Regulatory Compliance Update July 2017

Regulatory Compliance Update

By: Hickman Beckner, Vice President

There was little regulatory activity in June. The Memorial Day Congressional recess and the healthcare debate has pushed financial regulatory issues to a lower priority. There is a significant change to HMDA Reporting issued by the CFPB that is discussed below.

The CFPB has greatly expanded the data collected for the Home Mortgage Disclosure Act reporting. This data is required for mortgage loan applications submitted starting January 1, of 2018. There are 74 new data elements added to the file. The data elements include the type of construction, address information, ethnicity and race of the borrower and co-applicants, age, credit scores, scoring model, and loan financial details. If your institution is using the HMDA Reporting from Commercial or Retail, please contact Shaw Systems for our release schedule.

Federal Reserve – The Federal Reserve Board (FRB) has published proposed changes to the regulations covering checks, substitute checks, and electronic checks that have been “altered”. The new rules define a check that has been “altered” as a change in the terms of a check after it was issued such as the payee’s name or the amount. In the case of an altered check the depository bank will bear the loss.

Significant Dates:

June 8, 2017 – Comments due on CFPB’s request for information about the consumer credit card market.

July 10, 2017 – Comments due on CFPB’s plan to determine the effectiveness of the new Mortgage Servicing regulations.

July 14, 2017 – Comments due on CFPB’s request for information on the small business lending market.

August 1, 2017 – Comments due on the Federal Reserve’s proposed new rules discussed above for altered checks.

September 15, 2017 – Effective date for Phase 2 of NACHA’s same day ACH Processing.

September 29, 2017 – Effective date for NACHA Operating Rules that require registration of third-party senders.

October 19, 2017 – Effective date for CFPB final mortgage servicing rules covering:
Definition of delinquency
Forced placed insurance notices
Early intervention for defaults
Loss mitigation
Prompt payment crediting
Wording changes on statements to reflect successors in interest
Small servicers

October 19, 2017 – Effective date for CFPB’s interpretive ruling dealing with borrowers in bankruptcy. The CFPB has created a “safe harbor” for sending statements to borrowers that have declared bankruptcy.

Emerging Legislation:

Military Consumer Enforcement Act – Gives the CFPB authority to oversee and enforce SCRA.

Transparency in Military Lending Act – This is an extension of the Military Lending Act that will require additional disclosures be provided to active service members when they apply for a loan.

Financial CHOICE Act – This is a far reaching act that has passed the House of Representatives. The act has the following goals:

End “Too Big To Fail” by repealing parts of Dodd-Frank and restrict access to the Federal Reserve’s Discount window for failing institutions.

Enhance penalties for fraud, self-dealing and deception.

Bring all federal regulatory agencies under Congressional oversight and appropriation process.

Require due-process reforms for any American who feels they are a victim of a government shakedown.

Allow financial institutions to elect to be strongly capitalized and exempt from the supervisory regime of Dodd-Frank and allow those institutions that would limit their ability to acquire or merge with another financial institution.

Repeal the Volcker for trading in an institutions own account, repeal the SEC’s authority to limit securities arbitration.

Restructure the CFPB as an executive branch agency, allow the President to remove the director, change the name of the agency, make the CFPB subject to Congressional oversight, repeal the Fiduciary Rule, and repeal the Unfair, Deceptive or Abusive Practices (UDAAP) authority.

This a very large and far-reaching proposal. Bills such as this typically do not get passed in their original form. We would expect the Senate to break this bill into numerous smaller bills and send new legislation back to the House for conference committee consideration.