Continuing SAR Narrative: Referencing Prior SARs

Adam Witmer
BSA

One of the biggest challenges when writing the narrative for a Suspicious Activity Report (SAR) is to be able to balance writing in a way that someone reading the SAR can determine if additional action needs to take place and writing in a way that provides too many details.  This is especially true for a continuing SAR where the activity on the current SAR is consistent with activity that was included in prior SAR filings.  The concern is whether information that was included on a prior SAR should again be included in the narrative, or whether this information is considered redundant.  Fortunately for BSA Officers, FinCEN has provided some guidance as to what should be included in the narrative of a continuing SAR filing.

2018 HMDA Getting It Right Guide

Adam Witmer
HMDA, Regulatory Update

The FFIEC has finally released an updated HMDA Getting It Right Guide.  The FFIEC release the new guide today, which is the first revision of the guide since 2013.  The new version has been completely revised to reflect the HMDA changes from the 2015 final rule as well as the 2017 amendments that went into effect on January 1, 2018.  

No Risk-Based Pricing No Credit Score Disclosure

Adam Witmer
FCRA

Over the years, I have seen quite a bit of confusion relating to requirements under the Fair Credit Reporting Act (FCRA) when it comes to risk-based pricing.  One misunderstanding I have seen several times is that some believe a “credit score disclosure” is required for non-real estate applications, even if a financial institution does not set rates based on the risk (credit score) of the customer.  As I will explain below, this is not a correct understanding.

Fair Lending Risk - Disparate Impact

Adam Witmer
Fair Lending

Disparate impact is when a lender applies a racially or otherwise neutral policy or practice equally to all credit applicants, but the policy or practice disproportionately excludes or burdens certain persons on a prohibited basis.  In other words, a specific policy of your financial institution can not inadvertently discriminate.  

Fair Lending Risk - Comparative Evidence of Disparate Treatment

Adam Witmer
Fair Lending

Comparative evidence of disparate treatment occurs through an analysis of loan files where the result is that a protected class received less favorable terms than a control group.  When an auditor or examiner is looking for this type of discrimination, they will will conduct a test called a “comparative analysis.”  In simple terms, a comparative analysis is when you compare the “best” denials against the “worst” approvals in an attempt to find overlap.  In other terms, a comparative analysis looks at

Fair Lending Risk - Overt Evidence of Disparate Treatment

Adam Witmer
Fair Lending

Overt evidence of disparate treatment is the first type of discrimination recognized by the courts and probably the easiest one to identify in an organization.  This type of discrimination is defined as when a lender openly discriminates on a prohibited basis.  This means that a lender publicly makes a statement or publishes an advertisement that is a blatant statement of discrimination.  A simple example of this would be if...

Assessing Fair Lending Risk

Adam Witmer
Fair Lending, Compliance Management

Fair lending is one of the hottest topics in regulatory compliance.  As the dust has settled from TRID and the examiners haven’t quite focused their full efforts on the new HMDA rules, fair lending scrutiny is as intense as it ever has been.  In fact, it always has been a hot topic and will always be one.  One trend new trend that I have been seeing, however, is a demand for community banks and credit unions to conduct a fair lending risk assessment.  

CFPB Request on Supervision Process

Adam Witmer
Regulatory Update

On February 14, 2018, the CFPB issued a request for information on their supervision process.  In a statement, the CFBP stated that they are seeking comments and information from interested parties to assist in assessing the overall efficiency and effectiveness of its supervision program and whether any changes to the program would be appropriate.  This is the fourth such requests by...

TRID Product Type for Construction Loans

Adam Witmer
Regulation Z, TRID

Construction loans have proven to be anything but simple under TRID.  The CFPB gave very limited guidance for construction loans first came out and much of the guidance they have provided isn’t as clear as it should be.  For this reason, many financial institutions still seem to struggle with TRID disclosures for construction loans.  For example, disclosing the correct “Product” for a construction loans can

TRID Purpose on Construction Loans

Adam Witmer
TRID, Regulation Z

Construction loans under TRID have proven to be very challenging for many community banks and credit unions.  The reason for this is twofold: the CFPB did not provide much guidance in regards to construction loans and the guidance that they did provide is often found to be confusing.  For this reason, it is worth revisiting the TRID rules for construction loans every once in a while.  I recently received a question regarding the purpose field on the Loan Estimate (LE) as well as the Closing Disclosure (CD) for single-close, two phase construction loan where the land was

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