Summary: CFPB Advisory Opinion Proposal

12 CFR Chapter X

The Consumer Financial Protection Bureau

Prepared by the Legislative and Regulatory Affairs Department

 July 2020

The Consumer Financial Protection Bureau invites the public to comment on a new advisory opinion program and a proposed information collection associated with requests submitted by personal requesting advisory opinions.

Comments must be received by August 21, 2020.  The proposed rule can be accessed here.

Summary:

According to the CFPB, the primary purpose of the proposed advisory opinion program is to provide a mechanism through which the Bureau may more effectively carry out its statutory purposes and objectives by better enabling compliance in the face of regulatory uncertainty.

The proposed advisory opinion program will primarily focus on the following statutory objectives of the Bureau:

• That consumers are provided with timely and understandable information to make responsible decisions about financial transactions
• That outdated, unnecessary or unduly burdensome regulations are regularly identified and addressed to reduce unwarranted regulatory burdens
• That Federal consumer financial law is enforced consistently, without regard to the status of a person as a depository institution, to promote fair competition
• That markets for consumer financial products/services operate transparently and efficiently to facilitate access and innovation.

The proposed program would focus primarily on clarifying ambiguities in the Bureau’s regulations, although advisory opinions might be issued to clarify statutory ambiguities as well. The Bureau will not issue advisory opinions on issues that require notice and comment rulemaking under the APA.

Submission and content of requests

Requests would be submitted through processes designated by the Bureau (such as email) and requestors would be required to provide certain information such as:

• Requestor’s identification – whether the request is submitted on the requestor’s behalf or on behalf of a third party; if request submitted on behalf of a third party, the request must include a statement as to whether the third party is the subject of an ongoing Bureau enforcement investigation.
• Request must include material facts and circumstances including a detailed specification of the legal question and supporting facts; a proposed interpretation, identification of the potential uncertainty or ambiguity that the interpretation would address and
• Requests may also include additional information such as an explanation of the potential consumer benefits and risks associated with resolution of the interpretative question and the proposed interpretation; and an explanation of how the proposed interpretation relates to the Bureau’s statutory objectives.

Characteristics of Advisory Opinions

• Advisory opinions would be considered interpretative rules under the Administrative Procedures Act (APA) and would respond to a specific request for clarity on an interpretive question.
• Advisory opinions would be published in the Federal Register or on the consumerfinance.gov site.
• Each advisory opinion will be applicable to the requestor and similarly situated parties to the extent that their situations conform to the Bureau’s summary of material faces of the advisory opinions. Where a statutory safe harbor is applicable to an advisory opinion, the advisory opinion will explain that fact.

Factors in Bureau Selection of Topics of Advisory Opinions

 The Bureau intends to consider the following factors when considering whether to address a specific request.

• That the interpretive issue has been noted during prior Bureau examinations as one that might benefit from additional regulatory clarity
• The issue is one of substantive importance or impact or one whose clarification would provide significant benefit; and/or
• That the issue concerns an ambiguity that the Bureau has not previously addressed through an interpretive rule or other authoritative source.

Factors weighing strongly in favor of the presumption that an advisory opinion is not appropriate include:

• The interpretive issue is the subject of an ongoing Bureau investigation or enforcement action
• That the issue is better suited for the notice and comment process
• That the issue could be addressed effectively through a compliance aid or
• That there is clear Bureau or court precedent that is available to the public on the issue.

The Bureau intends to take into consideration the following additional factors when determining the appropriateness of an advisory opinion:

• Alignment with the Bureau’s statutory objectives
• Size of the benefit offered to consumers by resolution of the interpretive issue
• Known impact on the actions of other regulators
• Impact on available Bureau resources

Comments

The Bureau solicits comment on all aspects of the proposed advisory opinion program.  In particular, the Bureau is requesting comment on:

