Regulatory Compliance Update September 2019

Regulatory Compliance Update

By: Hickman Beckner, Senior Vice President

We have reviewed the Compliance News for August 2019.  Congress has been in recess for the month of August.  The regulatory pace has slowed.

CFPB – Has updated the “safe harbor” maximum fee amounts that may be imposed on a cardholder for late payment, returned payment, over limit, declined transaction, inactivity and fees to close an account.  The maximum for the first violation is $29 and $40 for subsequent violations of the same type in the next 6 billing cycles.  The amounts are not a statutory maximum but are “guidelines” by the CFPB. The CFPB is required to adjust the amounts annually based on changes in the Consumer Price Index.

CFPB – Has adjusted the dollar amounts that are used as the points and fees trigger for coverage under the Home Ownership and Equity Protection Act (HOEPA).  The loan amount threshold is now $21,980.  The total points and fees threshold is $1,099.  These triggers are used in the origination process.

CFPB – Has adjusted the dollar amount for points and fees used in determining whether the loan is a qualified mortgage.  These triggers are used in the origination process.

IRS – Has plans to reactivate Form 1099-NEC for nonemployee compensation.

FTC – The Federal Trade Commission has issued a final rule requiring the national credit bureaus to provide free electronic credit monitoring to active duty military customers.  The credit bureaus must provide notices of any material additions or modifications in a consumer’s credit file and provide free access to all information in the file at time of notification.  The rules affect the credit bureaus.

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.

September 3, 2019 – Effective date for final changes in Regulation CC which covers availability of deposit funds. The changes extend Regulation CC to several US Territories.

September 18, 2019 – Comments due on CFPB’s proposed amendments to Regulation F which covers debt collection activities.  Extended from August 19, 2019.

September 20, 2019 – Effective date of NACHA’s rule changes for availability of same-day ACH transfers.

October 1, 2019 – Effective date of the FDIC final rules for recordkeeping for timely deposit insurance determination.

October 4, 2019 – Comments due on IRS reinstated for 1099-NEC (Nonemployee Compensation) that would take effect in tax year 2020.  Extended from September 30, 2019.

Emerging Issues:

The Senate stayed in session for three days after the House recess.  Senators took advantage of the extra days to introduce new legislation.

Payment Modernization Act – Would require the Federal Reserve to establish a real time payments system that would operate as a public utility that prioritizes security, consumer health and transparency.  The bill would also require that funds be made available to consumers for withdrawal in real time providing equal treatment for consumers and financial institutions.

ISA Student Protection Act – Would create a legal framework for Income Share Agreements (ISA) offered to students.  ISA’s are a form of student loans where a student agrees to pay a percentage of their income to repay the loan advance.

Credit Access and Inclusion Act – Would allow for reporting of certain positive consumer credit information to the credit bureaus.  The information would include performance under a lease agreement for a dwelling, utility and telecommunication payments.  The bill prohibits an energy-utility firm from reporting a consumer’s balance as late if the utility and consumer have entered into a payment plan agreement.

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