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On April 17, 2019, new CFPB Director, Kathleen Kraninger presenter her first public speech at the Bipartisan Policy Center.  In this speech, Director Kraninger outlined her agenda for the direction of the CFPB by explaining that she intends to utilize all available tools to prevent consumer harm including education, regulation, supervision, and enforcement.  The speech began by discussing how the CFPB hopes to…

When the guidelines for the detached structure exemption from flood insurance were first announced, many jumped for joy.  Over the years, many of customers and lenders alike have argued that flood insurance shouldn’t be required for certain detached structures, though flood insurance rules have traditionally required flood insurance for any collatoralized structure located in a high-risk flood zone, regardless of whether or not it was a residence, commercial building, or storage shed.  So, when the Homeowners Flood Insurance Affordability Act of 2014 provided for an exemption for flood insurance for certain detached structures, many were excited to quickly use the detached structure exemption to avoid flood insurance.

Unfortunately, many soon realized that the detached structure exemption couldn’t be used for every detached structure that was not a residence.  In addition, some ambiguity in the rules left many wondering which structures could actually qualify for the detached structure exemption. For example, one of the main questions we continue to see is this: Can detached structures on investment properties still qualify for the exemption from obtaining flood insurance?

The Certified Regulatory Compliance Manager (CRCM) certification is one of the most respected and well recognized certifications for a banking compliance professional.  This respect and recognition doesn’t come just because the CRCM is earned through the American Bankers Association (ABA) - or because many of the top compliance professionals and consultants have this certification.  The CRCM certification is a valued credential because of the difficulty to obtain the designation, meaning that not just anyone can obtain their CRCM.

To explain, the difficulty of the CRCM certification results from four main things: experience qualifications, knowledge of content, taking the actual test, and maintaining the certification.

On March 20, 2019, the Federal Trade Commission (FTC) announced that the FTC and CFPB provided their joint annual report to Congress regarding the agencies efforts to administer the Fair Debt Collection Practices Act.  This report is just one more indicator of the increasing focus of debt collection practices of financial institutions.

In this joint report the CFPB explained that it plans to provide a Notice of Proposed Rulemaking relating to debt collection practices sometime in the spring of 2019.

The bottom line is that debt collection practices continue to be an increasing hot topic with regulators.  Therefore, we will be including the annual report to Congress in our next Quarterly Compliance Update, which will be available for purchase later in April.

On March 12, 2019, the CFPB published their 2019 Winter Edition of Supervisory Highlights, which marks the eighteenth issue of this publication, and the first under Director Kathy Kraninger.

As has been the case with prior editions, this edition of the publication included five main sections including an introduction, supervisory observations, remedial actions, supervision program developments, and conclusion - and includes topics like automobile and mortgage servicing, deposits, and remittances.

On the first day of spring, the Federal Deposit Insurance Corporation (FDIC) today issued the Winter 2018 issue of Supervisory Insights, which includes a feature article examining the future of, and alternatives to, the London Inter-bank Offered Rate (LIBOR).

LIBOR is a popular reference rate for commercial loans, residential mortgages, derivatives and swaps, and other credit instruments.  While LIBOR often is viewed as a reference rate used by larger financial institutions, it is also important to smaller community banks and savings institutions.  Initiatives are underway that could transition financial markets away from the use of LIBOR as a reference rate after 2021. Therefore, financial institutions must plan for this potential change and the FDIC provides guidance in this article.

On March 29, 2019, the Consumer Financial Protection Bureau (CFPB) released the Home Mortgage Disclosure Act (HMDA) Modified Loan Application Registers (LARs).  This data was published for about 5,400 financial institutions and is the first year in which the “expanded data fields” - required by the 2015 HMDA rule - are available for public viewing, though some data has been modified for public viewing for privacy purposes.

The modified LAR data is required by statute to be available by March 31 of each year.  Prior to the implementation of the 2015 HMDA rule, financial institutions had to make their Modified LARs available to members of the public who requested them.  The 2015 rule, which became effective on 1/1/2018, eliminated this requirement.

On March 25, 2019, the OCC released Bulletin 2019-15 as a reminder to supervised banks that certain nonpublic OCC information generally cannot be disclosed.  In the bulletin, the OCC explains that reports of examination and other nonpublic OCC information are the property of the OCC. Except in very limited circumstances, a bank may not disclose this information without the prior written permission of the OCC. This prohibition applies to any portion of a report of examination, supervisory correspondence, and any representations concerning the report or supervisory correspondence, or their findings, including the assigned CAMELS rating. Any unauthorized disclosure or use of nonpublic information may be subject to criminal penalties.

On March 25, 2019, the CFPB announced the availability of the FFIEC 2019 HMDA Getting it Right (GIR) Guide.  Updated each year, the GIR guide is a valuable resource for assisting all institutions in their HMDA reporting. It includes a summary of responsibilities and requirements, directions for assembling the necessary tools, and instructions for reporting HMDA data.

The full GIR guide can be found at…

The 2019 edition is effective January 1, 2019, and applies to 2019 HMDA data that must be submitted by March 1, 2020.  This updated edition reflects amendments made to HMDA by the Economic Growth, Regulatory Relief, and Consumer Protection Act and the 2018 HMDA interpretive and procedural rule issued by the Consumer Financial Protection Bureau.

The rules surrounding RESPA Section 8 prohibitions against kickbacks and unearned fees have been around for decades.  These rules, however, seem to be easily forgotten and overlooked by lenders and Realtors alike. In fact, the regulators often tend to go through dry spells where they don’t issue any public enforcement actions relating to Section 8 violations, though it is doubtful that such violations don’t continue to occur.  The reality is that the RESPA Section 8 prohibitions still exist and the we have even seen some recent…