Compliance Update with Amy K
by Amy Kleinschmit
Chief Compliance Officer

HMDA. The Consumer Financial Protection Bureau (CFPB) recently announced that their Small Entity Compliance Guide on HMDA has been updated to reflect 2. 2155 changes. You can find this updated guide here.

CU Policy Pro. Updates have also been made to the CU Policy Pro model policies. This latest round includes 18 policy updates and 2 new policies: Policy 6300 – Charitable Donation Accounts; and Policy 7435 – Small Business Administration (SBA) Loans. 

If your credit union has adopted any of the following policies, be sure to update as appropriate.

Policy 1210 – Compensation, Reimbursement and Indemnification (recommended change). This policy was updated to provide clarification in the general policy statement that Board education and training costs are reimbursable expenses. This is intended to clarify that the cost associated with the reimbursement and coverage of those type of educational expenses are not considered compensation.

Policy 1240 – Enterprise Risk Management (ERM) (recommended change). The name of policy 1240 was changed to eliminate the “Enterprise-Wide” reference and provide consistency with industry references. Other changes were made, including the addition of a key field for the credit union to add their risk appetite statement.

Policy 1300 Audits (recommended change). Because of the strong emphasis on Information Technology, this policy has been updated to include the responsibility of the Board of Directors to obtain an annual Information Technology Audit and Assessment, along with the corresponding scope and responsibility. Additionally, the report was updated to reference “Audit Committee” for those state-chartered credit unions who are not required to have a “Supervisory Committee,” but have the same requirements and responsibilities.

Policy 2110 – Bank Secrecy Act / Anti-Money Laundering Program (recommended change). Although FinCEN issued a ruling to provide permanent exceptive relief from the beneficial ownership requirements for legal entity members for rollovers, renewals, modifications and extensions for certain accounts, we don’t believe any policy changes are necessary. However, credit unions should ensure their implementing procedures are updated accordingly. The BSA policy was updated to reflect changes to the address for CMIR filings and the corresponding date for FBAR filing.

Policy 2112 – BSA - Marijuana-Related Business and Policy 2113 – BSA – Not Servicing Marijuana-Related Business (recommended change). With the rescission of the Cole Memo Priorities, this policy was updated to reflect the FinCEN guidance outlined in FIN-2014-G001 which has not been retracted nor updated guidance for credit unions provided. Reference to compliance with the “Cole Memo Priorities” specifically has been removed.

Policy 2615 – ATM/Debit Cards (recommended change). Updated with language related to the opt-in process for overdrafts related to ATM and one-time debit card transactions. Language was also updated to provide clarity on error resolution and unauthorized transactions. Credit unions are encouraged to update their policy to also reflect Visa/MasterCard liability and error resolution requirements, as applicable, since the policy addresses only Regulation E requirements.

Policy 5110- ALCO Key Objectives (recommended change). This policy was revised to expand on the key objectives and update the guidelines to include a focus on optimizing return on equity.

Policy 6300 – Charitable Donation Accounts (NEW POLICY). This is a new policy created for federal credit unions that are creating charitable donation accounts. The requirements outlined in this policy are governed under NCUA Regulation 721.3(b)(2). Credit unions that maintain charitable donation accounts are required to have a written policy that is reviewed by the board of directors at least annually.

Policy 7210 – Credit Cards (required change). Each year the permissible fee thresholds for a safe harbor under Regulation Z are adjusted.  This year, the fees each increased by one dollar ($28 for the first late payment fee and $39 for each subsequent violation within the following six months).  These changes become effective on January 1, 2019.

Policy 7213 – Military Personnel Loans (recommended change). Added language to clarify the timing requirements for SCRA protections for reservists. It is now clarified that protections begin for reservists on the date orders are received, rather than the active duty date for other military personnel. As a result of the National Defense Authorization Act signed in to law on August 13, 2018, the policy was updated to add a safe harbor alternative for verifying active duty status, in lieu of waiting for the servicemember to provide documentation and evidence for a corresponding rate reduction of loans incurred prior to active duty status.

Policy 7215 Overdraft Protection (Courtesy Pay) (recommended change). Although not a requirement, this policy was revised to add “best practices.” Credit unions should consider their current overdraft practices and adopt corresponding language within their policy that is consistent with their overdraft program. 

Policy 7350 – Ability to Repay (required change). Revised to comply with the annual changes made to the points and fee thresholds to determine if a mortgage is considered a qualified mortgage under the rules, based on the Consumer Price Index. These changes become effective on January 1, 2019.

Policy 7351 – Small Creditor Ability to Repay (required change). Similar to Policy 7350, this policy was also revised to comply with the annual changes made to the points and fee thresholds based on the Consumer Price Index.

Policy 7370 – HOEPA Rule Requirement (required change). The thresholds for determining if a loan is covered under HOEPA were also adjusted for January 1, 2019 and these amounts were updated in the policy accordingly.

Policy 7435 – Small Business Administration (SBA) Loans (NEW POLICY - recommended). Because more credit unions are engaging in SBA lending programs, CU Policy Pro has created this model policy for consideration. Please note that, like all model policies, the credit union will need to amend this model policy based on their actual program. Additionally, the credit union will need to ensure that this policy aligns to their general lending policy and should build applicable procedures to support it.

Policy 9150 – Unfair, Deceptive, or Abusive Acts or Practices (recommended). Because of the constant scrutiny and subjectivity of the Unfair, Deceptive, or Abusive Acts or Practices Act, minor revisions to strengthen the policy were made.

Policy 9200 – Home Mortgage Disclosure Act – Regulation C (recommended). On August 31, 2018, the Bureau of Consumer Financial Protection (BCFP or CFPB) issued an interpretive and procedural rule to amend certain provisions of the Home Mortgage Disclosure Act (HMDA) impacted by the passage of S. 2155 (Economic Growth, Regulatory Relief, and Consumer Protection Act). The “interpretive and procedural rule” among a few other things, clarifies and reduces the amount of data points that credit unions will be required to report if they qualify for a partial exemption. This policy was updated to reflect the revised data points for credit unions to report if they qualify for the partial exemption under the rule.

Policy 9220 – Home Ownership and Equity Protection Act (required). Similar to the changes made to Policy 7370, this policy was also revised to adjust the thresholds for determining if a loan is covered under HOEPA, effective January 1, 2019.

Policy 10001 – Corporate Records. (recommended). Updated to clarify that the permanent record retention reference to “Credit Union Policies” was related to “Credit Union Insurance Policies,” which is identified in 749.1 as a vital record.


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


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