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Lawmakers question CFPB on Aug. TILA-RESPA date

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WASHINGTON (3/31/15)--Why have compliance disclosure reforms gone into effect during what is traditionally the busiest month for home closings?

That's the question two key lawmakers asked the Consumer Financial Protection Bureau (CFPB) Monday regarding the bureau's Truth in Lending Act-Real Estate Settlement Procedures Act (TILA-RESPA) integrated disclosures rule, which is scheduled to be implemented Aug. 1.

CUNA has urged the CFPB to allow a lengthy implementation period for the TILA-RESPA rule due to the complexity of the issue.

Rep. Blaine Luetkemeyer (R-Mo.), chair of the House Financial Services subcommittee on housing and insurance, and Rep. Randy Neugebauer (R-Texas), chair of the House Financial Services subcommittee on financial institutions on consumer credit, expressed their concerns about such a major change taking place during peak homebuying season.

The legislators said that, since many homebuyers look to move into new houses before the start of the school year, 10 of the 25 busiest days for existing home closings in 2014 were in August. Conversely, 19 of the slowest days for home closings in 2014 were in January or February.

"We strongly encourage you to make the Aug. 1, 2015 to Dec. 31, 2015 timeframe a 'hold harmless' period of restrained enforcement and liability," the legislators wrote. "This would allow all parties to better understand the changes associated with [TILA-RESPA] and help ensure consumer confidence and stability in the nation's housing market."

CFPB Student Scorecard should focus on consumer benefits, CUNA says

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WASHINGTON (3/31/15)--CUNA supports the Consumer Financial Protection Bureau's (CFPB) plan to create a Safe Student Account Scorecard as a tool for colleges and universities to ensure that financial product offerings marketed to their students are "superior to those generally available," the trade association said in a March 30 comment letter to the bureau.

However, CUNA also said that the proposal could be improved if it included transparency to the students regarding the decision the educational institution ultimately reaches.

CUNA believes that student access to that information will help ensure "the educational institutions are in fact basing their selection on what is in the students' best interests and not on other factors, such as financial incentives."

CUNA also urged the bureau to clarify that the optional scorecard would be intended to assist educational institutions in choosing partners, and that the scorecard will not establish any minimum standards. The letter also questioned whether the information addressed in the CFPB's draft scorecard could be better delivered through bureau guidance.

House could consider relief bills in April: CUNA looks to work with Senate

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WASHINGTON (3/31/15)--Passage of nine CUNA-backed regulatory relief bills by the U.S. House Financial Services Committee last week is a good sign, but CUNA will be stepping up its advocacy efforts to get the bills onto the next step. Both the Senate and House are on spring recess this week and next.
"What we expect to happen next is when the House comes back in April they will take up these bills in some form or fashion, either individually or in some sort of package, I think that question remains to be determined," said Ryan Donovan, CUNA's chief advocacy officer. "We're encouraging the House to pass all of these bills quickly and get them over to the Senate so that we can work through that process as well."
The nine bills would provide a measure of regulatory relief to credit unions. Several, including the Helping Expand Lending Practices in Rural Communities Act (H.R. 1259), have companion pieces in the Senate.
Like its House companion, the Senate's version (S. 871) would direct the Consumer Financial Protection Bureau to establish an application process determining whether an area should be designated as a rural area if the CFPB has not designated it as one.
CUNA wrote to Sens. Mitch McConnell (R-Ky.), Rand Paul (R-Ky.), Dean Heller (R-Nev.) and Shelley Moore Capito (R-W.V.) Monday in support the bill. CUNA President/CEO Jim Nussle thanks the legislators for the bill and says CUNA looks forward to working with the legislators to secure its enactment.

CFPB should increase relief in 'rural' definition rule: CUNA

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WASHINGTON (3/31/15)--The Consumer Financial Protection Bureau's (CFPB) proposal regarding rural and underserved areas is a positive step, but CUNA urged the agency to take further regulatory relief steps, in a comment letter filed Monday.

The CFPB in January proposed a broader definition of "small" credit union and bank, as well as an expanded designation for what comprises a "rural" area.  If finalized, the proposal would, in part, increase the number of financial institutions able to offer certain types of mortgages in rural and underserved areas by exempting more small creditors from the CFPB's tough new mortgage rules.

