2016 Regulatory Compliance Update – 2016 Year in Review and 2017

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REGULATORY COMPLIANCE UPDATE

PRESENTED BY:

JULIE GLIHA, MBA, CRCM, VP COMPLIANCE RONETTE SCHLATTER, CRCM, SENIOR COMPLIANCE ANALYST

MANDATORY COMPLIANCE DATES- 2016 RECAP AND 2017/2018 DATES Mandatory Compliance Date

Regulation, Final Rule Citation and Summary – Year in Review

1-1-2016

ANNUAL CARD ACT, HOEPA AND QM ADJUSTMENTS September 21, 2015 Federal Register: http://www.gpo.gov/fdsys/pkg/FR-2015-09-21/pdf/2015-22987.pdf Summary: The CFPB has published a final rule regarding various annual adjustments it is required to make under provisions of Regulation Z (TILA) that implement the CARD Act, HOEPA, and the ability to repay/qualified mortgage provisions of Dodd-Frank. The adjustments made by the final rule are effective January 1, 2016. For the IBA Annual Threshold Adjustment Chart, click here.

1-1-2016

REG. Z , REG. M AND IOWA CONSUMER CREDIT CODE INCREASE IN EXEMPTION THRESHOLD Reg. Z: November 27, 2015 Federal Register: http://www.gpo.gov/fdsys/pkg/FR-2015-11- 27/pdf/2015-30091.pdf Reg. M: November 27, 2017 Federal Register: http://www.gpo.gov/fdsys/pkg/FR-2015-11- 27/pdf/2015-30071.pdf Iowa Consumer Credit Code: Iowa House File 2324: http://coolice.legis.iowa.gov/CoolICE/default.asp?Category=BillInfo&Service=Billbook&menu=false&ga=85&hbill=HF2324 Summary: The annual adjustment to the exemption threshold above which non-real estate-secured consumer credit transactions are exempt from Reg. Z, Reg. M, and ICCC coverage remains unchanged from 2015 to 2016 at $54,600. For the IBA Annual Threshold Adjustment Chart, click here.

2016 Regulatory Compliance Update – 2016 Year in Review and 2017

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1-1-16

ANNUAL ASSET-SIZE ADJUSTMENT FOR HMDA REPORTING, TILA, AND CRA Summary: The Consumer Financial Protection Bureau has announced the 2016 annual adjustments to the asset size exemptions for :

HMDA - The HMDA asset-size exemption remains unchanged for 2016 at $44 million. As a result, these institutions with assets of $44 million or less as of December 31, 2015, are exempt from collecting HMDA data in 2016. December 23, 2015 Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2015-12-23/pdf/2015-32285.pdf

TILA - The asset-size adjustment under the TILA will decrease from $2.060 billion to $2.052 billion for 2016. As a result for 2016, these creditors with assets of less than $2.052 billion (including assets of certain affiliates) as of December 31, 2015, are eligible to make balloon payment and small creditor qualified mortgages and are exempt from the requirement to escrow for first-lien HPMLs, provided the other criteria are met. December 23, 2015 Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2015-12-23/pdf/2015-32293.pdf

The federal bank regulatory agencies announced the annual adjustment to the asset-size thresholds used to define small bank, small savings association, intermediate small bank, and intermediate small savings association under the Community Reinvestment Act (CRA) regulations.

"Small bank" or "small savings association" means an institution that, as of December 31 of either of the prior two calendar years, had assets of less than $1.216 billion.

"Intermediate small bank" or "intermediate small savings association" means a small institution with assets of at least $304 million as of December 31 of both of the prior two calendar years, and less than $1.216 billion as of December 31 of either of the prior two calendar years.

December 22, 2015 announcement: http://www.federalreserve.gov/newsevents/press/bcreg/20151222a.htm

1-1-16

REG. Z ANNUAL ADJUSTMENT TO HPML “SMALL LOAN” APPRAISAL EXEMPTION November 27, 2015 Federal Register: http://www.gpo.gov/fdsys/pkg/FR-2015-11-27/pdf/2015-30097.pdf Summary: The threshold for small loans that are exempt from the appraisal requirement for “higher priced mortgage loans” (HPMLs) remains unchanged for 2016: effective January 1, 2016 through December 31, 2016, HPMLs in the amount of $25,500 or less are not subject to Reg. Z’s HPML appraisal (with interior inspection) requirement.