• Application elements the Bureau should require from parties requesting advisory opinions, and accommodations that should be made for requestors with limited legal resources
• How the Bureau should prioritize requests for advisory opinion guidance
• How the Bureau should quantify benefit to consumers when evaluating advisory opinion requests
• Improvements that could be made to the proposed advisory opinion program to further enhance compliance
• How the Bureau should handle sensitive information submitted by requestors
• How the Bureau can make advisory opinion guidance that has not been incorporated into the Official Interpretations codified in the Code of Federal Regulations available to the public in a useful format

 

 

 

 

 

Letter to Credit Unions 20-CU-21 Field of Membership Rural Districts

July 2020

As a result of the SCOTUS (Supreme Court of the United States) denial of the ABA appeal of the Appellate decision in the FCU FOM litigation, NCUA will begin reinstating the rural districts for 18 FCUs that had their “new” rural FOMs suspended when the ABA filed suit. NCUA will also renew processing of rural district FOM applications that were in process at the time of suit and immediately begin accepting new applications for the broader FOM for eligible FCU community charters.

FCU Rural District FOM

Under NCUA’s rules, a FCU rural district FOM qualifies if it meets all of the following criteria:

• Well defined contiguous geographic boundaries
• A total population of 1 million people or less
• Either 1) more than 50% of the population resides in census blocks or other geographic units designated as rural by CFPB or Census Bureau; or 2) the district has a population density of 100 persons or fewer per square mile
• The boundaries of the proposed FOM do not exceed the contiguous boundaries of the state in which the FCU is headquartered and (including) the immediate neighboring states of the headquarter state

NCUA’s chartering manual contains the rules for FCU FOM and may be found in Appendix B of Part 701.

The SCOTUS decision also permits NCUA to reinstate its FOM provisions for Combined Statistical Areas (CSA), however for the CSA, NCUA will have to re-adopt a final CSA rule. NCUA had proposed a rule in November 2019.

Letter to Credit Unions 20-CU-20: Phased Approach to On-site Operations

June 2020

NCUA issued LTCU 20-CU-20 to inform stakeholders of NCUA’s current “multi-phase transition plan” for resuming its normal on-site operations (Return to Normal Operations or RTNO). NCUA notes that its transition to RTNO may begin as early as July 6, 2020.

In Phase 1 of its RTNO, NCUA will:

• continue to encourage both field and office staff to work remotely when possible
• place limits on the number of staff working in NCUA offices
• implement social distancing and other precautionary measures in offices
• will distribute PPEs to both field and office staff

NCUA states that examiners may begin (after July 6) conducting voluntary on-site examinations and that more specific implementation details will be published before that begins. NCUA notes that it will continue to coordinate examination and supervision efforts with SSAs.

Letter to Credit Unions 20-CU-19: Additional Guidance Regarding Servicing Hemp-Related Businesses

June 2020

NCUA has issued an update to guidance for credit unions related to serving Hemp businesses. The original guidance, 19-RA-02, was issued in 2019 after the USDA published its initial Interim Final Rule for growing Hemp pursuant to the 2018 Farm Bill. The updated guidance, LTCU 20-CU-19 provides credit unions with the following 17 FAQs (summarized & edited for brevity):

• What is the status of the USDA’s Interim Final Rule on hemp production?

The USDA’s Interim Final Rule (IFR) was issued on 10/31/19 and took effect upon publication. The USDA website has hemp-related resources and a webpage dedicated to rulemaking documents.

 Does the IFR mean that hemp can be legally produced in every state?

No. The 2018 Farm Bill did not preempt state or tribal laws regarding the production of hemp that are more stringent than federal law or that may prohibit hemp in its entirety. If permitted by the state, hemp may be grown pursuant to the USDA rules and the 2018 Farm Bill or the 2014 Farm Bill (2014 Farm Bill authority will expire on November 1, 2020).

• How can I determine if a state or Native American tribe has submitted a hemp production plan to the USDA for approval?

The USDA provides detailed information on state and Tribal plans submitted for approval on its website.

• What if the state or tribal territory we serve has not had a hemp production plan approved by the USDA?

