compliance monthly november 2014

compliance monthly
November 2014
Compliance Monthly is intended to keep you informed of regulatory changes in advance of their effective
date so your institution can have the necessary policies, procedures and processes in place to be compliant
at the time of enactment.
Finalized Rules:
CFpb Rule for Easing Privacy Notice
Requirements Now Effective
The CFPB finalized a rule to ease the annual privacy
notice requirement under the Gramm-Leach-Bliley
Act. The new rule, which was proposed in May 2014,
allows financial institutions that meet certain criteria
to post their annual privacy notices online rather
than delivering them individually. A bank may forgo
mailing the annual GLBA disclosure if the information
on it has not changed since the previous notice, if it
does not share the customer’s personal information
in a way that triggers GLBA opt-out rights, if it has
other channels for disclosures or opt-outs required by
the Fair Credit Reporting Act and if the bank uses the
federal agencies’ model privacy notice form. The
rule took effect October 28, 2014.
Agencies Finalize Credit Risk Retention
Rule
Federal regulators finalized the Dodd-Frank Act’s
mortgage risk retention rule, requiring the securitizer
of asset-backed securities to retain not less than 5
percent of the credit risk of the assets collateralizing
the asset-backed securities. The final rule applies
5 percent risk retention requirements only for nonqualified residential mortgages. All mortgages that
qualify for sale to Fannie Mae and Freddie Mac
will also be exempt from risk retention as long as
the GSEs are under federal conservatorship. The
final rule also does not require any retention for
securitizations of commercial loans, commercial
mortgages, or automobile loans if they meet specific
standards for high quality underwriting. The final rule
will be effective one year after publication in the
Federal Register for residential mortgage-backed
securitizations and two years after publication for all
other securitization types.
CFPB Modifies Current Mortgage Rules
The CFPB has finalized its April 2014 proposal to
make minor adjustments to its mortgage rules to
ensure continuing access to credit. The adjustments
include two changes that will help certain nonprofit
organizations continue to provide mortgage credit
and servicing to underserved populations. The
changes also lay out limited circumstances in which
lenders that exceed the Qualified Mortgage (QM)
points and fees cap can pay a refund of the excess
amount plus interest to consumers and still have
the loan be considered a QM. The changes will be
effective upon publication in the Federal Register.
Proposed Rules:
Flood Insurance Rules on Escrow,
Detached Structures Proposed
Federal regulators have approved a joint notice
of proposed rulemaking to amend regulations
pertaining to loans secured by property located in
special flood hazard areas. The proposed rule would
implement provisions of the Homeowner Flood
Insurance Affordability Act of 2014 (HFIAA), which
addressed affordability problems in the 2012 BiggertWaters flood insurance reform law.
The proposal would exempt detached structures
that are not used as a residence from a requirement
to be insured, protecting homeowners from steep
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Compliance Monthly
November 2014
insurance bills for storage sheds or garages. While this
provision was effective on enactment, the proposal
would formally include it in the agencies’ rules.
The proposed rule would require lending institutions
to escrow premiums and fees for flood insurance for
loans secured by residential improved real estate or
mobile homes that are made, increased, extended
or renewed on or after January 1, 2016 unless the
regulated lending institution or a loan qualifies for a
statutory exception. Lenders would be required to
offer existing customers an option to escrow starting in
January 2016 when the escrow requirements begin for
new and renewed loans.
The agencies plan to address, in a separate
rulemaking, provisions of Biggert-Waters on the
acceptability of non-NFIP policies and expectations
for lender-placed flood insurance. Comments are due
by December 29, 2014.
Defense Proposes to Expand Military
Lending Act Coverage
The Department of Defense (DoD) has announced a
proposal that would expand the scope of coverage
of the Military Lending Act of 2006 (MLA). The
proposal would extend MLA protections to any type
of credit covered by the Truth in Lending Act except
loans secured by real estate and purchase-money
loans. Comments are due by November 28, 2014.
