taught me everything I know about reading and analyzing legislation. He never allowed me to describe a change as technical because (1) There is really no such thing as a technical amendment – every change is technical and (2) All too often “technical amendment” is used to describe changes that no one really understands or wants to explain. In other words,  always read the regulation and understand it no matter how insignificant it may seem to the drafter. In the immortal words of Henry Kissinger even paranoids have real  enemies

June 29, 2017 at 10:21 am Leave a comment

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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