Regulatory Compliance Update December 2016

Regulatory Compliance Update

By: Hickman Beckner, Vice President

Congress was in recess for the elections. With the change in administration, there has been some regulatory activity.

New regulations were issued by the CFPB covering servicing for mortgages. The new rules impact Successors In Interest for property, periodic statements for borrowers in bankruptcy, forced placed hazard insurance, statements for loans that have been accelerated or are in temporary loss mitigation and periodic statements for loans that have been charged off. Shaw is currently working with our regulatory counsel and will issue updates to comply with the new rules.

The IRS has revised the rule for trigger events for 1099-C issuance. The “36-month rule” for issuing a 1099-C has been eliminated. Non-payment for 36 months no longer considered a “triggering event” for issuance of the 1099-C form to the defaulting.

Financial Crime Enforcement Network (FinCEN) published the final rules for non-regulated financial institutions for Customer Due Diligence also known as “know your customer.” The new rules mandate:

  • Verifying Customer Identification
  • Identifying the Beneficial Owner of an Account
  • Understanding the Customer Relationship
  • On-Going Monitoring of Customer Activity and Information

Consumer Financial Protection Bureau (CFPB) has updated thresholds for consumer loans, leases, and fees for credit reports:

The threshold for consumer leases covered by Regulation M has been reaffirmed. The threshold will remain at $54,600.

The threshold for consumer loans covered by Regulation Z has been reaffirmed. The threshold will remain at $54,600.

The charge for a consumer credit report will remain at $12.00. This does not apply to the free annual credit reports that are provided under the FACT Act. The fee applies to consumers who request a credit report in addition the free report.

Significant Dates:

January 6, 2017 – Comments due on the proposed rule that would implement private flood insurance provisions of Biggert-Waters Flood Insurance Reform Act. This Act allows private insurance in place of Federally-sponsored insurance.

January 17, 2017 – Comments due on proposed rulemaking for cyber risk management standards for large and interconnected financial institutions.

February 21, 2017 – Comments due for CFPB’s “Request for Information Regarding Consumer Access to Financial Records.”

Emerging Legislation:

The Senior Safe Act which creates a safe harbor for covered institutions and individuals who report the suspected exploitation of a senior citizen has passed the House and now moves to the Senate.

We are expecting a large number of bills to be submitted to lessen regulation or deregulate completely many areas of financial services. President-elect Trump and members of Congress have made public proposals to repeal or significantly modify Dodd-Frank. Dodd-Frank was a large and wide-ranging law that created many regulatory mandates. The largest impact was the creation of the Consumer Financial Protection Bureau. We do not expect that the CFPB will be abolished, but we do expect that its funding will be changed to bring it under the budgeting control of Congress. We also expect that the appointment of the director position will be changed. This will impact many of the rules enacted and proposed by the CFPB. The Dodd-Frank legislation required over 750 new rules to be issued by the regulatory agencies. The agencies did not issue all the rules required by the legislation and many of the rules that were issued may be rolled back or amended. The other major impact could be a reintroduction of Glass-Steagall which was partially repealed in 1999 and attempt to again separate commercial banking activities from investment banking activities. This will mostly affect securitization and syndication of loans.

Shaw Systems will continue to monitor legislative activities and report to you on the impacts.