Regulatory Compliance Update July 2019

Regulatory Compliance Update

By: Hickman Beckner, Senior Vice President

We have reviewed the Compliance News for June 2019.  The IRS has issued new limits for Health Saving Accounts (HSA).  The FDIC has proposed changes for deposit insurance and the Consumer Data Industry Association (CDIA) has published an updated resource guide with includes changes to metro 2 reporting.  The banking regulators have released an updated list of host state of loan-to-deposit ratio that are used for compliance.

IRS – The IRS has announced 2020 inflation adjusted plan limit amounts for Health Savings Accounts (HSA’s).  These do not affect our systems.

FDIC – The FDIC has proposed changes in recordkeeping for timely deposit insurance determination.  These proposed regulations will not impact our systems.

Consumer Data Industry Association – The CDIA has published an updated Credit Reporting Resource Guide.  The significant changes are discussed below. Please review the Resource Guide for more detailed information.

Credit Reporting Guide Summarized Update

Industry Standards [Section 2]

Mortgage Lending – clarified codes “97” and “64” for charged off loans and added a new K4 segment for deferred payments.

Metro 2 Format – Clarified the description for Original Creditor Name.

Field Definitions [Section 4]

Clarified Scheduled Monthly Payment when a balloon payment is also due.

Clarified Date Closed when the loan is transferred.

Original Creditor Name has been clarified to include partner affiliates.

In addition, a footnote has been added:

  • The Affinity Name further identifies or provides linkage detail for the relationship of the original creditor to any connecting or supporting entities (e.g., ABC BANK THE HOME STORE).
  • Clarified the K4 segment definition that either the “Deferred Payment Start Date” or the “Balloon Payment Due Date” must be known when reporting the K4 Segment. If neither of these dates is known, then the K4 Segment should not be reported.

Exhibits [Section 5]

  • Exhibit 6 added special comments for leases – “BJ” (involuntary Repossession/Obligation Satisfied) and deleted “96” (repossession.
  • Exhibit 7 (Special Comment Codes) added special comments for leases – “BJ” (involuntary Repossession/Obligation Satisfied) and deleted “96” (repossession.)
  • Exhibit 8 (Compliance Condition Codes) Added “Note:” has been added which says that the “Date Closed” field should be reported as the date the account was closed to further purchases. This applies to the following Compliance Condition Codes:
  • Code “XA” (Account Closed At Consumer’s Request)
  • Code “XD” (Account Closed At Consumer’s Request – Account Information Disputed By The Consumer Directly To The Data Furnisher Under The FCRA; The Data Furnisher Is Conducting Its Investigation)
  • Code “XE” (Account Closed At Consumer’s Request – Data Furnisher Has Completed Its Investigation; Consumer Disagrees With The Results Of The Investigation)
  • Code “XJ” (Account Closed At Consumer’s Request – Account Information Disputed By The Consumer Under FCBA; The Data Furnisher Is Conducting Its Investigation.)

Frequently Asked Questions & Answers (Q&As) [Section 6]

  • General – the following verbiage has been added at the beginning:

Please note that within these reporting guidelines, certain fields are mentioned that provide specific guidance for the situations described. For all other Metro 2 fields, the standard guidelines described within the Field Definitions module should be followed.

  • Modified Q&A #44 How should deferred loans be reported? – under “Payment History Profile,” the following clarifying note has been added:

Note: When an account goes into deferment, do not change the previously reported account history in the Payment History Profile.

Date of Account Information = date the account was transferred. If the account is reported in subsequent reporting periods, freeze the Date of Account Information as of the date the account was transferred.

Date Closed – the following verbiage has been added:

If the account was closed prior to being transferred, report the original date the account was closed.

  • Modified Q&A #47 How should accounts that have been sold to another company be reported? – under reporting Option #1, the following change has been made:
  • Date Of Account Information – new guidance has been added that reads as follows:

Date of Account Information = date the account was sold. If the account is reported in subsequent reporting periods, freeze the Date of Account Information as of the date the account was sold.

Glossary Of Terms [Section 7]

The following new glossary entry has been added:

  • Affinity Name

Use the following guidelines to report accounts that are updated by the data furnisher more than one time during a given monthly reporting period:

  • Date of Account Information = most recent date of update
  • Account Status Code = new code that applies to the most recent update
  • Payment History Profile = Freeze the PHP as it was reported in the first update of the monthly reporting period. In subsequent reporting periods, the PHP should be updated/incremented normally.

Banking Regulators – The FDIC, FRB and OCC have released an updated list of loan-to-deposit ratios for each state.  These ratios are used to determine if a branch outside the home state of a bank is being used for the primary purpose of deposit production (which is prohibited by law).

Significant Dates:

July 1, 2019 – Effective date of interagency final rule that implements private flood insurance provisions of the Biggert-Waters Flood Insurance Reform Act of 2012.

July 1, 2019 – Comments due on CFPB’s planned review of overdraft requirements of Regulation E.

July 1, 2019 – Effective date of the Office of the Comptroller of the Currency (OCC) that permits federal savings associations with total assets of $20 billion or less to elect to operate with national bank powers.

July 8, 2019 – Comments due on the CFPB’s request for information on Regulation C (Home Mortgage Disclosure Act).

July 12, 2019 – Comments due on CFPB’s proposed changes to Regulation C that would address the reporting threshold for closed-end loans, the reporting threshold for lines of credit and incorporating previously issued interpretations and procedures into the regulation.

Emerging Issues:

Congress is scheduled to observe the traditional summer recess starting August 2, 2019.  Both houses will reconvene on September 9, 2019.

Corporate Transparency Act – Would require corporations and limited liability companies to disclose their true beneficial owners when formed, would establish minimum beneficial ownership disclosure rules, would require annual filings of the current beneficial owners and would provide for civil and criminal penalties for false submissions. The Act passed the House Financial Service Committee.

TRACED Act – Would require voice service providers to authenticate and block illegal robocalls, would direct the Federal Communications Commission to write rules regarding when voice calls can be blocked and an appeals process for parties affected by the blocking rules.  Would require the FCC to write rules to protect subscribers from unwanted calls or texts from callers using unauthenticated numbers.

SECURE Act – Would prohibit retirement plans from making loans available through credit cards or debit cards. Would permit penalty-free withdrawals up to $5,000 for expenses related to the birth or adoption of a child.  Would change the beginning date for Required Minimum Distributions for 70 ½ to 72.   Would require additional disclosures of the monthly income that would be produced by a single life annuity and a joint and surviving spouse annuity.

Disaster Tax Relief Act – Would permit victims in a federal disaster area to withdraw up to $100,000 from their retirement account without the 10% early withdrawal penalty.

Legacy IRA Act – Would expand the IRA charitable rollover to $400,000 for an annuity held by a charity.

National Flood Insurance Program Extension Act – Extended the National Flood Insurance Program through June 14, 2019.  This Act was passed and signed into law.

Additional Supplemental Appropriations Act – Provided aid for victims of natural disasters and extended the National Flood Insurance Program through September 30, 2019.

Blog Sign Up Form