On November 28, 2016, the Consumer Financial Protection Bureau (CFPB) published Bulletin 2016-03 (Bulletin), click here, warning financial services companies, including entities supervised by the CFPB, of the detrimental effect incentives for employees and service providers to meet sales and other business goals can have on consumers if these incentives are not properly managed and supervised. The Bulletin describes compliance management steps supervised entities should take to mitigate risks posed by incentives.
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Read articles below for analysis and discussion of recent trends by BM&G’s industry experts.
Texas Home Equity Lending Interpretations Amendments
In the November 18, 2016, issue of the Texas Register (41 TexReg 9106), the Finance Commission of Texas and the Texas Credit Union Commission (the “Commissions”) jointly adopted amendments to §§153.5, 153.8, 153.13, 153.14 and 153.17 of the Home Equity Lending Interpretations. These amendments are effective as of November 24, 2016. The Commissions adopted the amendments without change to the proposed text published in the July 22, 2016, issue of the Texas Register.
CFPB Supervisory Highlights, Fall 2016
In the November 22, 2016, Federal Register (81 FR 83811) the Consumer Financial Protection Bureau (CFPB) published the Fall 2016 edition of its Supervisory Highlights, click here, which reports CFPB examination findings assessing compliance with Federal consumer financial laws in the areas of automobile loan origination and servicing, debt collection, mortgage origination and servicing, student loan servicing, and fair lending for the May 2016 through August 2016 report period. This memorandum will focus on the examination findings for mortgage origination.
Uniform Interagency Consumer Compliance Rating System
In the November 14, 2016, Federal Register (81 FR 79473, click here) the Federal Financial Institutions Examination Council (FFIEC), on behalf of its members-the Board of Governors of the Federal Reserve System (FRB), the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the State Liaison Committee (SLC) (the Agencies)-published a revised Uniform Interagency Consumer Compliance Rating System (the CC Rating System), effective for consumer compliance examinations that begin on or after March 31, 2017.
Loans in Areas Having Special Flood Hazards—Private Flood Insurance
In the November 7, 2016, Federal Register (81 FR 78063, click here) the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation (FDIC), the Farm Credit Administration (FCA), and the National Credit Union Administration (NCUA) jointly issued a proposed rule to amend their regulations regarding loans in areas having special flood hazards to implement the private flood insurance provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters Act). Specifically, the proposed rule would require regulated lending institutions to accept policies that meet the statutory definition of private flood insurance in the Biggert-Waters Act and permit regulated lending institutions to accept flood insurance provided by private insurers that does not meet the statutory definition of private flood insurance on a discretionary basis, subject to certain restrictions.
CFPB Bulletin 2016-02, Service Providers
In the October 26, 2016, Federal Register (81 FR 74410, click here) the Consumer Financial Protection Bureau (CFPB) published Bulletin 2016-02 (Bulletin) that revises and replaces Bulletin 2012-03 regarding lenders’ accountability for violations of Federal consumer financial laws by their service providers (see firm website www.bmandg.com for April 18, 2012 firm memorandum on Bulletin 2012-03).
CFPB Releases updates to TRID Small Entity Compliance Guide and Guide to Loan Estimate and Closing Disclosure Forms
On October 12, 2016, the Consumer Financial Protection Bureau (“CFPB”) provided updated versions of the Know Before You Owe mortgage disclosure rule Small Entity Compliance Guide (“SECG”) and the Guide to Loan Estimate and Closing Disclosure Forms (“GTF”). The updates represent the fourth revisions to the Guides, which were originally published in April, 2014. According to the CFPB, the updated Guides incorporate guidance from existing webinars to add clarity on various topics. The updated Guides do not reflect the proposed amendments published by the CFPB on July 29, 2016, for which the public comment period expired on October 18th. Below are some of the highlights contained in the updated Guides:
Department of the Treasury Introduces Regulations Defining Terms Describing Marital Status Under the Internal Revenue Code
In the September 2, 2016 issue of the Federal Register (81 FR 60609) (click here), the United States Department of the Treasury (“Department”) announced the implementation of final regulations, effective September 2, 2016, defining terms in the Internal Revenue Code that describe the marital status of taxpayers for federal tax purposes. These regulations reflect the United States Supreme Court’s holdings in Obergefell v. Hodges, 135 S. Ct. 2584 (2015) (click here) and United States v. Windsor, 133 S. Ct. 2675 (2013) (click here) as well as the Department’s Revenue Ruling 2013-17 (click here). The language of these definitions is gender neutral and designed to apply equally to same-sex and opposite-sex couples. The Department’s objective was to clarify, for federal tax purposes, the federal law espoused in Obergefell and Windsor.
TRID Rule Proposed Amendments Published in Federal Register
In today’s Federal Register (81 FR 54318, click here) the CFPB published the proposed amendments to the integrated mortgage disclosure rules that became effective on October 3, 2015 (TRID Rule), which would: • Memorialize past informal guidance. Memorialize certain past informal guidance issued through webinar, compliance guide, or otherwise. • Create tolerances for the total of payments. Establish express tolerances for the total of payments to parallel the existing provisions regarding the tolerances for accuracy in calculating the finance charge and disclosures affected by the finance charge.
CFPB PROPOSED AMENDMENTS TO TRID RULES
On July 29, 2016, the CFPB published proposed amendments to the TRID Rules on its website and on August 15, 2016, the CFPB also published the proposed amendments in the Federal Register (81 FR 54318). For ease of reference, the proposed amendments along with the existing text deleted and the existing text not deleted are reproduced below in the following manner: proposed amendments;[existing text deleted]; and, existing text not deleted.