January 2019 Compliance Journal: Compliance Notes

The below article is the Compliance Notes section of the January 2019 Compliance Journal. The full issue may be viewed by clicking here.

Governor Tony Evers has appointed Kathy Blumenfeld as the new Secretary of the Department of Financial Institutions (DFI). In turn, Secretary Blumenfeld has appointed Cheryll Olson-Collins to Deputy Secretary, and Catherine Haberland to Assistant Deputy Secretary. DFI’s organizational structure may be viewed at: https://www.wdfi.org/this_is_dfi/organizational_chart.htm


The current government shutdown is the longest in our nation’s history, impacting businesses and consumers alike. Wisconsin’s banks have stepped up to the plate to help their customers weather this storm, just like during so many other community hardships. WBA is compiling a list of banks and the special products/services they are offering customers impacted by the shutdown. The list and further information may be viewed at: https://www.banconomics.com/articles/govt-shutdown-resources-wi-banks


In the most recent Fed360, FRB announced it has implemented a quality improvement initiative for Check Adjustments Services. The Federal Reserve Banks will charge a quality fee to depositing institutions for quality issues within work deposited with the Federal Reserve Banks. Additionally, the Federal Reserve Banks will charge a quality fee for cases submitted with incorrect or incomplete information that resulted in the prevention of automatic resolution of the request. These quality fees are designed to encourage greater efficiency through proper case submission and improved deposit practices. The announcement may be viewed at: https://www.frbservices.org/news/fed360/issues/011519/011519-check-adj-quality-initiative.html 


According to a report from The Hill, the Supreme Court refused to hear a case challenging the constitutionality of CFPB. The State National Bank of Big Spring, the Competitive Enterprise Institute and the 60 Plus Association had asked the justices to review the U.S. Court of Appeals for the District of Columbia Circuit’s decision to reject their challenge to the constitutionality of the CFPB’s structure as an “independent” agency. The District of Columbia Circuit’s decision to dismiss the case came after the court’s full panel of judges upheld the constitutionality of the agency’s structure in a separate case. 


FEMA announced it will allow operations of the National Flood Insurance Program (NFIP) to resume, even while the government remains partially shut down. The move was retroactive to Dec. 21, ultimately leaving no lapse in NFIP availability. Additionally, FRB, FCA, FDIC, and OCC issued a joint statement reminding banks that they can continue to make loans during periods when the NFIP administered by FEMA is unavailable. The statement, as well as a guidance issued in 2010 which is generally applicable whenever the NFIP is unavailable, may be viewed at: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20181228a.htm


FRB announced the designation of the Chairs and Deputy Chairs of the 12 Federal Reserve Banks for 2019. Each Reserve Bank has a nine-member board of directors. The Board of Governors in Washington appoints three of these directors and each year designates one of its appointees as Chair and a second as Deputy Chair. The designations may be viewed at: https://www.federalreserve.gov/newsevents/pressreleases/other20190109a.htm 


CFPB issued reports assessing the effectiveness of the Ability to Repay and Qualified Mortgage Rule and a separate report assessing the effectiveness of CFPB’s mortgage servicing rule issued under the Real Estate Settlement Procedures Act (RESPA). The assessment of the Ability to Repay and Qualified Mortgage Rule uses a range of data sources, including a unique data set CFPB assembled for purposes of this assessment, to comprehensively examine the extent to which the rule has affected consumers’ access to credit and the cost of credit. The assessment of the Servicing Rule likewise uses a range of data, again including a unique data set CFPB assembled, to thoroughly examine how the rule has affected the experiences and outcomes for consumers, with a particular focus on those who fall behind on their mortgage payments. The reports may be viewed at: https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-publishes-assessments-ability-repay-and-mortgage-servicing-rules/


FRB announced preliminary results indicating that the Reserve Banks provided for payments of approximately $65.4 billion of their estimated 2018 net income to the Treasury. The payments include two lump-sum payments totaling approximately $3.2 billion, necessary to reduce aggregate Reserve Bank capital surplus to $6.825 billion as required by the Bipartisan Budget Act of 2018 and the Economic Growth, Regulatory Relief, and Consumer Protection Act. The 2018 audited Reserve Bank financial statements are expected to be published in March and may include adjustments to these preliminary unaudited results. The preliminary results may be viewed at: https://www.federalreserve.gov/newsevents/pressreleases/other20190110a.htm


OCC issued a reminder of the revisions to its Community Reinvestment Act (CRA) regulations that became effective January 1, 2019. The revisions adjust the asset-size threshold amounts used to define “small bank,” “small savings association,” “intermediate small bank,” and “intermediate small savings association.” The rulemaking adjusts the threshold amounts based on the annual percentage change in a measure of the consumer price index. The reminder may be viewed at: https://www.occ.gov/news-issuances/bulletins/2019/bulletin-2019-1.html 


The December issue of the FDIC Consumer News has been published. This edition addresses the new year and consumers taking a look at their financial habits. The issue may be viewed at: https://www.fdic.gov/consumers/consumer/news/december2018.pdf


