Compliance Update with Amy K
by Amy Kleinschmit
Chief Compliance Officer

CFPB – Remittance Transfer

The Consumer Financial Protection Bureau (CFPB) has issued a final rule regarding remittance transfers which can be found here and is effective July 21, 2020.

The final rule adopts amendments to increase a safe harbor threshold in the Rule. The term “remittance transfer provider” is defined, in part, to mean any person that provides remittance transfers for a consumer in the normal course of its business. As originally adopted, the normal course of business safe harbor threshold stated that a person is deemed not to be providing remittance transfers for a consumer in the normal course of its business if the person provided 100 or fewer remittance transfers in the previous calendar year and provides 100 or fewer remittance transfers in the current calendar year. The CFPB’s final rule increases the normal course of business safe harbor threshold from 100 transfers annually to 500 transfers annually.

The CFPB also issued an executive summary and “unofficial” redline showing the changes this final rule made – these additional resources can be found here.


CFPB COVID-19 Updates

The CFPB recently issued a statement regarding billing error responsibilities of credit card issuers and other open-end non-home secured creditors during the COVID-19 pandemic.

FAQs were also issued relating to open-end (not home-secured) rules. These FAQs can be found here. These FAQs discuss changing account terms for open-end credit and notice requirements. The CFPB discusses ways creditors can engage with consumers to assist them during COVID.

Additionally, the CFPB issued FAQs regarding payment and deposit rules which can be found here. The FAQs discuss when notice is required for changing account terms, including reminding that changes favorable to the consumer do not require advance notice and may provide immediate relief. (Except Reg CC which requires notice when favorable changes are made but can be after the effective date). Finally, similar to above, the CFPB also discusses other means for checking, savings, or prepaid account providers to provide consumers with immediate relief.


FHFA & Payment Deferral Options

The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac are making available a new payment deferral option for homeowners in COVID-19 related forbearance. The payment deferral option allows borrowers, who are able to return to making their normal monthly mortgage payment, the ability to repay their missed payments at the time the home is sold, refinanced, or at maturity. Servicers will begin offering the payment deferral repayment option starting July 1, 2020.


New Fraud Prevention Resources for Elderly

The CFPB has developed new fraud prevention activity sheets for older Americans to help educate and protect them from scams.

These updates resources can be found here. 

As announced in their press release, “Over the last few years, we distributed more than 4 million of our placemats on topics including fake charity scams, grandparent scams, identity theft, and government imposter scams. We’ve now created letter-sized versions of these placemats that work beyond a group meal setting. A variety of organizations, including libraries, financial institutions, and senior centers, can share the activity sheets with their clients in English or in Spanish. The word game format helps drive home important scam prevention information.”


NCUA – Low-income designation & Military personnel

The National Credit Union Administration (NCUA) recently announced it is expanding its approach when considering military personnel in determining whether a credit union qualifies for the low-income designation, the agency announced today. NCUA’s new approach provides that military personnel will now be considered in a similar manner as students attending colleges, universities, vocational or technical schools when the NCUA evaluates a federally insured credit union’s low-income designation.


NCUA – CLF Agent Memberships

NCUA issued Letter to Credit Unions 20-CU-14 regarding the establishment of CLF Agent Memberships which can be found here. As noted in the letter, all eleven corporate credit unions have joined the CLF as agent members. This agent network is temporary and sunsets on December 31, 2020.

As agent members, the corporate credit unions have purchased the CLF capital stock for their member credit unions with assets less than $250 million. Therefore, all credit unions with assets less than $250 million that are members of a corporate credit union (covered credit unions) are now eligible to apply for a loan from the CLF. With this action, the corporate credit unions have extended CLF coverage to more than 3,700 credit unions and increased the CLF’s borrowing capacity by over $13 billion. If your credit union is covered by these new CLF agent members, you should work directly with your corporate credit union to request a CLF loan.


Interagency Guidance on Allowances for Credit Losses and Credit Risk Review Systems

The Interagency Policy Statement on Allowances for Credit Losses, which can be found here, was issued in response to changes to GAAP as promulgated by FASB. This interagency policy statement describes the measurement of expected credit losses under the current expected credit losses (CECL) methodology and the accounting for impairment on available-for-sale debt securities in accordance with FASB ASC Topic 326; the design, documentation, and validation of expected credit loss estimation processes, including the internal controls over these processes; the maintenance of appropriate ACLs; the responsibilities of boards of directors and management; and examiner reviews of ACLs.

Also issued was Interagency Guidance on Credit Risk Review Systems, which can be found here.  This guidance is relevant to all institutions supervised by the agencies, which includes the NCUA, and replaces Attachment 1 of the 2006 Interagency Policy Statement on the Allowance for Loan and Lease Losses. The final guidance discusses sound management of credit risk, a system of independent, ongoing credit review, and appropriate communication regarding the performance of the institution’s loan portfolio to its management and board of directors.


CU PolicyPro Update

Due to the rapid changes and interpretations to regulations related to COVID-19 and CU PolicyPro has done yet another round of updates to the policies.

Model Policy 7362: Temporary Policy for Loan Modifications and Reporting was originally published in mid-April to assist credit unions with the combined interagency guidance that has been issued related to loan modifications for borrowers, mortgage servicing, credit reporting, accounting treatment, etc. This policy has now been updated twice; once on April 22 due to additional relief measures being published and becoming effective on April 21, 2020, and again on 5/1/2020 to provide additional context regarding the Right of Rescission Rules and Changed Circumstance clarification under TRID. Additional information was also added regarding relief for written valuations under the Equal Credit Opportunity Act.

If your credit union is currently using or plans to use Model Policy 7362: Temporary Policy for Loan Modifications and Reporting, please be sure you are using the most current version dated 5/1/2020.

A new Model Policy, 7437: Main Street Lending, was created to assist credit unions who will be offering loans through the Main Street Lending Program administered by the Federal Reserve. Note: this policy was not included in the original update on 4/14/2020. The published date for this policy is 5/5/2020.

As much as we would like to say this will be the last of the revisions, there are likely to be additional updates to these and other policies in the near future as the regulations related to COVID-19 evolve. Check for all changes on the left sidebar of CU PolicyPro as they come in.

These policies are also included in the InfoSight content, along with other non-policy resources such as summary information, FAQs, links, and more. We encourage you to visit CU PolicyPro and InfoSight frequently to review any updates that have been published between newsletter communications. Note: InfoSight requires a separate password from CU PolicyPro.


As always, CUAD members may contact Amy Kleinschmit with any compliance related questions.

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