Regulatory Compliance Update March 2016

Regulatory Compliance Update

By: Hickman Beckner, Vice President

The month of January saw technical changes but little new regulatory activity.

IRS 1098 Changes:

Congress included an amendment to the Surface Transportation and Veterans Healthcare Choice Improvement Act addressing 1098 interest reporting.  The new reporting requirements are mandatory for 1098’s for tax year 2016 meaning the 1098 forms produced in January 2017.  The new requirements require the following new information on Form 1098:

  • Principal Balance of the Loan
  • Origination Date
  • Property Address or Description of the property if there is no address

Other Changes in Form 1098:

  • The form will be a new size to accommodate the new information.
  • Captions for boxes have been changed.
  • Box 2 (Points Paid) has been moved to Box 6.
  • Box 3 – Refund of overpaid Interest has been moved to Box 4.
  • New Box 5 – This will be used to report Mortgage Insurance Premiums.
  • New Box 10 – This will be used to report optional information.

Shaw Systems will be updating the 1098 Reporting for the new requirements.  The IRS sometimes revises the requirements during the year.  Shaw Systems will issue the annual IRS Update in November.

Credit Bureau Reporting Clarifications:

The Consumer Data Industry Association (CDIA) has updated the Credit Reporting Resource Guide which includes the Metro 2 format.  The changes are clarifications to the Guide.  Shaw Systems is reviewing the changes for any required changes in credit bureau reporting. 

Significant Dates:

March 22, 2016 – Comments due on interagency regulatory review regarding rules of procedure, safety and soundness, and securities.

July 1, 2016 – Effective date of the IRS’ temporary regulations that remove the automatic extension for filing W-2 forms.

September 23, 2016 – Effective date for Phase 1 of NACHA’s same day ACH processing. This only impacts ACH deposits to accounts. Loan payments will come in 2017.

October 3, 2016 – Mandatory compliance with Military Lending Act final rules. This does not require any processing changes in your loan system. It establishes (for the first time) a national usury ceiling for loans made to active duty military members and their immediate families. This also requires that if the borrower defaults all legal action must be brought in the state where the loan was made.

Emerging Issues

With the Martin Luther King, Jr. holiday and President’s Day holiday, there has been no new legislation affecting financial services.