Agencies Release New Appraisal FAQs

Adam Witmer
Regulatory Update

On October 16, 2018, the OCC, Federal Reserve, and FDIC published new FAQs regarding appraisals and evaluations for real estate transactions.  These FAQs clarify existing regulatory requirements and guidance that is found in two previous issuances:the 2010 Interagency Appraisal and Evaluation Guidelines and the 2016 Interagency Advisory on Use of Evaluations in Real Estate-Related Financial Transactions.

OCC Updates Three Booklets

Adam Witmer
Regulatory Update

On October 15, 2018, the OCC issued a Bulletin (2018-38) announcing the updating of three booklets: “Agricultural Lending,” “Oil and Gas Exploration and Production Lending,” and “Trade Finance and Services.”  These booklets are part of the Comptroller’s Handbook and are used by examiners for their supervision and examinations of these areas.

Reducing a Lender Credit Due to a Changed Circumstance

Adam Witmer
TRID, Regulation Z

True or False: Lender credits should never decrease.

Well, the TRID best practice over the years has said that once a lender credit is listed on the LE, it should never decrease.  This philosophy seems to align with that of the CFPB who views a decrease of a lender credit to be the equivalent of an increase of a fee.  In fact, the preamble to the final TRID rule states that “lenders are not permitted to reduce the lender credits they provided to the borrower under current Regulation X.”

So, this means that a lender credit should never be reduced, right?  Well, not exactly.

Flood Insurance for a Building with No Value

Flood Insurance for a Building with No Value

Adam Witmer
Flood

Is flood insurance required for an old dilapidated building that has no value to either the owner or lender? Adam uses this Compliance Clip (video) to answer this question and provide the regulatory guidance used to support his answer. As flood insurance penalties are easily assessed for even just a few violations, financial institutions need to ensure they don't get washed out with rogue lenders not following the rules. Oh yeah, there might even be a flood pun or two in this video.

Interagency Statement on Sharing of BSA/AML Resources Among Financial Insittutions

Adam Witmer
Regulatory Update, BSA, Compliance Management

On October 3, 2018, the main federal regulators, along with FinCEN, released a statement regarding instances in which banks and credit unions may decide to enter into collaborative arrangements to share resources to manage their Bank Secrecy Act (BSA) and anti-money laundering (AML) obligations more efficiently and effectively.  While this guidance may not be beneficial for a majority of financial institutions, this may be beneficial for very small institutions with a low-risk profile and less-complex structures, or those institutions who are owned by the same organization.

HMDA Refinance vs Cash Out Refinance

Adam Witmer
HMDA

One of the biggest challenges that came with the January 1, 2018 HMDA changes relates to the difference between a refinance and a cash-out refinance.  On the surface, it would not seem to be that difficult but the specifics can actually get quite complicated. Therefore, it is imperative that each HMDA reporter fully understand the difference between a cash out refinance and a refinance.

Understanding the Written List of Service Providers Under TRID 2.0

Adam Witmer
Regulation Z, TRID

Among the many changes in TRID 2.0 - which went into effect on October 1, 2018 - the CFPB has provided a few changes in relationship to the written provider list.  The final amendments to the written provider list are significantly better than what the CFPB originally proposed and provide creditors with guidance on how to deal with circumstances where a creditor did not provide the written list of providers or failed to disclose a required service on the list. The changes, however, can be quite confusing upon initial review. Therefore, it is important for each financial institution to fully understand the TRID 2.0 changes that relate to the written list of service providers.

Agencies Grant CIP Exemption for Insurance premium Finance Loans

Adam Witmer
BSA, Regulatory Update

On September 28, 2018, FinCEN, the OCC, Federal Reserve, FDIC, and NCUA released joint guidance which grants financial institutions an exemption from CIP requirements for loans extended to customers to facilitate purchases of property and casualty insurance policies.  The justification for this exemption is based on the fact that these types of loans present a low risk of money laundering due to their very specific purpose. Those entities that extend loans to customers for such purposes should…

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