Regulatory Compliance Update March 2018

Regulatory Compliance Update

By: Hickman Beckner, Senior Vice President

I have reviewed the Compliance News for February 2018.  Congress is back in session.  The administration has requested zero new funding for the CFPB.  The CFPB will use its reserve fund for its budget.  This has caused regulatory activity to slow down except for the implementation of existing regulations.

The Senate Congress has passed and sent to the House a law that would significantly change Dodd-Frank and would exempt all but the largest banks from some Dodd-Frank regulations.  The House will have changes, so the bill has not reached final form.

IRS – The IRS has issued new rule for implementation of the Budget Act that retro-actively extended the deduction for Mortgage Insurance Premiums through tax year 2017.

Lenders must report Mortgage Insurance Premiums received in 2017 in Box 5 of the 1098INT form.  If the lender has already furnished 1098INT statements to borrowers that did not include the Mortgage Insurance Premiums, the lender must furnish corrected statements by March 15.

The 1098INT statements produced Commercial included MIP in box 5.  This should not be an issue. Retail does not process Mortgage Protecting Insurance.

IRS Information Return Penalties – The IRS has published the 2018 inflation-adjusted penalty amounts for filing information and payee statements.

Corrected return filed within 30 days:

Per Return: $50

Maximum Total penalty: $547,000

Corrected return filed after 30 days:

Per Return: $100

Maximum Total penalty: $1,641,000

Corrected Return filed after August 1st

Per Return: $270

Maximum Total penalty: $3,282,500

Intentional Disregard of Filing Requirements:

Per Return: $540

Maximum Total penalty: Unlimited

Significant Dates:

March 16, 2018 – Effective date for Phase 3 of NACHA Same Day ACH Processing.

April 16, 2018 – Registration deadline for registered information systems for payday lenders, vehicle title lenders and other high cost consumer loans.

April 19, 2018 – Effective date for CFPB final changes in mortgage servicing requirements dealing with Successor In Interest and periodic statements for borrowers in bankruptcy.   This will impact both Retail and Commercial.

April 19, 2018 – Effective date for CFPB rules for Successors in Interest safe harbor for Fair Debit Collection Practices Act for actions taken to comply with the CFPB Mortgage Servicing Rules.

May 11, 2018 – Effective date for FinCEN’s Customer Due Diligence Requirements.

Emerging Legislation:

MOBILE Act – Passed by the House of Representatives

Would authorize a financial institution to record personal information from a scan, copy or image of a driver’s license or other personal identification and store the information electronically for compliance with the Patriot Act or other regulations.  The image would have to be deleted after use. This law would preempt state laws restricting scanning of driver’s license for identification.

Mortgage Choice Act – Passed by the House of Representatives

Would amend the definition of “points and fees” that is used to determine the classification of a loan as a high-cost mortgage” or “qualified mortgage”.  This would result in consistent treatment of points and fees under existing regulations.

Protecting Consumer’s Access to Credit – Passed by the House of Representatives

Would require that the rate of interest on certain loans remain unchanged after the transfer of a loan.  The Act would also clarify that a legally made bank loan may be resold and collected by a non-bank entity at the same interest rate.

Other Significant Events:

Congress Relaxing Restrictions with New Deregulation Bill

The Senate recently passed a bill that will ease banking rules for small and midsize banks. The bill seeks to cut red tape and relieve lenders from some of the most tedious rules put in place after the financial crisis. The Senate bill would raise the threshold for “systemically important” banks from $50 billion to $250 billion exempting all but the largest banks from stringent oversight.

The bill also exempts banks with less than $10 billion in assets from the “Volker Rule” which prohibits banks from securities transactions with federally guaranteed deposits.  Supporters say the bill will spur more lending and boost the economy. Opponents say it will bring back unnecessary risks to the nation’s financial system and potentially harm consumers.

House lawmakers are disappointed that the Senate bill doesn’t incorporate more bipartisan provisions already approved by the House. House speaker Paul Ryan has said that the bill wouldn’t leave his desk unless and until the Senate negotiates with the House. Adding to the Senate plan could upset the deal between Senate Republicans and the group of centrist Democrats who backed it. Senate aides have said making changes to the bill could delay final passage of it for weeks or months, or derail it altogether.


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