In states that permit hemp production but do not have USDA approved regulatory plans, hemp producers have 2 options:

• • They can operate pursuant to the 2014 Farm Bill until November 1, 2020
  • They can apply for a license from the USDA directly pursuant to the USDA’s regulatory plan
• Who is responsible for ensuring that hemp producers comply with a state, Tribal, or USDA-approved hemp production plan?

In states or Tribal territories with USDA approved plans, enforcement and regulation is conducted by the designated state or Tribal authority. For producers operating under the USDA plan, enforcement and regulation is overseen directly by the USDA.

• Aside from hemp production, does the USDA IFR cover other hemp-related businesses such as manufacturing, processing, distribution, shipping, and retail?

No. The USDA only sets forth the requirements for engaging in hemp production as authorized by the 2018 Farm Bill. As noted in the August 2019 NCUA Regulatory Alert regarding Hemp, credit union should be aware of other statutes and regulations that may affect the distribution, shipping, sale, and use of hemp products. In particular, substantial issues may be raised by the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act. The U.S. Food and Drug Administration (FDA) has a webpage dedicated to hemp.

• Where can I learn more about FDA requirements applicable to cannabis-derived products, including cannabidiol (CBD)?

The FDA has created a webpage dedicated to cannabis derived products such as CBD. The legality of the sale of CBD is a complicated issue with implications for how the product is used, labeled, and marketed. In addition, whether the CBD is infuse into food and beverages or dietary supplements will determine whether or not the sale of the product violates the Federal Food Drug and Cosmetics Act and other applicable federal regulations related to consumer products and safety.

• Has FinCEN provided any guidance related to hemp?

Yes. FinCEN, the Board of Governors of the Federal Reserve System, the FDIC, the OCC, and CSBS issued a joint statement in December, 2019 that aligned with NCUA’s 2019 Regulatory Alert.

• Will NCUA examinations conducted in 2020 cover hemp?

In 2020, NCUA examiners will be collecting data through the examination process concerning the types of services credit unions are providing to hemp-related businesses to help the agency better understand how it can assist credit unions serving hemp-related businesses.

• Does the NCUA prohibit credit unions from providing services to hemp-related businesses?

No. Credit unions may provide the customary range of financial services for business accounts, including loans, to lawfully operating hemp-related businesses within their fields of membership.

• What should a credit union board consider when evaluating whether to provide services to a hemp business?

Credit unions need to be aware of the federal, state, and Native American tribal laws and regulations that apply to any hemp-related businesses they serve and understand the complexities and risks involved.

• Can a credit union provide loans to a hemp-related business?

Lending to a lawfully operating hemp-related business is permissible. Such loans are commercial loans subject to § 723 of NCUA’s rules or any state specific commercial lending rules where applicable. Credit unions should understand the complex regulatory regime governing such businesses and remain mindful of the unique risks when underwriting and managing hemp-related loans.

• What is the credit union expected to do to ensure the hemp business is operating lawfully?

As they would with any account, credit unions must maintain appropriate due diligence procedures for hemp-related accounts. The extent and nature of the due diligence will likely vary by accounts and is a business decision for the credit union. NCUA suggests credit unions consult legal counsel when determining the appropriate level of due diligence. Credit unions should verify that hemp growers possess a valid state or USDA license to grow hemp. However, credit unions are not expected to serve as the enforcement authority tasked with policing the hemp industry for illegal activity.

• Can a credit union decide not to serve hemp-related businesses?

The decision to serve any business is made by each individual credit union.

• Is there a list of credit unions that serve hemp-related businesses?

NCUA notes that the agency does not maintain a list of credit unions serving hemp-related businesses “at this time.”

• Do credit unions need to file marijuana related SARs on legally operating hemp businesses, provided the activity is not unusual for that business?

No, unless a credit union reasonably believes the hemp business is operating unlawfully and there is no other unusual activity, than a marijuana-related SARs need not be filed.

• Where can I learn more?

The USDA has published numerous resources. Credit unions with questions regarding state or Native American tribal laws and regulations should contact the state or Native American tribe government. Credit unions with hemp-related food, drug, and cosmetic questions should contact the FDA.

