(July 16, 2021) The “first phase” of NCUA’s plan to resume onsite operations – including exams — will begin Monday, the agency said this week, with staff and contractors permitted to volunteer to work onsite in locations where pandemic conditions have “sufficiently moderated,” the agency’s chairman said in a Letter to Credit Unions Wednesday.
In a letter to credit unions (NCUA letter 21-CU-06), NCUA Board Chairman Todd Harper said the determination of whether conditions have sufficiently moderated will be based on public health data for those areas.
“To the extent they exceed the NCUA’s safety protocols for Phase 1, NCUA staff working onsite in credit unions will generally be expected to follow credit union policies related to safety and security,” Harper wrote. “To the extent possible, the NCUA will respect a credit union’s preference to not have examination staff onsite during this phase. However, the NCUA reserves the right to conduct onsite work at a credit union if necessary to address a serious and time-sensitive matter.”
NCUA will continue to maintain heightened safeguards in its facilities to ensure the health and safety of staff and any visitors, the letter states. It also points out that the agency will continue to monitor conditions and inform credit unions of any changes in how it plans to conduct operations, “including examination procedures and protocols affected by the pandemic.”
NASCUS has already prepared a summary of the letter (available to members only).
LINKS:
(May 28, 2021) An overview of the letter to credit unions on the future of the LIBOR reference rate is the latest summary to be posted by NASCUS; it is available to members only.
Last week, NCUA issued the letter (21-CU-03) essentially telling credit unions stop using LIBOR (the London Interbank Offered Rate) as soon as possible. Failure by credit unions to prepare for disruptions of LIBOR “could undermine a federally insured credit union’s financial stability, and safety and soundness,” the NCUA letter stated. “The LIBOR transition is a significant event that credit unions should manage carefully.”
The agency last week also issued on the same subject its first “Supervisory Letter” of the year, which NCUA said “provides the supervision framework examiners will use to evaluate a credit union’s risk management processes and planning regarding the transition from LIBOR.”
The supervisory letter outlines the background, potential LIBOR exposure for credit unions, and examination considerations – but offers no endorsement of a specific replacement for USD LIBOR.
LINK:
NASCUS Summary, Evaluating LIBOR Transition Plans (members only)
(May 21, 2021) The CFPB’s final rule to delay the compliance date for its new “qualified mortgage” (QM) rule to Oct. 1, 2022 has been summarized by NASCUS and posted to the website.
The summary is available to members only.
In April, the bureau announced that compliance with its QM rule would be delayed to next year, asserting that the pause would allow lenders more time to offer the loans based on homeowners’ debt-to-income (DTI) ratios, and not only on certain pricing thresholds. The delay, which changes the mandatory compliance date from July 1 of this year to the Oct. 1 date of next year, is part of a final rule the CFPB is calling the “April 2021 Amendments to the ATR/QM Rule.” ATR stands for “ability to repay.”
Even though last month’s rule extends the compliance date to next year, the effective date of the QM rule remains March 1, 2021. However, the rule extending the compliance date becomes effective June 30.
According to an executive summary of the final rule published last month, for mortgage applications on the effective date (or after) – but before the new mandatory compliance date of Oct. 1, 2022 – lenders have the option of complying with either the revised, price-based general QM loan definition or the original, total monthly DTI-based general QM loan definition.
Only the revised, price-based general QM loan definition is available for applications received on or after the Oct. 1, 2022 mandatory compliance date, the summary states.
(April 30, 2021) The proposed delayed compliance dates for two debt collection rules from CFPB issued under the Fair Debt Collection Practices Act (FDCPA) has been summarized by NASCUS and is now posted on the association’s website.
This latest summary, like all of those developed and published by NASCUS, is available to members only.
Under the proposal, the two debt collection rules (which had been slated to take effect Nov. 30) will now have a delayed compliance deadline of Jan. 29, 2022. The bureau, when it issued the proposal, said the delay is intended to give those affected more implementation time amid the ongoing challenges of the COVID-19 pandemic.
