Regulatory Compliance Update November 2019

Regulatory Compliance Update

By: Hickman Beckner, Senior Vice President

We have reviewed the Compliance News for October 2019. Congress is back in session. There have been changes announced for credit bureau reporting starting in 2021.

Federal Regulators (FRB, FDIC, OCC) – Published the final changes to rules requiring appraisals for real estate backed loans. The new rules are effective October 8, 2019.

  • General exemption – raised the threshold for residential real estate transactions that require an appraisal to $400,000.
  • Rural property exemption – a new exemption was added for rural property transactions. Appraisals on rural property are normally more expensive because of lack of comparable properties.
  • USPAP – appraisals must be reviewed for compliance with Uniform Standards of Professional Appraisal Practice as required by Dodd-Frank.

IRS – Has updated the file layouts for 1042-S reporting.

Withholding Agent “W” Record

  • No changes

Recipient “Q” Record

  • Withholding Occurred in a Subsequent Year for Partnership Interest (position 999).
  • Reserved – has been shortened to 11 positions.

Reconciliation “C” Record

  • No changes

End of Transmission “F” Record

  • No changes

Credit Bureau Reporting Guide – the CDIA has published changes to the Credit Reporting Resource Guide which include changes to Metro 2 Format. The changes become effective as of April 2021.

Exhibits [Section 5]

  • Exhibit 11 (Consumer Information Indicators)
  • The description of Code “H” has been modified to remove reference to completion of payments.
  • The description of Code “Q” has been modified to include withdrawn petitions and removes the previously reported Bankruptcy indicator (A through P and Z). CII Codes I through P and Z will become obsolete for reporting as of April 2012.

Frequently Asked Questions [Section 6]

 The Questions and Answers section has been updated with information regarding reporting of bankruptcy.

Please consult with your credit bureau reporting resources for information on the CDIA changes.

Significant Dates:

Payday Loans – A federal court in Austin, Texas has delayed the regulations until December 8 while the court reviews the rules. August 19, 2019 was the published effective date.

November 7, 2019 – Comments due on Federal Reserve’s plans to develop a new interbank faster payments system (“FedNow”).

December 2, 2019 – Effective date for NCUA’s final rule that provides federal credit unions with additional options to offer payday alternative loans.

December 3, 2019 – Comments due on the FFIEC proposed changes to the Bank Call Report.

December 16, 2019 – Comments due on interagency request to improve reporting of small business and small farm loans in the Bank Call Report.

December 16, 2019 – Comments due on Interagency Guidance on Credit Risk Review Systems.

December 16, 2019 – Comments due on Interagency Policy Statement on Allowance for Credit Losses.

Emerging Issues:

Keep Big Tech Out of Finance Act – Would prohibit large technology companies from offering digital currencies, prohibit large platform utilities from being affiliated with financial institutions, would allow for fines of up to $1MM per day for violations.

Illicit Cash Act – Would require shell companies to disclose their owners, would establish federal reporting requirements mandating that all ownership information be maintained in a comprehensive database and would put Financial Crimes Enforcement Network (FinCEN) employees on a pay scale comparable to other federal financial regulators. The Act would also require communication and cooperation among agencies that enforce anti-money laundering and countering financing of terrorists (AMF-CFT).

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