Letter to Credit Unions 20-CU-18: PCA Regulatory Relief Measures in Response to the COVID-19 Pandemic

June 2020

In May, 2020, the NCUA Board approved changes to the Prompt Corrective Action (PCA) requirements in Part 702 of its Rules and Regulations. Part 702 applies to federally insured state credit union (FISCUs) by reference in § 741.3(a)(1). The Interim Final Rule took effect upon publication on May 28, 2020.

NCUA’s LTCU 20-CU-18 discusses the agency’s Administrative Order temporarily decreasing the earnings retention requirement for adequately capitalized credit unions pursuant to § 702.201(b)(2) as well as the authority for undercapitalized credit unions to submit a streamlined net worth restoration plan (NWRP) if their net worth ratio declined predominantly due to temporary share growth during the COVID-19 pandemic.

Administrative Order & Part 702.201 Adequately Capitalized Credit Unions

Per the Order, between March 31, 2020 and December 31, 2020, adequately capitalized natural person credit unions that are unable to meet the earnings retention requirement may decrease their earnings retention requirement to zero without submitting an application to the NCUA Regional Director. After December 31, 2020, the requirements of part 702 apply as before, including the earnings-retention requirement and the requirement to seek a waiver on case-by-case basis.

Credit unions posing an undue risk to the NCUSIF or exhibiting material safety and soundness issues may be required to submit an application for a decrease in the earnings retention requirement in accordance with § 702.201(b).

Part 702.206(c) & Streamlined Net Worth Restoration Plans

Recognizing that some credit unions may experience substantial COVID-19 related short-term increases in shares from stimulus deposits or consumer flight to safety, NCUA will temporarily permit credit unions to submit a streamlined NWRP. The streamlined NWRP must attest that the reduction in the credit union’s net worth ratio was predominantly caused by share growth and that such share growth is a temporary condition due to COVID-19.

When approving streamlined NWRPs, NCUA Regional Directors will:

• verify that the decline in the NWR was driven by an increase in total assets, and that the increase in total assets is attributed to an increase in shares, not borrowings or other sources of funds; and
• Consult with the applicable SSA for FISCU submissions.

FISCUs must comply with applicable state requirements when submitting an NWRP for state supervisory authority approval.

Furthermore, NCUA notes the fllowing:

• A Credit union expecting a decline in NWR to below 4% should notify their NCUA examiner and submit a NWRP in accordance with  702.206.
• NCUA will evaluate compliance with outstanding NWRPs, including those approved under this temporary provision, on a case-by-case basis.
• Less than adequately capitalized credit unions continuing to experiencing capital deficiencies may be required to submit a revised NWRP pursuant to  702.206(c).

Regulatory Alert 20-RA-05 Remittance Transfers under the EFT Act

June 2020

NCUA’s Regulatory Alert provides credit unions information regarding changes to the CFPB’s Remittance Rule (Regulation E) which implements the Electronic Fund Transfer Act (EFT Act). The changes take effect July 21, 2020.

The CFPB’s new rule makes the following changes:

• The new rule increases the safe harbor threshold, and removes from coverage of the rule, credit unions and banks that provide 500 or fewer transfers annually. This is an increase from the current threshold of 100 or fewer transfers.
• Establishes 2 new permanent exceptions to the rule which allow credit unions and banks to disclose estimates of the exchange rate and covered third-party fees instead of exact amounts:
• Entities may provide an estimate of the exchange rate for transfers to a particular country if the credit union or bank made 1,000 or fewer transfers in the prior calendar year to the particular country in which the transfer recipients received funds in that country’s local currency and the credit union or bank cannot determine the exact exchange rate for that transaction.
• Credit unions and banks may estimate the 3^rd-party fee for a transfer to a designated recipient’s institution if 1) the financial institution made 500 or fewer transfers to the designated recipient’s institution in the prior calendar year; 2) at the time the disclosure must be given the credit union or bank cannot determine the exact amount of the 3^rd-party fee; and 3) the remittance is sent from the sender’s credit union account (not including pre-paid accounts).