2016 Regulatory Compliance Update – 2016 Year in Review and 2017

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1-1-16

IRS HEALTH SAVINGS ACCOUNT DEDUCTION LIMITS IRS Revenue Procedure 2015 – 30: http://www.irs.gov/pub/irs-drop/rp-15-30.pdf Summary: The IRS has released the 2016 inflation-adjusted HSA limits, which are updated annually to reflect cost-of-living adjustments. For calendar year 2016, the limits are:

Individual Maximum Contribution limit: $3,350

Family Maximum Contribution limit: $6,750

Individual Minimum Deductible: $1,300

Family Minimum Deductible: $2,600

Individual Annual out-of-pocket: $6,550

Family Annual out-of-pocket: $13,100

1-1-16

INTERAGENCY RULE IMPLEMENTING THE BIGGERT-WATERS REQUIREMENT TO ESCROW FOR FLOOD

INSURANCE PREMIUMS July 21, 2015 Federal Register: http://www.gpo.gov/fdsys/pkg/FR-2015-07-21/pdf/2015-15956.pdf Summary: As mandated by the Biggert-Waters Act, and modified by the § 25 of the Homeowners Flood Insurance Affordability Act, this rule requires lenders to escrow flood insurance premiums and fees for loans secured by residential improved real estate or mobile homes that are made, increased, extended or renewed on or after Jan. 1, 2016, unless the loan qualifies for a statutory exception. The statutory exemptions include extensions of credit primarily for business, commercial, or agricultural purposes; subordinate lien loans where a senior lien has sufficient flood insurance; condo loans when adequate insurance is held and paid for by the condo association; home equity lines of credit; and nonperforming loans that are 90 days or more past due. In addition, certain small lenders are exempt (those with total assets of less than $1 billion as of Dec. 31 of either of the two prior calendar years and that on or before July 6, 2012, was not required under Federal or State law to deposit taxes, insurance premiums or any other charges in an escrow account for the entire term of the loan AND did not have a policy of consistently and uniformly requiring escrow accounts.)

1-1-16

CHANGES TO DEFINITIONS OF SMALL CREDITOR AND RURAL AREAS UNDER TRUTH IN LENDING ACT October 2, 2015 Federal Register: http://www.gpo.gov/fdsys/pkg/FR-2015-10-02/pdf/2015-24362.pdf Summary: The Consumer Financial Protection Bureau’s (Bureau) final rule amending Regulation Z. The Rule revises the Regulation Z definitions of “small creditor” and “rural area,” and makes technical changes and clarifications to other sections of Regulation Z and the related commentary. The revised definitions will affect the availability of some special provisions and exemptions to Regulation Z’s Ability-to-Repay, high-cost mortgage, and higher-priced mortgage loan (HPML) escrow requirements.

2016 Regulatory Compliance Update – 2016 Year in Review and 2017

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1-1-16 (Extended 3-21-16 but backdated to 1-1-16)

FORECLOSURE PROTECTION FOR SERVICEMEMBERS EXTENDED HUD Notice: http://portal.hud.gov/hudportal/documents/huddoc?id=92070.pdf Summary: Congress voted on March 21st to renew a part of the Servicemembers Civil Relief Act that provides one-year foreclosure protection for military personnel leaving active duty through 2017. Servicemembers will continue to be protected from foreclosure for one year following the end of their service. The original extension – which expanded the standard 90-day foreclosure protection for military personnel – expired at the end of 2015. The newly extended protection took effect once signed by the president, and was retroactive to Jan. 1, 2016.

1-1-16 (Collected in 2016, reported in 2017)

CRA & HMDA RESOURCES UPDATED

The Consumer Financial Protection Bureau (CFPB) has updated and published its Home Mortgage Disclosure Act (HMDA) Filing Instructions Guide for data collected in 2016. The CFPB has also published a Technology Review and Frequently Asked Questions documents, which provide details regarding the changes. All CFPB resources for HMDA reporters can be found on this webpage.

Data Collected in 2016, Submitted in 2017 – There are no changes to the data collected or to the submission process for HMDA data collected in 2016. Institutions will file HMDA data with the Federal Reserve Board (FRB) using the FRB’s instructions, file specifications and edits.

The FFIEC Census Data Products (used for data collected in 2016 and submitted in 2017) have been updated, including the FFIEC Census Windows Application and FFIEC Online Census Data System (formerly FFIEC Census Reports). The 2016 FFIEC Geocoding System has also been updated with the 2016 Census demographic data. The FFIEC CRA resource page is found here and the HMDA resource page is found here.

