(Jan. 29, 2021) In addition to the three summaries of NCUA actions, NASCUS this week also posted a new summary of CFPB recent actions – this one on the bureau’s final rule on debt collection practices related to time-barred debts. The summary is available to members only.
Under the final rule, debt collectors are banned from making calls or taking other “non-litigation means” to collect on debt that is beyond the statute of limitations unless it is disclosed during an initial contact that the debt is, in fact, past the time limit. The final rule also requires the debt collector to inform the consumer that the statute of limitations on the debt has expired during any required validation.
The bureau has said that its own research has found that a time-barred debt disclosure helps consumers understand that they cannot be sued if they do not pay, which it noted can help consumers make better-informed decisions whether to pay the debt or not.
LINK:
NASCUS Summary: CFPB Rule on Debt Collection Practices (Time-Barred Debts)
(Jan. 29, 2021) NASCUS summaries of recent NCUA letters to credit unions – and a summary of a regulatory alert issued by the agency – are among the latest to be published by NASCUS. All three are available to members only.
The two letters summarized are on the agency’s outline of the issues affecting credit unions contained in the Consolidated Appropriations Act, 2021 adopted by Congress Dec. 27 (letter 21-CU-01, issued by the agency the week of Jan. 4), and about NCUA’s Supervisory priorities for 2021 (letter 21-CU-02, issued by the agency last week).
The first letter notes that that most of the provisions of the consolidated appropriations bill extend portions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law last March as the impact of the coronavirus crisis became apparent. Those provisions are extended to Dec. 31, 2021, the letter notes. It also touches on provisions affecting the agency’s Central Liquidity Facility (CLF), troubled debt restructurings (TDRs), compliance with the Current Expected Credit Loss (CECL) accounting standard and more.
The second letter outlines the broad scope of the agency’s regulatory priorities for 2021, primarily focusing on challenges to credit unions posed by the ongoing coronavirus pandemic and steps to enhance the agency’s offsite monitoring of credit unions’ conditions. Additionally, the letter states that examiners will not be assessing credit unions’ efforts to transition to the CECL standard “until further notice.”
The summary of the regulatory alert (21-RA-01), released by NCUA earlier this month, outlines the agency’s view of CFPB’s action late last year to issue two final rules amending the Ability-to-Repay/Qualified Mortgage Rule (ATR/QM Rule) in Regulation Z. The final rules would replace the 43% debt-to-income (DTI) ratio limit with price-based thresholds (under the bureau’s general QM final rule), and create a new category of qualified mortgage (known as the seasoned QM final rule).
LINKS:
NASCUS Summary: LTCU 21-CU-01, Summary of the Consolidated Appropriations Act 2021 (members only)
NASCUS Summary: LTCU 21-CU-02, NCUA’s Supervisory Priorities (members only)
NASCUS Summary: Regulatory Alert 21-RA-01: CFPB Amends Ability-to-Repay/QM Rule under TILA (members only)
(Jan. 15, 2021) A final rule extending to Dec. 31, 2021 a temporary final rule on loan participations is the subject of the latest summary to be developed by NASCUS and posted on the association’s website.
The summary is available to members only.
At its Dec. 17 meeting, the NCUA Board approved (unanimously), an extension for a temporary final rule that increases the maximum aggregate amount of loan participations that a federally insured credit union (FICU) may purchase from a single originating lender without seeking a waiver from NCUA to the greater of $5 million or 200% of the FICU’s net worth (up from the greater of $5 million or 100% of the FICU’s net worth).
The rule had been slated to expire Dec. 31, 2020. The temporary rule, adopted by the NCUA Board as a relief measure for credit unions in the midst of the coronavirus crisis last spring, originally took effect April 21.
LINK:
Summary: Final rule, Temporary Regulatory Relief in Response to COVID-19 — Extension (members only)
(Jan. 8, 2021) Two new summaries – of an NCUA proposal on exemptions for suspicious activity reports (SARs) and exemption thresholds for consumer reporting requirements – have been published by NASCUS.
Both are available to members only.
Late last month, the NCUA Board proposed modifying requirements for federally insured credit unions to file SARs under Bank Secrecy Act (BSA) requirements that would exempt some credit unions which develop “innovative solutions” to meet BSA requirements, when requested.