Additional Changes

• The final rule includes a transition period for credit unions and banks that exceed the new exception thresholds.
• The final rule also adds an exception to allow a credit union or bank to estimate 3^rd-party fees when another federal statute or regulation prohibits the institution from determining the exact amount of the fee.
• The CFPB will develop improved procedures to consider requests to make changes to the exchange rate countries list.

NCUA’s Office of Consumer Financial Protection may be contacted by phone (703.518.1140) or e-mail ([email protected]).

Federal Reserve Interim Final Rule

 Regulation D                                  

Part 204: Reserve Requirements of Depository Institutions

 Summary

Prepared by NASCUS Legislative & Regulatory Affairs Department

June 2020

The Board of Governors of the Federal Reserve System (Federal Reserve Board or ‘‘FRB’’) is amending its 12 CFR Part 204, Regulation D, to delete the numeric limits on certain kinds of transfers and withdrawals that may be made each month from ‘‘savings deposits.’’ The amendments are intended to allow consumers more convenience in accessing their funds and to ease administrative burdens for depository institutions.

The Interim Final Rule may be read here. The rule became effective April 24, 2020.

Comments are due to the Federal Reserve June 29, 2020.

Summary

Section 19(b)(2) of the Federal Reserve Act (FRA) authorizes the FRB to impose reserve requirements on certain types of deposits and other liabilities of depository institutions for the purpose of implementing monetary policy. Specifically, the FRA requires depository institutions to maintain reserves against its certain accounts, including transaction accounts, as prescribed by the FRB’s regulations. On March 26, 2020, the FRB set that reserve ratio for transaction accounts to zero percent.

Regulation D distinguishes between reservable ‘‘transaction accounts’’ and non-reservable ‘‘savings deposits’’ based on the ease with which the depositor may make transfers or withdrawals. Prior to issuing the Interim Final Rule (IFR) the FRB’s Regulation D limited the number of certain transfers or withdrawals that an account holder may make from a ‘‘savings deposit’’ to no more than six/month. Prior to the IFR, Regulation D also required depository institutions:

• to prevent transactions in excess of the regulatory limit (6/month)
• to monitor accounts for violations of the limit

When the FRB responded to the economic disruption of the pandemic by eliminating the reserve requirement on transaction accounts, the need to distinguish between reservable ‘‘transaction accounts’’ and non-reservable ‘‘savings deposits’’ became superfluous.

Therefore, the FRB subsequently is issuing the IFR to amend Regulation D by deleting the six transfer limit from the ‘‘savings deposit’’ definition as well as the provisions that require depository institutions to prevent transfers and withdrawals in excess of the limit or to monitor the accounts for violations when excess transactions were inadvertently allowed. The IFR makes conforming changes to other definitions in Regulation D that refer to ‘‘savings deposit’’ as necessary.

As a result, depository institutions are permitted, but not required, to suspend enforcement of the 6/month transfer limit. Furthermore, the IFR does not mandate any change to how depository institutions report deposits.

The IFR includes a series of FAQs to help explain the implications of the changes.

• FAQ #1 – Reiterates that the IFR permits depository institutions to suspend enforcement of the 6-transfer limit, but it does not require them to do so.
• FAQ #2 & #3 – Clarifies that depository institutions may continue to report accounts as ‘‘savings deposits’’ on their FR 2900 deposit reports even after they suspend enforcement of the limit on those accounts (#2) or may report that account as a ‘‘transaction account’’ on the FR 2900 reports (#3).
• FAQ #4 – Addresses Regulation D’s §204.2(d)(1) ‘‘reservation of right,’’ and confirms that the ‘‘reservation of right’’ continues to be a part of the definition of ‘‘savings deposit.’’
• FAQ #5 – The IFR interim final rule does not require a depository institution to change the way it calculates or reports interest on an account where the depository institution has suspended enforcement of the transfer limit.
• FAQ #6 – Notes that a depository institution with account agreements with its ‘‘savings deposit’’ customers requiring the depository institution to enforce the 6-transfer limit may, if it chooses, amend those agreements in any manner.
• FAQ #7 – Notes that the IFR does not require depository institutions to change the names of accounts if a depository institution chooses to suspend regardless of whether the 6-transfer limit is suspended.
• FAQ #8 – **The Federal Register notice is missing FAQ #8.
• FAQ #9 – Clarifies that depository institutions may suspend enforcement of the 6-transfer limit on a temporary basis, such as for six months.
• FAQ #10 – Noting that some depository institutions charges fees to savings deposit customers for transfers and withdrawals that exceed the Regulation D limit, the FRB clarifies that the IFR does not require or prohibit depository institutions from charging their customers fees for transfers and withdrawals in excess of the limit.