1-20-16

VA RELEASES FAQ ON INTERIM FINAL QM RULE Final rule: http://www.benefits.va.gov/homeloans/documents/circulars/26_16_3_exhibita.pdf Summary: The Department of Veterans Affairs released a Frequently Asked Questions supplement to its Interim Final QM Rule issued May 9, 2014. The FAQ clarifies that pre-paid expenses such as real estate taxes and homeowners insurance are not counted when calculating the 36-month recoupment period for Interest Rate Reduction Refinance (IRRRL) loans. This FAQ comes in response questions raised from industry stakeholders.

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2-10-16

CFPB ISSUES TRID RULE CORRECTION February 10, 2016 Federal Register: https://www.federalregister.gov/articles/2016/02/10/2016-02630/2013-integrated-mortgage-disclosures-rule-under-the-rea Summary: On February 10, the Consumer Financial Protection Bureau (CFPB) published a notice of correction of supplementary information in the Federal Register to correct a typo regarding the application of tolerances to property insurance premiums, property taxes, homeowner’s association dues, condominium fees and cooperative fees in the TILA-RESPA Integrated Disclosure (TRID) final rule. The correction was effective as of the date of publication (February 10, 2016).

2-12-16 and 6-13-16

TELEMARKETERS BANNED FROM USING REMOTELY CREATED CHECK FTC Announcement: https://www.ftc.gov/news-events/press-releases/2015/11/ftc-amends-telemarketing-rule-ban-payment-methods-used-scammers Summary: The Federal Trade Commission (FTC) has finalized changes to its telemarketing sales rule (TSR) that will prohibit sellers and telemarketers from creating or accepting remotely created payment orders or checks, cash-to-cash money transfers, and cash reload mechanisms as payment in inbound and outbound telemarketing transactions. The new prohibitions will be effective June 13, 2016, while other TSR changes made by the final rule will be effective February 12, 2016. The final rule can be found in the December 14, 2015 Federal Register at https://www.gpo.gov/fdsys/pkg/FR-2015-12-14/pdf/2015-30761.pdf.

2-29-16

BANKS QUALIFYING FOR 18-MONTH EXAMINATION CYCLE EXPANDED February 29, 2016 Federal Register: https://www.federalregister.gov/articles/2016/02/29/2016-03877/expanded-examination-cycle-for-certain-small-insured-depository-institutions-and-us-branches-and Summary: The federal banking agencies have increased the number of small banks and savings associations eligible for an 18-month examination cycle rather than a 12-month cycle. Under the interim final rules, qualifying well-capitalized and well-managed banks and savings associations with less than $1 billion in total assets may now be eligible for an 18-month examination cycle. Previously, firms with less than $500 million in total assets could be eligible for the extended examination cycle. Regulators consider institutions to be well-capitalized and well-managed if they have a composite rating of 1 or 2 - the top ratings in the five-point scale indicating the safety and soundness of a bank or savings association.

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3-1-16

HMDA LAR FILING DEADLINE Summary: Sec. 203.5 of Reg. C requires by March 1 following the calendar year for which the loan data are compiled, a bank must send its complete loan application register to the Internet email address dedicated to that purpose by the Federal Reserve Board, which can be found on the website of the FFIEC.

3-1-16

CRA ANNUAL REPORTING DEADLINE Summary: Sec. 228.42(b) requires a bank, except a small bank or a bank that was a small bank during the prior calendar year, to report annually by March 1 to the Federal Reserve Board the following data for the prior calendar year: (1) Small business and small farm loan data; (2) Community development loan data; and (3) Home mortgage loans.

4-1-16

SMALL CREDITOR “RURAL” DESIGNATION EXPANDED March 3, 2016 Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-03-03/pdf/2016-04643.pdf Summary: The Consumer Financial Protection Bureau (CFPB) issued an interim final rule that broadens the availability of certain special provisions for small creditors that operate in rural or underserved areas. The interim final rule greatly expands the number of creditors that qualify to make small creditor balloon payment QMs. Under the revised rule, to originate QM with balloon payments and high-cost mortgages with balloon payments, a creditor must meet the current requirement for asset size and origination numbers plus have originated at least ONE consumer credit transaction secured by a first lien on a dwelling in a rural or underserved area in the preceding year.