OCC announced its 2019 schedule of workshops for board directors and bank management of national community banks and federal savings associations. The OCC examiner-led workshops provide practical training and guidance to directors of national community banks and federal savings associations to support the safe and sound operation of community-based financial institutions. The schedule may be viewed at: https://occ.gov/about/who-we-are/occ-for-you/bankers/bankers-education/directors-workshop-schedule.html


CFPB announced final policy guidance describing the Home Mortgage Disclosure Act (HMDA) data the Bureau intends to make available to the public beginning in 2019, including modifications to protect consumers’ privacy. The guidance may be viewed at: https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/regulation-c-home-mortgage-disclosure-act/ 


OCC issued updates to the “Bank Premises and Equipment,” “Consigned Items and Other Customer Services,” and “Litigation and Other Legal Matters” booklets of the Comptroller’s Handbook. A summary of the updates and the updated booklets may be viewed at: https://www.occ.gov/news-issuances/bulletins/2018/bulletin-2018-49.html


On December 21, 2018, Congress passed a standalone bill to reauthorize the National Flood Insurance Program (NFIP) through May 31, 2019. The bill may be viewed at: https://www.congress.gov/bill/115th-congress/senate-bill/3628 


OCC updated the “Student Lending” booklet of the Comptroller’s Handbook to include information about Section 602 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, which amends the Fair Credit Reporting Act to give borrowers the opportunity to rehabilitate private education loans under certain conditions. The “Student Lending” booklet also contains other updates to clarify supervisory guidance, sound risk management, and regulatory requirements, as well as to update references due to new and rescinded OCC issuances. The booklet may be viewed at: https://www.occ.gov/publications/publications-by-type/comptrollers-handbook/student-lending/pub-ch-student-lending.pdf 


Growth in card payments has accelerated, according to new electronic payments data collected by FRB. Card payments increased 10.1 percent by number and 8.4 percent by value from 2016 to 2017, each larger than the increases of 7.8 percent by number and 6.3 percent by value from 2015 to 2016. Remote payments claimed a greater share of total general-purpose card transactions over the 2016 to 2017 period, and the number of in-person chip-authenticated card payments also posted substantial gains. Check payments and automated teller machine (ATM) withdrawals declined by number yet increased in value. The full report may be viewed at: https://www.federalreserve.gov/newsevents/pressreleases/files/2018-payment-systems-study-annual-supplement-20181220.pdf 


FHFA released its third quarter 2018 Foreclosure Prevention Report, which shows that Fannie Mae and Freddie Mac (the Enterprises) completed 63,193 foreclosure prevention actions in the third quarter of 2018, bringing the total number of foreclosure prevention actions to 4,242,774 since September 2008.  The report also shows that nearly 25 percent of loan modifications in the third quarter reduced borrowers’ monthly payments by more than 20 percent.  Additionally, the Enterprises’ serious delinquency rate dropped to 0.79 percent at the end of the third quarter. The report may be viewed at: https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FPR_3Q2018.pdf 


FRB, FDIC, and OCC issued a joint press release announcing they will allow a three-year regulatory capital phase-in for new Current Expected Credit Losses (CECL) accounting standard. The release may be viewed at: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20181221a.htm 


SEC announced its 2019 examination priorities. This year, particular emphasis will be on digital assets, cybersecurity, and matters of importance to retail investors, including fees, expenses, and conflicts of interest. The full announcement may be viewed at: https://www.sec.gov/news/press-release/2018-299


FSOC published its 2018 annual report. FSOC’s annual reports describe significant financial market and regulatory developments, potential emerging threats to U.S. financial stability, recommendations to promote U.S. financial stability, and the activities of FSOC, among other things. The report may be viewed at: https://home.treasury.gov/system/files/261/FSOC2018AnnualReport.pdf 


HUD announced the new FHA loan limits for 2019. In high-cost areas of the country, FHA’s loan limit ceiling will increase to $726,525 from $679,650. FHA will also increase its floor to $314,827 from $294,515. Additionally, the National Mortgage Limit for FHA-insured Home Equity Conversion Mortgages (HECMs), or reverse mortgages, will increase to $726,525 from $679,650. FHA’s current regulations implementing the National Housing Act’s HECM limits do not allow loan limits for reverse mortgages to vary by MSA or county; instead, the single limit applies to all mortgages regardless of where the property is located. The announcement may be viewed at: https://www.hud.gov/press/press_releases_media_advisories/HUD_No_18_145


FATF issued the December 2018 FATF Business Bulletin. The bulletin includes information of AML/CFT measures in the United Kingdom and Israel. The full bulletin may be viewed at: http://www.fatf-gafi.org/media/fatf/content/FATF-Business-Bulletin-December-2018.pdf


CFPB issued a report on the Financial Well-being of Older Americans. The report describes the distribution of financial well-being scores for adults ages 62 and older in the United States, and the relationship between financial well-being and age. The report shows that financial well-being generally increases with age, but declines again at later ages. The full report may be viewed at: https://www.consumerfinance.gov/data-research/research-reports/financial-well-being-older-americans/


The latest issue of the Consumer Compliance Outlook has been published and may be viewed at: https://consumercomplianceoutlook.org/

By, Ally Bates