Late last year, the bureau issued two final (in October and December) under the FDCPA. The October final rule focused on the use of communications related to debt collection and clarified prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt. The December rule clarified disclosures debt collectors must provide to consumers at the beginning of collection communications. It also prohibited debt collectors from making threats to sue, or from suing, consumers on time-barred debt; and requires debt collectors to take specific steps to disclose the existence of a debt to consumers before reporting information about the debt to a consumer reporting agency.
But the bureau, earlier this month, determined that the COVID-19 pandemic had caused “widespread societal disruption, with effects extending into 2021.” In light of that disruption, the agency said, providing additional time for review – and implementation – of the new rules “may be warranted.”
The rules adopted last year permit debt collectors to choose to comply with the rules’ requirements and prohibitions ahead of their effective date. However, the CFPB noted, in proposing the delay, said that the FDCPA and other applicable law would continue to govern debt collectors’ conduct, with safe harbors and presumptions implemented only as of the rules’ effective date.
Comments are due May 19.
(April 23, 2021) The set of proposed rules proposed earlier this month by the CFPB aimed at preventing “avoidable foreclosures” as the emergency federal foreclosure protections expire is the focus of a recent summary from NASCUS.
As are all NASCUS summaries, it is available to members only.
CFPB said, on April 9 when it issued the proposals, that is seeks to “ensure that both servicers and borrowers have the tools and time they need to work together to prevent avoidable foreclosures, recognizing that the expected surge of borrowers exiting forbearance in the fall will put mortgage servicers under strain.”
The NASCUS summary outlines the key provisions of the proposal, which include:
- A special pre-foreclosure review period that would generally prohibit servicers from starting foreclosure until after Dec. 31, 2021.
- A provision permitting servicers to offer certain streamlined loan modification options to borrowers with COVID-19-related hardships based on the evaluation of an incomplete application.
- Temporary changes to certain required servicer communications to ensure that borrowers receive key information about their options at the appropriate time during the pandemic.
Comments on the proposals are due May 10.
(April 16, 2021) A request for information (RFI) about how credit unions and banks use artificial intelligence (AI) in their activities, including fraud prevention, personalization of customer services, credit underwriting, and more is summarized by NASCUS and posted on the website this week.
The summary is available to members only.
On March 29, the CFPB – along with NCUA and federal banking agencies – issued the RFI seeking information from a broad audience that includes credit unions and other financial institutions, but also trade associations, consumer groups, and other stakeholders. The agencies said they want to better understand financial institutions’ use of AI, including machine learning; appropriate governance, risk management, and controls over AI; challenges in developing, adopting, and managing AI; and whether clarifications are needed.
Regarding those clarifications, CFPB and the other agencies said they want to learn whether any are necessary from the agencies that would be helpful for financial institutions’ use of AI “in a safe and sound manner and in compliance with applicable laws and regulations, including those related to consumer protection.”
Comments are due June 1.
(April 16, 2021) In another summary prepared this week, NASCUS outlines a bulletin issued by the bureau April 6 detailing its expectations for mortgage servicers’ engagement with borrowers in the closing months of forbearance programs created to help them deal with the financial impact of the coronavirus crisis.
Like all NASCUS summaries, it is a benefit of membership.
The bulletin issued last week follows the bureau’s proposed rules (issued April 5) aimed at preventing “avoidable foreclosures.” The proposed rules, the agency said, seek to “ensure that both servicers and borrowers have the tools and time they need to work together to prevent avoidable foreclosures, recognizing that the expected surge of borrowers exiting forbearance in the fall will put mortgage servicers under strain.”
The follow-up bulletin (Bulletin 2021-02, “Supervision and Enforcement Priorities Regarding Housing Insecurity”), issued the following day, explains the CFPB’s intention to monitor servicers’ engagement with borrowers “at all stages in the process” in coming months and to prioritize mortgage servicing oversight work in carrying out its enforcement and supervision in the coming year.
LINK:
NASCUS Summary: CFPB Bulletin 2021-02, Supervision and Enforcement Priorities Regarding Housing Insecurity (members only)
(April 2, 2021) Two new summaries – of a interim final rule concerning enhancements to NCUA’s Central Liquidity Facility (CLF) and of an NCUA “regulatory alert” on CFPB’s expanded exemptions concerning higher-priced mortgage loans (HMPLs) – were published by NASCUS this week.