4-29-16

NEW EXAM GUIDANCE ON MOBILE FINANCIAL SERVICES (APPENDIX E OF FFIEC EXAM HANDBOOK) Appendix E: FFIEC Examination Handbook: http://www.ffiec.gov/press/PDF/FFIEC_booklet_Appendix_E_Mobile_Financial_Services.PDF Summary: The Federal Financial Institutions Examination Council (FFIEC) issued a revised version of their Retail Payment Systems booklet that contains a new appendix, Appendix E: Mobile Financial Services. The appendix focuses on risks associated with mobile financial services and emphasizes an enterprise-wide risk management approach to the effective management and mitigation of those risks. It also discusses the technologies used in the mobile channel and may be helpful to the board and management for the integration of mobile financial services into an institution’s risk management program. Additionally, the appendix contains a set of work program objectives to help the examiner determine the inherent risk and adequacy of controls at an institution or third party providing mobile financial services.

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5-10-16

NEW FTC GUIDANCE ON FCRA EMPLOYEE SCREENING FTC Guidance: https://www.ftc.gov/tips-advice/business-center/guidance/what-employment-background-screening-companies-need-know-about Summary: The Federal Trade Commission (FTC) has issued new guidance for background screening companies that must comply with the Fair Credit Reporting Act (FCRA) when conducting background checks on current or prospective employees. The new guidance, issued May 10, 2016, is aimed specifically at background-screening companies but the guidance is of interest to any employer that engages a third party to conduct background checks on employees or applicants. The FTC has published other guidance on employers' duties in complying with the FCRA, including: Background Checks: What Employers Need to Know; Using Consumer Reports: What Employers Need to Know; The Fair Credit Reporting Act and Social Media: What Businesses Should Know; and more.

5-18-16

DEPOSIT ACCOUNT RECONCILIATION GUIDANCE Interagency Guidance Regarding Deposit Reconciliation Practices: https://www.fdic.gov/news/news/financial/2016/fil16035a.pdf Summary: The federal regulatory agencies issued guidance to ensure that financial institutions are aware of the Agencies' supervisory expectations regarding deposit-reconciliation practices that may be detrimental to customers. The guidance addresses a set of situations in which customers make deposits to accounts and the dollar amount that the financial institution credits to that account differs from the total of the items deposited. Such discrepancies may arise in a variety of situations, including inaccuracies on the deposit slip, encoding errors or poor image-capture. The result may be a detriment to the customer and a benefit to the financial institution if not appropriately reconciled. The Agencies expect financial institutions to adopt deposit-reconciliation policies and practices that are designed to avoid or reconcile discrepancies ensuring customers are not disadvantaged.

6-30-16

INTERAGENCY RULE IMPLEMENTING THE BIGGERT-WATERS REQUIREMENT TO PROVIDE NOTICE OF RIGHT

TO ESCROW FOR FLOOD INSURANCE PREMIUMS July 21, 2015 Federal Register: http://www.gpo.gov/fdsys/pkg/FR-2015-07-21/pdf/2015-15956.pdf Summary: Unless an institution qualifies as a “small lender” or the loan for one of the statutory loan exemptions, this provision requires lenders to provide borrowers of residential loans outstanding as of Jan. 1, 2016, the option to escrow flood insurance premiums and fees. Notice of this option must be sent to borrowers no later than June 30, 2016 (or Sept. 30 of the first calendar year in which the institution has had a change in status and no longer qualifies for the exemption).

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6-30-16

BROKERED DEPOSIT FAQ FIL-42-2016: https://www.fdic.gov/news/news/financial/2016/fil16042.html?source=govdelivery&utm_medium=email&utm_source=govdelivery Summary: The FDIC has finalized updates to its Frequently Asked Questions (FAQs) regarding identifying, accepting and reporting brokered deposits. In November 2015, the FDIC released for comment proposed updates to the FAQs that were originally issued in January 2015. After consideration of the comments received, the FDIC retained a majority of the proposed updates, with certain clarifications and new FAQs. The newly issued Financial Institution Letter 42-2016 supersedes FIL-2-2015 and FIL-51-2015.

