Regulatory Compliance Update August 2019

Regulatory Compliance Update

By: Hickman Beckner, Senior Vice President

We have reviewed the Compliance News for July 2019.  The CFPB is seeking comments on revised Home Mortgage Disclosure Act rules and data.  The FDIC has published the final changes to the deposit insurance regulations for joint accounts. The banking regulators have issued the final changes for the small bank version of the Call Report. The IRS has published the updated regulations for 2019 Substitute Forms.

CFPB – Is asking for comments on changes to the scope of loans that must be reported and the additional data required for each loan for the Home Mortgage Disclosure Act (HMDA).

FDIC – Has published the final changes for its deposit insurance coverage of jointly-owned deposit accounts.

Banking Regulators (FDIC, OCC, FRB) – Issued the final regulations for banks with less than $5 billion in assets and who meet other qualifications.  The new regulations reduce the frequency of certain line items in the reports.

IRS – Issued the updated regulations for 2019 substitute forms.  These are the forms our customers produce in lieu of the official reporting forms.  There are no changes for tax year 2019.

Significant Dates:

August 19, 2019 – Published compliance date for CFPB’s final rule for payday loans.  The CFPB has postponed the sections of the regulations requiring underwriting for payday loans.  The remainder of the regulation will go into effect.

August 19, 2019 – Comments due on CFPB’s proposed amendments to Regulation F which covers debt collection activities.

August 21, 2019 – Effective date for FDIC rules covering joint deposit accounts.

September 3, 2019 – Effective date for final changes in Regulation CC which covers availability of deposit funds. The changes extend Regulation CC to several US Territories.

September 20, 2019 – Effective date of NACHA’s rule changes for availability of same-day ACH transfers.

September 30, 2019 – Comments due on IRS reinstated for 1099-NEC (Nonemployee Compensation) that would take effect in tax year 2020.

Emerging Issues:

As Congress approached the summer recess, many bills were submitted.     A large number of the bills focused on credit bureau reporting.  While many of the bills have passed the House Financial Services Committee there are many steps remaining before the bills become law.

Restricting Credit Checks for Employment Decisions Act – Would prohibit the use of consumer credit reports for employment decisions other than where required by other federal, state or local laws or if the report is used in connection with a national security investigation.  The bill has passed the House Financial Service Committee.

Free Credit Scores for Consumers – Would expand the information that consumers must be given with their credit score, would require that a free credit score be provided with the free annual credit report, would require free consumer credit reports and credit score be provided in proscribed circumstances. The bill has passed the House Financial Service Committee.

Improving Credit Reporting for All – Would impose new procedures for conducting reinvestigation of consumer disputes and would require the right for a consumer to appeal the results of the reinvestigation.  The Act would also require the credit bureaus to create a web page providing information on the consumers rights to dispute information, would require a minimum retention of records to substantiate the furnished information, would prohibit automatic renewals (and charges) for credit reports and credit scores and would require the credit scoring model to treat multiple inquiries for a credit report or credit score made for certain products to be considered as a single inquiry. The bill has passed the House Financial Service Committee.

Restoring Unfairly Impaired Credit and Protecting Consumer Act – Would shorten the time period during which adverse information can stay on a consumer credit report, would require expedited removal of fully paid or settled debt from a consumer report, would restrict reporting of medical debt, would require removal of  adverse information on a private student debt when the debt was found to be fraudulent, would allow victims of financial abuse to obtain a court order to remove adverse information and would prohibit the credit scoring model from reducing a consumer credit score because the consumer participated in certain credit rehabilitation programs or for the absence of reporting of the affected debt. The bill has passed the House Financial Service Committee.

Student Borrower Credit Improvement Act – Would prohibit a credit bureau from providing information related to a delinquent or defaulted private student loan if the borrower has made 9 on-time monthly payments within a 10-month period after the date of default or delinquency, would include hardship criteria for allowing a borrower to stop making consecutive monthly payments within the 10-month period, would prohibit the holder of a private student loan from bringing a civil action during the 10-month period, and would deem a credit report to be accurate where the holder of a private student debt furnishes standardized reporting codes (to be developed) in connection with loan rehabilitation.  The bill has passed the House Financial Service Committee.

Clarity in Credit Score Information Act – Would direct the CFPB to establish standards for the accuracy and predictive value of credit scoring models both before and every 2 years after their release.  Would direct the CFPB to conduct a study and issue a report to Congress on the impact of using the traditional scoring model or alternative techniques to analyze non-traditional data and including non-traditional data on credit reports for certain consumers such as those with minimal or no traditional credit data or those who are historically underserved.  The bill has passed the House Financial Service Committee.

Equal Employment for All Act – Would prohibit the use of credit bureau reports for adverse employment decisions.

Retirement Security and Savings Act – Would allow people who have saved too little to set aside more money for their retirement, would reduce the regulatory burden for small businesses to establish 401(k) plans for their employees, would expand government programs for lower income people to establish retirement savings plans and would ease the mandatory withdrawal requirements when the retiree rolls the 401(k) funds into a qualified annuity.

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