As a benefit of membership, only members have access to the summaries.
Regarding the CLF enhancements, the NCUA Board approved the interim final rule (IFR) at its meeting March 18. Generally, it extends provisions enacted under the 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that expanded CLF access beyond natural person credit unions to include access for corporate credit unions or a group of corporates. That expansion, implemented under an interim rule a year ago, was due to expire Dec. 31, 2020, but was extended through Dec. 31, 2021, under the Consolidated Appropriations Act, 2021, enacted into law late last year. Also extended are provisions approved in April governing CLF capital stock subscriptions by agent members.
The IFR also extends and clarifies the regulatory provisions related to a member withdrawing from CLF membership: The immediate withdrawal period for credit unions that joined the CLF between April 29, 2020, and Dec. 31, 2020, now continues through Dec. 31, 2021; for those joining between Jan. 1 and Dec. 31, 2021, the immediate withdrawal period continues through Dec. 31, 2022.
The rule took effect March 24; comments are due by May 24.
Regarding the regulatory alert on HPMLs issued in mid-March, the summary addresses the CFPB’s rule issued in February. The rule exempts from the HPML escrow requirement any loan made by a bank or credit union and secured by a first lien on the principal dwelling of a consumer if:
- the institution has assets of $10 billion or less (as of Dec. 31 in the preceding year);
- the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; and
- certain of the existing HPML escrow exemption criteria are met.
Proposed in July, CFPB said the rule represents the last mandatory rulemaking to implement the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S.2155).
LINKS:
NASCUS Summary: Interim Final Rule, Central Liquidity Facility (CLF) (members only)
(March 5, 2021) NASCUS has published its summary of NCUA’s regulatory review roster for 2021, which lists the one-third of the agency rules that it is reviewing – part of the three-year review plan by the agency. This summary is also available to members only.
Under the review plan, the agency’s Office of General Counsel maintains a rolling review schedule of one-third of NCUA rules each year, and seeks public comment on those.
Among the rules being reviewed this round: Security program, report of suspected crimes, suspicious transactions, catastrophic acts and Bank Secrecy Act compliance (Part 748 of the agency’s rules); Golden parachute and indemnification payments (Part 750); Registration of residential mortgage loan originators (Part 761); Rules of NCUA Board procedure, promulgation of NCUA rules and regulations, public observation of NCUA Board meetings (Part 791); and Post-employment restrictions for certain NCUA examiners (Part 796).
LINK:
NASCUS Summary: NCUA 2021 regulatory review
(Feb. 19, 2021) Four new summaries have been posted by NASCUS, looking at recent actions from NCUA, which include: two regulatory alerts, a final rule on supervisory guidance, and (along with other federal regulators) answers to questions about anti-money laundering activities.
All four of the summaries are available to members only.
The summaries on regulatory alerts from NCUA look at two issued earlier this month: the first on 2021 threshold adjustments under Regs C, Z and V; the second on submission of 2020 Home Mortgage Disclosure Act (HMDA) data. The first alert (21-RA-02) notes that, in January, the bureau published annual adjustments for exemption thresholds under the Home Mortgage Disclosure Act (HMDA, Regulation C) and the Truth in Lending Act (TILA, Regulation Z). The asset-size thresholds, the alert points out, exempt some credit unions from data collection under Regulation C and from escrow account requirements for higher-priced mortgage loans and specific qualified mortgages under Regulation Z.
The alert also notes that the CFPB published an annual adjustment to the maximum amount consumer reporting agencies may charge consumers for making a file disclosure to a consumer under Regulation V.
The second alert (21-RA-03) reminds credit unions with $47 million or more in assets that they have until March 1 to file reports on home mortgage loan applications made last year under HMDA (as implemented by the CFPB’s Reg C). There are some limiting provisions for reporting under the rule, the agency pointed out in the alert. For example, the closed-end mortgage loan threshold increased from 25 to 100 effective July 1, 2020. “Credit unions that originated fewer than 100 covered closed-end mortgage loans in 2018 or 2019 are not required to report any closed-end mortgage loan information for 2020,” the agency wrote, noting that Section 1003.3(c) of Regulation C lists excluded (not covered) transactions.