-End-

 

 

Interagency Lending Principles for Offering Responsible Small-Dollar Loans

May 2020

NCUA and the federal banking agencies (Federal Reserve System, FDIC, and OCC) have published “principles” to encourage banks and credit unions to offer responsible small-dollar loans to both consumers and small businesses. The agencies noted the role small-dollar loans can play in helping borrowers manage short term credit needs during the pandemic, and suggest lenders

The agencies advise lenders they should:

• Offer “thoughtfully structured” loans
• Design repayment structures that work for borrowers
• Implement lending programs that are equitable reflections of the lender’s costs
• Utilize automation and other new technologies to lower lending costs

The agencies characterize responsible small-dollar loan programs as generally having the following characteristics:

• High percentage of customers repay loans pursuant to the original terms, indicating loans were affordable and appropriately underwritten
• Loan terms and pricing minimize debt cycles and debt rollovers
• Program design enhances a borrower’s financial capabilities

The guidance characterizes well managed programs as:

• In alignment with the financial institution’s overall business plans and strategies
• Including innovative technology or processes for customers who may not meet traditional underwriting standards
• Offering fair access to financial services and fair treatment of borrowers
• In compliance with applicable fair lending and consumer protection laws.

With respect to credit unions, NCUA notes that FCUs may offer PALs I and PALs II loans pursuant to § 701.21(c)(7)(iii) and (iv).

The agencies’ core lending principles for small-dollar loan products include:

• Loan products are consistent with safe and sound banking, treat customers fairly, and comply with applicable laws and regulations
• Financial institutions effectively manage the credit, compliance and operational risks associated with the products they offer
• Loan products are underwritten based on prudent policies and practices

-End-

 

 

 

Letter to Credit Unions 20-CU-16 Low-Income Designations: Qualification of Military Personnel

May 2020

NCUA has announced it is changing the agency’s approach to determining whether a credit union qualifies for designation as a low income credit union (LICU) pursuant the

Federal Credit Union Act (FCUA) and Part 701.34 (applicable to FISCUs by reference in Part 741.204). The regulation generally defines a low-income member as a member whose family income is 80% or less than the median family income.

Prior to this change, NCUA’s determined LICU status by assigning incomes based on geocoding of members’ addresses. However, NCUA asserts that this methodology cannot account for military personnel with Army/Air Post Office (APO) or Fleet Post Office (FPO) mailing addresses and therefore excluded them from the analysis. The change of methodology announced by NCUA seeks to address that issue.

Based on a determination by NCUA’s Office of Chief Economist that a majority of military personnel would qualify as low-income members, NCUA is changing its methodology to include APO/FPO addresses in the LICU analysis with a percentage (designated by NCUA) included as low-income members.

NCUA’s geocoding approach is a assumption based methodology. However, some credit unions may have members that don’t adhere to the methodology’s models and assumptions. For those credit union, NCUA also provides an option to submit additional information to NCUA to demonstrate the credit union qualifies for a LICU designation. Credit unions may submit to NCUA’s CURE office the following:

• a list identifying members who are active-duty military personnel (no additional information is necessary) for NCUA to factor into their military methodology formulation discussed above; or
• granular data for military members, including active-duty and members of the Reserve and the National Guard. Data could include actual income, paygrade, years of service, or rank of its military members.