7-1-16

FINAL RULE ON SMALL BANK DEPOSIT INSURANCE PREMIUMS FDIC Final Rule: https://www.fdic.gov/news/board/2016/2016-04-26_notice_dis_b_fr.pdf Summary: The Federal Deposit Insurance Corporation (FDIC) approved a final rule for assessing deposit insurance premiums on banks with under $10 billion in assets. Under the rule, assessment rates will be calculated using financial measures and supervisory ratings derived from a statistical model estimating the probability of failure over three years. The final rule eliminates the risk categories currently used for banks that do not have a rating of CAMELS I or II, and instead bases assessment rates for all banks on a standardized formula. The final rule will take effect beginning the quarter after the FDIC’s insurance fund reaches 1.15 percent, which was expected to occur (and did occur) in the

third quarter 2016.

7-11-16 Mandatory Compliance 5-11-18

FINAL CUSTOMER DUE DILIGENCE RULE May 11, 2016 Federal Register: http://s3.amazonaws.com/public-inspection.federalregister.gov/2016-10567.pdf Summary: In this final rule FinCEN outlines four key elements for customer due diligence which now includes Beneficial ownership identification and verification as a requirement. Beginning no later than May 11, 2018, a bank may comply with the requirement to identify and verify beneficial owners by collecting the information on a model Certification Form included with the rule in Appendix A or by collecting the same information using other means. A bank may rely on the information provided by the customer as long as “it has no knowledge of facts that would reasonably call into question the reliability of [the] information.” While CIP must be applied to beneficial owners, banks may rely on copies of documents that apply to the beneficial owners. In addition, the final rule added a new fifth pillar to the overall AML program requirements to explicitly include risk-based procedures for conducting ongoing customer due diligence, developing a customer risk profile and conducting ongoing monitoring.

2016 Regulatory Compliance Update – 2016 Year in Review and 2017

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7-25-16

CRA Q&A REVISED July 25, 2016 Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016- 07-25/pdf/2016-16693.pdf Summary: The federal bank regulatory agencies with responsibility for Community Reinvestment Act (CRA) rulemaking have published final revisions to "Interagency Questions and Answers Regarding Community Reinvestment.". In the Questions and Answers document, the agencies revised six existing Q&As and adopted three new ones addressing:

Availability and effectiveness of retail banking services. Innovative or flexible lending practices. Community development-related issues, including: (i) economic development; (ii) community

development loans and activities that revitalize or stabilize underserved nonmetropolitan middle-income geographies; and (iii) community development services.

Responsiveness and innovativeness of an institution's loans, qualified investments, and community development services.

8-1-16

REVISED EMPLOYMENT POSTERS Summary: The U.S. Department of Labor (DOL) has updated their mandatory posters which notify employees of their rights under the Fair Labor Standards Act (FLSA) and the Employee Polygraph Protection Act (EPPA). The new posters were effective August 1, 2016. To avoid possible penalties, banks should promptly update their federal labor law posters for the Fair Labor Standards Act and the Employee Polygraph Protection Act. The maximum penalty for poster violations has increased to $525. Copies of the revised FLSA and EPPA posters may be downloaded directly from the DOL’s website. Download the FLSA poster. Download the EPPA poster.

9-23-2016

NACHA SAME DAY ACH RULE – PHASE 1 NACHA Resource Center: https://resourcecenter.nacha.org/ Summary: Effective Sept. 1, ACH Originators will have the ability to send same-day ACH credit transactions to accounts held at any receiving depository financial institution (RDFI).

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10-3-16

MILITARY LENDING ACT July 22, 2015 Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2015- 07-22/pdf/2015-17480.pdf Summary: This Department of Defense final rule expands the current Military Lending Act rule which restricts the terms on certain consumer loans made to military personnel and their spouses and dependents. The final regulation significantly expands its application to include all consumer credit except for residential mortgages, purchase money loans, and loan not subject to Reg. Z. All banks, at a minimum, will have to determine the military status of applicants meeting the definition of “covered borrowers” for covered loans and provide certain disclosures. Covered loans must comply with the MLA including the MAPR threshold and contract term prohibitions. For more information and to access IBA tools relating to the MLA, click here. The federal banking agencies released their updated interagency examination procedures for the amended Military Lending Act rule. These can be found at https://www.occ.gov/news-issuances/bulletins/2016/bulletin-2016-33a.pdf

10-3-16

NACHA UNAUTHORIZED ENTRY FEE NACHA Rule Change: https://www.pnc.com/en/corporate-and-institutional/treasury-management/resources/nacha-rule-changes/nacha-2016-unauthorized-entry-fee.html Summary: In 2014 the NACHA membership approved a rule establishing an Unauthorized Entry Fee. Under this Rule, an ODFI will pay a fee to the RDFI for each ACH debit that the RDFI returns as unauthorized (i.e., a return that uses a return reason code of R05, R07, R10, R29 or R51). The amount of the Unauthorized Entry Fee initially will be $4.50 per unauthorized return. The new fee will become effective beginning with such return entries that have a Settlement Date of October 3, 2016. According to the Rule, this initial fee amount will be effective for three years, and then be re-evaluated for any potential adjustment. Fees charged to ODFIs and credited to RDFIs will be administered by the ACH Operators. ACH Rules subscribers will receive a supplemental notice regarding the fee.