In its proposal, NCUA suggested that innovative approaches and technological developments in the areas of SAR monitoring, investigation and filings may involve a variety of techniques, including automated form population, automated or limited investigation processes and enhanced monitoring processes
The agency said requests for exemptive relief pertaining to innovation or other matters may involve, among other things, for SARs: expanded investigations and timing issues, disclosures and sharing, continued filings for ongoing activity, outsourcing of responsibilities and practices, as well as the role of agents of FICUs, the use of shared utilities and shared data, and the use and sharing of de-identified data. “The NCUA expects that new technologies will continue to prompt additional innovative approaches related to SAR filing and monitoring,” the agency said.
However, NCUA added, any exemptions it grants would not relieve a credit union from its obligation to comply with Treasury’s Financial Crimes Enforcement Network (FinCEN) SARs regulations, where appropriate.
The second summary looks at a regulatory alert issued by NCUA, also late last month, on annual adjustments for exemption thresholds for 2021 under the Truth in Lending Act (Regulation Z) and the Consumer Leasing Act (Regulation M). The new thresholds (which took effect Jan. 1) are the same as the 2020 thresholds, specifically: for higher price mortgage loans exemption, $27,200; for consumer credit and consumer lease exemptions, $58,300.
LINKS:
NASCUS Summary: NCUA Proposed Rule BSA Part 748
(Dec. 11, 2020) Two new summaries were posted this week by NASCUS, outlining an NCUA final rule on corporate credit unions and an interagency proposal about codifying the use of “supervisory guidance” from federal agencies. Both are available to members only.
Corporate final rule clarifies provisions
The final rule on corporate credit unions, generally aimed at clarifying a number of provisions in NCUA’s rules, was adopted unanimously by the NCUA Board in October. The rule takes effect next week (Dec. 14), and addresses five key areas:
- permits a corporate credit union to make a minimal investment in a credit union service organization (CUSO) without the service organization being subjected to heightened agency oversight;
- expands the categories of senior staff positions at member credit unions eligible to serve on a corporate credit union’s board;
- removes the “experience and independence” requirement for a corporate CU’s enterprise risk management (ERM) expert;
- clarifies the definition of a collateralized debt obligation;
- simplifies the requirement for net interest income modeling.
Although the proposal did contain two provisions regarding proposed subordinated debt offerings by credit unions, the final rule leaves those out. NCUA decided to remove both of those provisions, noting that both sections would be addressed in a final rule on subordinated debt in the future. The agency added that it does not envision any changes to the proposed definition of a debt instrument included in the proposal.
‘Supervisory guidance’ would be codified
In late October, NCUA joined the federal banking agencies and the CFPB in proposing a rule (for a comment period ending Jan. 4) aimed at clarifying and codifying the role of supervisory guidance from federal financial institution regulators. Under the proposal, the meaning of “supervisory guidance” would be clarified as meaning, essentially, it doesn’t have the force of law. If finalized, the proposal would codify an interagency statement issued by all of the agencies in September 2018. That statement was intended to make clear that, unlike a statute or regulation, supervisory guidance is not the same as statute or regulation. “Supervisory guidance does not have the force and effect of law, and the agencies do not take enforcement actions based on supervisory guidance,” the 2018 statement read.
NCUA has maintained that the proposal will not create a burden for credit unions – partially because, the agency said, NCUA has followed the intent of the proposal for at least the last seven years. NCUA has noted that, at least since 2013, all “documents of resolution” for credit unions have been to specific statutory and regulatory citations – a practice, the agency has vowed, would not change under the proposed rule.
LINKS:
Summary: corporate rule (members only)
Summary: role of supervisory guidance (members only)
NCUA has issued “interim guidance” for credit unions interested in serving the legalized hemp industry. The guidance will be updated as needed as necessary regulations are issued by the United States Department of Agriculture (USDA) and others regarding the growth, processing, manufacture, and retail sale of hemp. The change in federal law results from the 2018 Farm Bill removing hemp from Schedule I of the Controlled Substances Act (signed into law on December 20, 2018).
NASCUS Legislative & Regulatory affairs staff summarized the alert and it can be found here.