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CLAconnect.com
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Regulatory Compliance Update
Justin Robinson
Managing Director
CliftonLarsonAllen
612-414-6590
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Agenda
•Compliance Management
•BSA
•Military Lending Act
•Real Estate Lending
•Fair Lending
•UDAAP
•CFPB Upcoming Agenda
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Compliance Management
• Key Components
– Oversight
– Program
– Complaints
– Compliance audit
• Program and management tone are vital
• Avoid appearance of compliance breakdowns
• Compliance review
• Complaint Management
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Complaint Management
• Drives compliance focus
• All complaints can be important
• Expectations greatly increasing
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Compliance Best Practices
• Compliance integration
• Management support
• Training
• Reviews
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BSA
• More in depth examinations
• Focus on program structure
– Due diligence
– MSBs
• New Developments:
– Due Diligence Rule
– CIP for Prepaid Cards
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BSA
• CIP for Certain Prepaid Cards
– Regulatory Interpretation:
◊ CIP on individuals purchasing Prepaid cards if:
• The card is reloadable, or
• The card has access to credit or overdraft features
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Military Lending Act (MLA)
• Compliance deadlines 2016 and 2017
• Covered borrower
– Member of armed forces ◊ Active duty
◊ Active guard
◊ Reserve duty
– Includes dependents of covered borrower
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Changes to MLA
• MAPR covers more types of loans
• MAPR includes more fees
• Additional Disclosures
• Arbitration prohibited
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Key Concerns of MLA
• Share secured loans
• Right to set-off
• Process for identifying covered borrowers
• Logistics of providing required notice
• Reliance on credit bureaus
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Real Estate Lending
• Mortgage regulations continue
– HMDA
– Servicing
– Amended TRID rules
• TRID issues
– Common violations
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Real Estate Lending
• HMDA
– Effective for loans originated January 1, 2018
– New data to be collected
– Now required ◊ Denial reasons
◊ Preapproval requests approved, but not accepted
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Real Estate Lending
• HMDA
– Must report HELOCs
– New filing method (beginning in 2019) ◊ Universal Loan Identifier
– In 2020, new threshold for filing quarterly ◊ 60,000 total applications reported in preceding calendar year
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Real Estate Lending
• Servicing
– Effective August 2017
– Applies to small servicers: ◊ Definition of Delinquency
◊ Forced Placed Insurance
◊ Successors in Interest
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Real Estate Lending
• TRID Amendments
– Tolerance clarification ◊ Service Provider List
◊ “Total Payments” section of CD
– Expand coverage for all cooperatives
– Expand post-consummation disclosures: ◊ Escrow cancellation
◊ Partial payment
– Mandate revised LE after rate lock
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Real Estate Lending
• TRID Common Violations
– Timing
– Technical
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TRID Timing Violations
• Loan Estimate delays
– 3 days after receiving an “application” ◊ “application” defined as the submission of the consumer's name,
the consumer's income, the consumer's social security number to obtain a credit report, the property address, an estimate of the value of the property, and the mortgage loan amount sought.
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TRID Timing Violations
• Revised LE and CD given on the same date
– “The creditor may not provide a revised Loan Estimate on or after the date the creditor provides the consumer with the Closing Disclosure.”
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TRID Technical Violations
• Title Fees
– Must be itemized.
– Must include “title”
– Must be alphabetized (this applies to all services)
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TRID Technical Violations
• Taxes and Insurance and Escrow Fields
– Refinances that do not indicate estimate T&I ◊ Even if there is no escrow, there should be an estimate of T&I
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TRID Technical Violations
• Written List of Service Providers
– Must include at least one example for every service listed on the LE that the applicant can shop for
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Fair Lending
• Still a focus for regulators
– NCUA more “offsite” Fair Lending reviews
• Real estate loan policies
• Indirect lending
• HMDA
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UDAAP: Unclear Expectations
• Strict compliance is not enough
• Examiners and Consumer scrutiny
• SUBJECTIVE!
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UDAAP
• Always remember the Four Ps
– Prominence
– Presentation
– Placement
– Proximity
• Review Third party relationships
• Footnotes in marketing and disclosures
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UDAAP Examples
• Recent Issues
– Inaccurate and sloppy credit reporting
– Credit card add-on products
– Overdraft programs
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UDAAP Violation Causes
• Complaints
• Complexity
• 3rd parties
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CFPB Rulemaking
• Spring 2016 Rulemaking Agenda:
– Debt protection
– Overdrafts
– Reg B data collection for commercial loans
– Arbitration agreements
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CFPB Rulemaking
• Debt Protection
– Looking to expand current FDPA ◊ Currently applies only to 3rd party debt collectors
◊ CFPB indicates similar restrictions would apply in collecting own debt
• Collecting correct debts
• Limit excessive or disruptive communications
• Make debt details clear and disputes easy
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CFPB Rulemaking
• Overdrafts
– Rules are coming
– We don’t have much clarity on what it will look like
– Potential changes: ◊ Fee limits
◊ More disclosures
◊ Additional opt-in requirements
◊ Strict monitoring requirements
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CFPB Rulemaking
• Regulation B Data Collection
– Potential new rules for commercial loan applications
– Require credit unions to collect certain data at application: ◊ Application number
◊ Date the application was received
◊ Type and purpose of loan
◊ Amount of credit applied for and approved
◊ Action taken and date
◊ The census tract of the principal place of business
◊ The gross annual revenue of the business
◊ The race, sex, and ethnicity of the principal owners of the business
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CFPB Rulemaking
• Arbitration Agreements
– Proposed rule aimed at restricting arbitration agreements ◊ Ban arbitration clauses that block class action lawsuits
◊ Submit arbitration claims filed and awards issued to the CFPB
◊ “The Bureau is also considering publishing the claims and awards on its website so the public can monitor them”
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Justin Robinson
• 612-414-6590