Credit unions also have the option of conducting their own analysis to demonstrate that all or some portion of military membership qualify as low-income.

Letter to Credit Unions 20-CU-15 Principles for Making Responsible Small-Dollar Loans

May 2020

NCUA issued LTCU 20-CU-15 to discuss interagency guidance issued together with the Federal Reserve System, FDIC, and OCC related to small dollar lending programs: Interagency Lending Principles for Offering Responsible Small-Dollar Loans. The interagency guidance (principles) follows NCUA’s issuance in March 2020 of LTCU 20-CU-04 Responsible Small-Dollar Lending in Response to COVID-19 and a March 2020 joint statement from the federal bank regulators: Joint Statement Encouraging Responsible Small-Dollar Lending in Response to COVID-19.

The principles described in the new interagency guidance apply to all credit unions that make small-dollar loans. NCUA, emphasizing that effectively managing the credit, operational, and compliance risks associated with small dollar loans is important for credit unions, identifies 4 essential elements:

• Credit unions should underwrite small-dollar loans based on prudent policies
• Credit unions should offer small dollar loans in a manner consistent with safe and sound practices
• Credit unions must comply with all applicable consumer protection and other laws and regulations
• Credit unions should treat members fairly

NCUA notes that FCUs have the option of providing PALs under § 701.21(c)(7)(iii) and

• 701.21(c)(7)(iv).

PALs I	PALs II
$1,000 maximum loan	$2,000 maximum loan
6-month maturity	12-month maturity

 

Regulatory Alert 20-RA-03 CFPB Issues Interpretive Rule on Waiver of TRID and TILA Waiting Periods

May 2020

NCUA’s Regulatory Alert discussed the CFPB’s interpretive rule clarifying when consumers can elect to modify or waive certain required waiting periods for some mortgage loans under the TILA-RESPA Integrated Disclosure (TRID) rule and the Regulation Z right of rescission rule (See 12 CFR 1026.15 and 1026.23). 

Under the interpretive rule, a borrower’s need to obtain funds and not delay closing for reasons related to the COVID-19 pandemic may be a “changed circumstance” or “bona fide personal emergency” which would permit borrowers to waive waiting periods under both rules, or permit a credit union to amend some TRID documents.

NCUA encourages credit unions to inform borrowers of their ability to forego the waiting periods.

The interpretive rule also designates COVID-19 to be a permissible “changed circumstance” under the TRID rule for revising fee disclosures to reflect higher costs for the transaction (such as increased appraisal fees).

NASCUS Note:

The CFPB also issued a FAQ regarding the waiving of the timing requirement under the ECOA Valuations Rule.

Regulatory Alert 20-RA-04 CFPB Increases Reporting Thresholds Under HMDA

May 2020

NCUA’s Regulatory Alert discusses the May 12, 2020 CFPB final rule amending parts of Regulation C which implement the Home Mortgage Disclosure Act (HMDA). The final rule:

• Effective July 1, 2020 the threshold for collecting and reporting data about closed-end mortgage loans is increased from 25 to 100, for calendar year 2020. It also increases the threshold for collecting and reporting
• Effective January 2, 2022 the threshold for collecting data about open-end lines of credit is increased from 100 to 200.
• The asset size foe collection of data remains unchanged: credit unions with total assets of $47m or less of December 31, 2019, are not subject to HMDA in 2020.

 What this means for credit unions:

NOTE: This rule change only applies to HMDA. Other regulations, such as  Regulation B (requiring collection of  information regarding ethnicity, race, sex, marital status, and age when credit is sought for purchase/refinancing of a primary residence dwelling that also secures the credit.

For calendar year 2021, a credit union is not required to collect HMDA data for closed-end mortgage loans if it originated fewer than 100 closed-end mortgage loans in 2019 or 2020.

The HMDA provisions may be found in Regulation C. CFPB will not update the current version of Regulation C until the effective dates of the amendments.