Regulatory Compliance Update
By: Hickman Beckner, Senior Vice President
Regulatory activity was slow in August. Congress was in its summer recess and August is a traditional month for vacations. The major regulatory activity in August were some technical adjustments by the CFPB and final rules for IRS reporting.
CFPB – The CFPB has issued their annual update for 2018 for safe harbor maximum fee amounts that can be charged for credit cards. The fees cover categories such as late fees, NSF fees, and over limit fees. The safe harbor amounts are adjusted annually by the CFPB under the Credit Card Act. These are not regulatory limits but if the financial institution complies with this amount, they are not subject to regulatory scrutiny.
First violation – $27
Subsequent violations in a 6-month period – $38
The CFPB revised the dollar limits for Home Ownership Equity Protection Act (“HOEPA”). These limits trigger additional required disclosures. These limits do not impact our systems.
Loan Amount – $21,032
Total Points and Fees – $1,052
The CFPB has adjusted the limits for determining if a loan is a “qualifying mortgage”. These limits also do not impact our systems. The limits are used to identify “higher priced mortgages.”
IRS – The IRS has issued the 2017 specifications for electronic filing of 1098’s and 1099’s.
Oklahoma (State Code “40”) has been added to the combined Federal/State filing Program.
Virginia (State Code “51”) has been dropped.
Transmitter “T” Record – the payment year has been incremented to “2017.”
Payer “A” Record – the payment year has been incremented to “2017.”
Payee “B” Record – the payment year has been incremented to “2017.”
Form 1098 – The Number of Mortgage Properties field has been added. This field is only used if the number of properties is greater than one. The valid values are 002 – 999.
Form 1099-C – The Identifiable Event Field has new codes – “H” for expiration of the non-payment period and “T” for discharge of debt.
Shaw Systems is currently implementing the IRS changes for delivery in the fall.
September 14, 2017 – Comments due on CFPB’s request for information on the small business lending market.
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
Prompt payment crediting
Wording changes on statements to reflect successors in interest
October 19, 2017 – Effective date for CFPB’s interpretive ruling dealing with borrowers in bankruptcy. The CFPB has created a “safe harbor” for sending statement to borrowers that have declared bankruptcy. Since the effective date falls in the middle of the week, the CFPB has announced that lenders and servicers may implement the rules up to three days earlier or Monday, October 16, 2017. The CFPB has also published the final rules for Reg. Z compliance for statements sent to confirmed successors in interest.
There have been a few bills introduced in Congress:
Expedited Funds Availability Act for American Samoa and Northern Mariana Islands – would apply the Expedited Funds availability provisions to non-contiguous states and territories.
Fix Credit Reporting Errors Act – Would require credit bureaus to forward documentation from a consumer to dispute errors and would permit the consumer to include documentation in their credit report to dispute erroneous information.
Protecting Consumer’s Access to Credit – Would require the rate of interest on certain sold loans (charge-offs) remain unchanged after transfer. This would prevent loan buyers from increasing the interest rate on the charged off loan they purchase.