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12-1-16

DOL FINAL OVERTIME RULE DOL Fact Sheet: https://www.dol.gov/WHD/overtime/final2016/overtime-factsheet.htm Summary: The Department of Labor issued its final rule doubling the salary level used to determine whether employees are exempt from overtime pay under the Fair Labor Standards Act. Starting on Dec. 1, the new salary level for exemptions will rise from $23,660 to $47,476, or $913 per week. The salary threshold will automatically update every three years, instead of annually as proposed. The salary level for highly compensated employees -- at which employers may conduct only a minimal duties test for exemption -- will rise from $100,000 to $134,000. Up to 10 percent of the standard salary level can come from non-discretionary bonuses, incentive payments and commissions, paid at least quarterly.

12-24-16

CREDIT RISK RETENTION RULE December 24, 2014 Federal Register http://www.gpo.gov/fdsys/pkg/FR-2014-12-24/pdf/2014-29256.pdf Summary: This joint final rule implements the credit risk retention requirements of section 15G of the SEC Act of 1934, as added by the Dodd-Frank Act. The rule was effective Feb. 23, 2015 but compliance was not mandatory until Dec. 24, 2015 with respect to asset-backed securities collateralized by residential mortgages and Dec. 24, 2016 with regard to all other classes of asset-backed securities.

1-1-17 (Data collected in 2017, submitted in 2018)

CRA & HMDA RESOURCES UPDATED Summary: The Consumer Financial Protection Bureau (CFPB) has updated and published its Home Mortgage Disclosure Act (HMDA) Filing Instructions Guide for data collected in 2017. The CFPB has also published a Technology Review and Frequently Asked Questions documents, which provide details regarding the changes. All CFPB resources for HMDA reporters can be found on this webpage.

Data Collected in 2017, Submitted in 2018 – There are no changes in the data, but there is a new data submission process beginning with HMDA data collected by financial institutions in or after 2017. Financial institutions will file HMDA data with CFPB using the HMDA Platform and all filers will be required to file electronically.

Beginning with the data collected in 2017 and reported in 2018, financial institutions will no longer be able to submit HMDA data without correcting or validating all edits. All syntactical and validity edits must be corrected and quality and macro quality edits must be corrected or validated before a filer can submit HMDA data to the CFPB.

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1-1-17

2016 LIST OF DISTRESSED/UNDERSERVED AREAS FFIEC CRA page: http://www.ffiec.gov/cra/distressed.htm Summary: The Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have provided the 2016 list of distressed or underserved nonmetropolitan middle-income geographies, where revitalization or stabilization activities will receive Community Reinvestment Act (CRA) consideration as community development. Distressed nonmetropolitan middle-income geographies and underserved nonmetropolitan middle-income geographies are designated by the agencies in accordance with their CRA regulations. Revitalization or stabilization activities in these geographies are eligible to receive CRA consideration as community development for 12 months after publication of the current list. The current and previous years' lists can be found on the FFIEC website here, along with information about the data sources used to generate those lists.

1-1-17

ANNUAL CARD ACT, HOEPA AND QM ADJUSTMENTS http://s3.amazonaws.com/files.consumerfinance.gov/f/documents/Truth_in_Lending_Comb_Reg_Z_Annual_Threshold_Adj_Final_Rule.pdf Summary: The CFPB has published a final rule regarding various annual adjustments it is required to make under provisions of Regulation Z (TILA) that implement the CARD Act, HOEPA, and the ability to repay/qualified mortgage provisions of Dodd-Frank as follows:

The HOEPA loan threshold will increase slightly to $20,579 (up from $20,350) and the fee trigger is will be $1,029.