TILA-RESPA Mortgage Disclosure
Changes
The CFPB has announced a proposal to modify
and make technical amendments to its TILA-RESPA
Integrated Disclosure rule. The first change would
give creditors one business day to issue a revised
version of the new Loan Estimate form after locking
in a customer’s interest rate, instead of the previous
same-day requirement. The second change would
add language to the Loan Estimate form informing
construction borrowers that they might receive a
revised Loan Estimate if their loan takes more than 60
days to settle. Various technical corrections are also
proposed. Comments are due by November 10, 2014.
Other Compliance News:
Updated Flood Insurance Manual
Available
FEMA has updated its NFIP Flood Insurance Manual
to reflect program changes that become effective
October 1, 2014.
CFPB Updates Mortgage Rules Readiness
Guide
The CFPB updated its mortgage rules readiness guide
to include the TILA-RESPA integrated mortgage
disclosures. The guide is intended to help bankers
assess their readiness to comply with the rules. The
TILA-RESPA integration takes effect in August 2015.
CFPB Issues Mortgage Servicing
Compliance Bulletin
The CFPB is issuing a compliance bulletin and policy
guidance entitled “Compliance Bulletin and Policy
Guidance--Mortgage Servicing Transfers” in light
of potential risks to consumers that may arise in
connection with transfers of residential mortgage
servicing rights. This will replace the bulletin on
mortgage servicing transfers issued in February.
FinCEN Issues Virtual Currency Rulings
FinCEN has issued administrative rulings on application
of its regulations to a virtual currency payment system
and a virtual currency trading platform. FinCEN was
asked 1) whether the convertible virtual currency
payment system a company intends to set up would
make the company a money transmitter under the
BSA; and 2) whether the convertible virtual currency
trading and booking platform that a company
intends to set up would make the company a money
transmitter under the BSA. FinCEN ruled the Company
would be a money transmitter in both scenarios.
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Compliance Monthly
November 2014
CFPB Issues Lists of Rural, Underserved
Counties for 2015
The CFPB released lists of rural or underserved counties
to use in 2015 in conjunction with the Ability-to-Repay,
escrow, HOEPA and appraisal rules. Rural counties
and county-level jurisdictions were generally defined
by using a U.S. Department of Agriculture classification
system and underserved counties were defined by
data collected under the Home Mortgage Disclosure
Act.
IRS Offers Additional FATCA
Clarification
The IRS provided additional clarification on the
treatment under the Foreign Account Tax Compliance
Act of accounts opened between July 1, 2014,
and January 1, 2015. According to the IRS, foreign
financial institutions, withholding agents and other
payers will be allowed to treat accounts opened
during that period as “preexisting” for the purposes of
FATCA’s new-account-opening procedures.
Copyright 2014 Accume Partners, All rights reserved.
Information contained in Compliance Monthly is not intended to
provide specific advice and guidance. You should consult your own
professional services provider in connection with matters affecting
your own interests.
accumepartners.com
Compliance Monthly
November 2014
about accume partners
For 20 years, Accume Partners has been providing the banking industry with internal audit, regulatory
compliance, technology risk management and enterprise risk management services. Through these key
areas of focus, Accume is able to stay in front of change, bring balanced perspectives and the specialized
knowledge demanded by today’s financial institutions. Accume professionals are former banking executives,
regulators, auditors, accountants, compliance officers and risk managers with extensive experience in the
pressing issues faced by the banking community. This experience, along with the insights gained from serving
clients every day, provides us with the basis for effective insights, thought leadership and practical solutions. To
learn more, please visit our website at accumepartners.com.
For more information, please call or e-mail any of these Accume Partners’ contacts:
Steven Peck
Managing Director, Compliance
267.664.1274
[email protected]
David Smith
Director, Compliance
570.606.7423
[email protected]
James Nemecek
Director, Compliance
215.565.6576
[email protected]
Mark Lindig
Chief Executive Officer
646.476.1961
[email protected]
Paul Nobbs
Managing Director, NJ Banking and
Financial Services
609.332.7132
[email protected]
Nicole Lloyd
Managing Director, Mid-Atlantic
717.903.3142
[email protected]
Glenn Hoffman
Managing Director, Technology Risk
Management
203.803.7345
[email protected]
K.D. Mehra
Managing Director, NY Banking
347.576.5652
[email protected]
Eric Holmquist
Managing Director, Enterprise Risk
Management
215.817.2107
[email protected]
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