CUNA generally supports the proposal, calling the bureau's overall approach "positive and appreciated."
However, CUNA offered a number of changes to make the proposal more favorable toward credit unions and other small servicers.
This includes providing favorable regulatory relief to creditors that manage their lending programs, in addition to the thresholds of asset size and loans originated. This could be achieved by considering the default rates on covered loans, CUNA suggests.
CUNA also recommends the small creditor thresholds, which can exempt institutions from certain requirements under Regulation Z (which implements the Truth in Lending Act), be analyzed. The new threshold proposed by the CFPB would raise the thresholds to 2,000 loans originated in a year, up from 500.
"Raising the limit is commendable but we encourage the agency to provide impact analyses that demonstrate how communities, consumers and creditors would be affected if the limit were raised to 2,500, 3,000, 3,500 or 4,000 as well as the proposed threshold of 2,000 so that stakeholders and the agency would have more informed comments regarding what the new limit should be," the letter reads.
The CFPB's proposal would not raise the asset limit for small creditors, which is currently set at $2 billion. CUNA believes the number is arbitrary and too low, and urges the bureau to consider raising the threshold to $10 billion.
CUNA supports most other aspects of the proposal, including:
  • Adding a grace period to the annual asset limit and original limit to allow a creditor that exceeds those limits to operate as a small creditor for loan applications received before April 1 of the current calendar year;
  • Expanding the definition of "rural" to include a county that meets the current definition of a rural county or a census block that is not in an urban area as defined by the U.S. Census Bureau; and
  • The inclusion of safe harbor provisions for creditors related to the use of CFPB tools to determine whether a property is located in rural or underserved areas and to determine if a property is located in an urban area.

FFIEC: Ways to ID, mitigate cyberattacks that use malware

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WASHINGTON (3/31/15)--Information on how financial institutions can identify and mitigate compromised user credentials and malware was released Monday by the U.S. Treasury's Federal Financial Institutions Examination Council (FFIEC).

According to the FFIEC, theft of credentials and the introduction of malware have often types of cyberattacks that have been increasing in severity and frequency over the past two years.
Compromised user credentials can be those of consumers, employees and third parties, and can be used to access secure systems or system credentials that could allow broader access.
The introduction of malware can come through downloading attachments, visiting compromised websites, connecting external devices such as USB drives or through the installation directly into a system by unauthorized parties with stolen credentials.
In accordance with FFIEC guidance, all financial institutions should:
  • Securely configure systems and services;
  • Review, update and test incident response and business continuity plans;
  • Conduct ongoing information security risk assessments;
  • Perform security monitoring, prevention and risk mitigation;
  • Protect against unauthorized access;
  • Implement and test controls around critical systems regularly;
  • Enhance information security awareness and training programs; and
  • Participate in industry information-sharing forums, such as the Financial Services Information Sharing and Analysis Center.
The FFIEC has also posted a number of resources online with information designed to strengthen user awareness of safe online practices.
According to the FFIEC, the statements released Monday do not contain new regulatory expectations--they are intended to alert financial institutions of specific risk mitigation tips.

CUNA's Hampel reminds Operation Comment can help with RBC2 letters

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WASHINGTON (3/31/15)--Bill Hampel, CUNA's chief policy officer, reminded credit unions on Monday that credit unions should let their thoughts and suggestions on the National Credit Union Administration's revised risk-based capital proposal (RBC2) be known. Less than a month remains before the April 27 comment deadline.

"It's very important for credit unions, now that they've had two months to consider the proposal, to weigh in with comment letters." Hampel said. "It is quite a bit improved from the first proposal, but we're not there yet."

CUNA posted a new RBC2 comment letter guide online last week. The guide includes the major areas credit unions should consider when commenting, CUNA's position on those issues and how to submit comment letters.

In addition to submitting comments through mail, fax, email, the NCUA's website and the federal eRulemaking portal, credit unions can use Power Comment , which will automatically format and send comment letters to the NCUA.

IRS to offer April 8 webinar on UBIT

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WASHINGTON (3/30/15)--The IRS has announced an April 8 webinar on unrelated business income tax (UBIT) and tax-exempt organizations.
The webinar, offered by the IRS's Tax Exemption & Government Entities Division, will provide information on:
  • UBIT;
  • Three parts test;
  • Common types of activities;
  • Exceptions and exclusions;
  • Principal form used to report; and,
  • IRS resources.
Presenters for the 2 p.m. (ET) session will be Steve Farson , tax law specialist, IRS Office of Exempt Organizations , and Al Page , tax law specialist, IRS Office of Exempt Organizations.

Those interested in participating can sign up here .

Also related to UBIT, the IRS issued a "new" memo to replace its 2014 memo on the same subject, but the new memo makes no changes in its listing of what products and services offered by state-chartered credit unions trigger UBIT. See the related item in Inside Washington.