The new loan amount and points and fees thresholds for Qualified Mortgages are as follows: Points and fees cannot exceed three percent for loan amounts greater than or equal to $102,894; $3,087 for loan amounts between $61,737 and $102,894; five percent for loan amounts between $61,737 and $20,579; $1,029 for a loan amount greater than or equal to $12,862 but less than $20,579 and eight percent for loan amounts of less than $12,862.

For credit cards, the penalty fee safe harbor for 2017 will remain at $27 for a first late payment and $38 for subsequent late payment safe harbor

3-1-17

HMDA LAR FILING DEADLINE Summary: Sec. 203.5 of Reg. C requires by March 1 following the calendar year for which the loan data are compiled, a bank must send its complete loan application register to the Internet email address dedicated to that purpose by the Federal Reserve Board, which can be found on the website of the FFIEC.

3-1-17

CRA ANNUAL REPORTING DEADLINE Summary: Sec. 228.42(b) requires a bank, except a small bank or a bank that was a small bank during the prior

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calendar year, to report annually by March 1 to the Federal Reserve Board the following data for the prior calendar year: (1) Small business and small farm loan data; (2) Community development loan data; and (3) Home mortgage loans.

10-19-17 Except Successor in Interest and Periodic Statements for Borrowers in Bankruptcy are effective 4-19-2018

REVISED MORTGAGE SERVICING RULES October 19, 2016 Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-10-19/pdf/2016-18901.pdf Summary: The Consumer Financial Protection Bureau issued a final revising many provisions within Reg. Z’s and Reg. X’s servicing rules, originally issued in 2014 as mandated by the Dodd-Frank Act. The key provisions of the rule include, among other things:

Successors In Interest – The revised rules makes several changes related to successors in interest. Generally, a person is a successor in interest if a borrower transfers an ownership interest in a property securing a mortgage loan to the person by transfer by devise, descent or operation of law. A person does not have to assume or otherwise be liable on the mortgage loan in order to be a successor in interest under the 2016 rule.

Definition of Delinquency - The revisions defines “delinquency” to mean a period of time during which a borrower and a borrower’s mortgage loan obligation are delinquent. It provides that a borrower and a borrower’s mortgage loan obligation are delinquent beginning on the date a periodic payment sufficient to cover principal, interest, and, if applicable, escrow, becomes due and unpaid, until such time as no periodic payment is due and unpaid. For more information on the definition of delinquency and how it applies, see the Factsheet on Delinquency and the 2016 Mortgage Servicing Rule.

Force-Placed Insurance - The revised rule amends the force-placed insurance disclosures and model forms to account for situations when a servicer wishes to force-place insurance because the borrower has insufficient, rather than expiring or expired, hazard insurance on the property.

Prompt Payment Crediting - The revisions clarify how servicers must treat periodic payments made by consumers who are performing under either temporary loss mitigation programs or permanent loan modifications. Periodic payments made pursuant to a permanent loan modification must be credited under the terms of the permanent loan agreement.

Revisions were also made to related to the rules involving requests for information, early intervention requirements with delinquent borrowers, loss mitigation requirements, periodic statement disclosure requirements relating to loans that have been accelerated, permanently modified or are in temporary loss mitigation as well as other technical corrections and clarifications.

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1-1-18

EXPANSION OF HMDA DATA COLLECTION October 15, 2015 Federal Register: https://www.federalregister.gov/articles/2015/10/28/2015-26607/home-mortgage-disclosure-regulation-c Summary: The Consumer Financial Protection Bureau (CFPB) final rule revising Regulation C (which implements the Home Mortgage Disclosure Act). The revisions were proposed in July 2014 due to a requirement in the Dodd-Frank Act. Most provisions of the final rule, which dramatically expands the number of data elements a lender must collect and report, become effective January 1, 2018, with the data being reported by March 1, 2019. The final rule requires lenders to report specifics on the property value, loan terms, the applicant's debt-to-income ratio, discount points charged on the loan, the duration of any teaser interest rates, as well as other required elements. It also requires lenders to provide information on other loans tied to a home, such as reverse mortgages and open-end lines of credit. For articles regarding the HMDA Data Collection expansion published in the DISCLOSURE beginning in July, click here.

1-1-18

CRA & HMDA RESOURCES UPDATED Summary: The Consumer Financial Protection Bureau (CFPB) has updated and published its Home Mortgage Disclosure Act (HMDA) Filing Instructions Guide –for data collected in 2018 and after. The CFPB has also published a Technology Review and Frequently Asked Questions documents, which provide details regarding the changes. All CFPB resources for HMDA reporters can be found on this webpage.