The third summary from NASCUS looks at the agency’s final rule on supervisory guidance. Issued early this month. Under the rule, aimed at clarifying and codifying the role of supervisory guidance, the meaning of “supervisory guidance” is clarified as meaning, essentially, it doesn’t have the force of law. As finalized, it codifies an interagency statement issued by NCUA and other federal financial institution regulators in September 2018.
The final summary from NASCUS this week outlines “frequently asked questions” (FAQs) about suspicious activity reporting and other anti-money laundering considerations released by NCUA, Treasury’s Financial Crimes Enforcement Network (FinCEN) and federal banking agencies. According to the agencies, the FAQs clarify the regulatory requirements related to suspicious activity reporting to assist credit unions and other financial institutions with their compliance obligations. The FAQs also enable financial institutions to focus resources on activities that produce the greatest value to law enforcement agencies and other government users of Bank Secrecy Act (BSA) reporting, the agencies said.
NASCUS Summary: Final Rule Summary: Role of Supervisory Guidance (Part 791, Subpart D) (member only)
(Feb. 12, 2021) The new “seasoned qualified mortgage” (QM) from CFPB is the focus of the latest summary published by NASCUS and now available on the association’s website (to members only).
The rule was finalized by the agency in December. It takes effect March 21, but its mandatory compliance date is not until July 1.
The “seasoned QM” rule, the CFPB said then, creates a new category for first-lien, fixed-rate covered transactions that have met certain performance requirements, are held in portfolio by the originating creditor or first purchaser for a 36-month period, comply with general restrictions on product features and points and fees, and meet certain underwriting requirements.
A loan becomes eligible as a seasoned QM, the bureau stated, when it is a first-lien, fixed-rate loan with no balloon payments and meets certain other product restrictions. As under the general QM final rule, the bureau said, the creditor must also consider the consumer’s debt-to-income (DTI) ratio or residual income, income or assets other than the value of the dwelling, and debts “and verify the consumer’s income or assets other than the value of the dwelling and the consumer’s debts.”
The loan must also “season” by meeting certain performance requirements at the end of the seasoning period, CFPB said. Specifically, according to the bureau, the loan can have no more than two delinquencies of 30 or more days and no delinquencies of 60 or more days at the end of the seasoning period. The creditor or first purchaser also generally must hold the loan in portfolio until the end of the seasoning period.
LINK:
Summary: CFPB Seasoned Qualified Mortgage Loan Final Rule
(Feb. 5, 2021) NASCUS’ latest summary of CFPB actions outlines the new rule on season qualified mortgages (QMs) under the Truth-in-Lending Act (Regulation Z); the summary was posted this week.
The summary is available to members only; the rule takes effect March 21.
In early December, the bureau finalized its “seasoned QM” rule, which creates a new category for first-lien, fixed-rate covered transactions that have met certain performance requirements, are held in portfolio by the originating creditor or first purchaser for a 36-month period, comply with general restrictions on product features and points and fees, and meet certain underwriting requirements.
A loan becomes eligible as a seasoned QM, the bureau stated when the rule was finalized, when as a first-lien, fixed-rate loan has no balloon payments and meets certain other product restrictions. As under the general QM final rule, the bureau said, the creditor must also consider the consumer’s DTI ratio or residual income, income or assets other than the value of the dwelling, “and debts and verify the consumer’s income or assets other than the value of the dwelling and the consumer’s debts.”
The loan must also “season” by meeting certain performance requirements at the end of the seasoning period, CFPB said. Specifically, according to the bureau, the loan can have no more than two delinquencies of 30 or more days and no delinquencies of 60 or more days at the end of the seasoning period. The creditor or first purchaser also generally must hold the loan on portfolio until the end of the seasoning period.
LINK:
NASCUS Summary: CFPB Seasoned Qualified Mortgage Loan Final Rule