Data Collected in 2018, Submitted in 2019 – The data collected expands significantly per the 2015 HMDA Rule. The new data submission process that began with the 2017 data continues.

1-1-18

REVISED UNIFORM RESIDENTIAL LOAN APPLICATION September 29, 2016 Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-09-29/pdf/2016-23555.pdf Summary: The Consumer Financial Protection Bureau issued a notice to creditors that Fannie Mae’s redesigned Uniform Residential Loan Application (URLA) form -- while not required under the Equal Credit Opportunity Act and Regulation B -- is compliant with Reg B. The new URLA may be used starting Jan. 1, 2018. While its use is not required, it has been redesigned in part to reflect expanded Home Mortgage Disclosure Act data collections. Creditors who use the previous URLA will be required to use a supplemental form to comply with Regulation C. The CFPB indicated in their Sept. 29, 2016 notice that lenders may, at their option, permit borrowers or applicants to self-identify with disaggregated ethnic and racial categories starting in 2017, but noted that this collection is not mandatory until Jan. 1, 2018.

2016 Regulatory Compliance Update – 2016 Year in Review and 2017

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1-1-18 (Effective 6-7-16 with mandatory compliance by 1-1-18)

DEPARTMENT OF LABOR FIDUCIARY RULE April 8, 2016 Federal Register: http://webapps.dol.gov/FederalRegister/PdfDisplay.aspx?DocId=28806 The Department of Labor (DOL) changes to its regulation on fiduciary status (Fiduciary Rule or Rule), greatly expands the definition of an “investment advice” fiduciary for purposes of the ERISA and IRA prohibited transaction rules. In particular, a bank that provides “advice” in the course of marketing its retirement investment products and services, including IRA rollovers, may now be deemed a “fiduciary” under the Rule. If so, any compensation the bank receives as a result of such “advice” may be considered a “prohibited transaction” under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (Code) because the bank would be using its fiduciary advice role to cause itself to be paid additional fees. Absent an available exemption, the penalty could be to repay the fees, plus interest, plus an excise tax. Thus, for example, a bank’s receipt of compensation in connection with its advice to retail customers on IRA investments or IRA rollovers, or as a result of its routine marketing and sales practices in connection with these activities, may trigger prohibited transaction liability, unless the bank can rely on an exemption. A statutory exemption – Section 4975(d)(4) of the IRS Code – permits a bank to advise customers on IRA investments and on IRA rollovers, so long as the IRA is designed to invest exclusively in the bank’s deposits. Thus, provided the conditions of this exemption are met, a bank may reasonably rely on Section 4975(d)(4) to conduct its bank IRA CD program (or other IRA bank deposit program), including accepting rollovers into that program, without triggering prohibited transaction liability, and without triggering the applicability or requirements of the Fiduciary Rule or the related exemptions.

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PREPAID ACCOUNTS RULE October 5, 2016 CFPB website posting: http://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/prepaid-accounts-under-electronic-fund-transfer-act-regulation-e-and-truth-lending-act-regulation-z/ Summary: The Bureau of Consumer Financial Protection (Bureau) issued a final rule to create comprehensive consumer protections for prepaid accounts under Regulation E, which implements the Electronic Fund Transfer Act; Regulation Z, which implements the Truth in Lending Act; and the official interpretations to those regulations. The final rule modifies general Regulation E requirements to create tailored provisions governing disclosures, limited liability and error resolution, and periodic statements, and adds new requirements regarding the posting of account agreements. Additionally, the final rule regulates overdraft credit features that may be offered in conjunction with prepaid accounts. Subject to certain exceptions, such credit features will be covered under Regulation Z where the credit feature is offered by the prepaid account issuer, its affiliate, or its business partner and credit can be accessed in the course of a transaction conducted with a prepaid card.

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FINCEN CUSTOMER DUE DILIGENCE RULE Q&A FIN-2016-G003: https://www.fincen.gov/statutes_regs/guidance/pdf/FAQs_for_CDD_Final_Rule_(7_15_16).pdf Summary: To help bankers understand their obligations under the customer due diligence rule, FinCEN issued a Frequently Asked Questions (FAQ) document to provide clarity on the rule’s scope and application. The rule requires banks to collect information at account opening on beneficial owners – individuals who own more than 25 percent of the equity interests in a company or is the single individual who exercises control.