Another Regulation CC Proposal

In case you missed it, the Federal Reserve and CFPB issued a joint proposal on Regulation CC last week.  We don’t get too excited about proposals around here but this one is well overdue.


You may recall that way back in 2010 and 2011 there were some changes that affected Regulation CC.  First, the check processing regions were consolidated into one, which effectively did away with “nonlocal” checks.  Second, the longstanding $100 required to be made available by the next business day on a case-by-case hold, was increased to $200.  Unfortunately, Regulation CC was never updated with these changes.  The Fed proposed amendments to Regulation CC in March 2011, but those never actually came to fruition.  Seven years later, it looks like we are finally starting to get Regulation CC back in line with the times.


First, a final rule regarding the check collection and return provisions in Regulation CC took effect on July 1, 2018.  Then, in September 2018, a final rule regarding disputes between banks in cases of substitute or electronic checks was issued.  Compliance is mandatory with those changes on January 1, 2019.  A few of the changes proposed include increasing the $200 to $225 (on April 1, 2020), implementing five year adjustments to certain threshold amounts, and extending Regulation CC coverage to additional U.S. Territories (for example, Guam).  It also makes some technical changes to Regulation DD (TISA) for items related to Regulation CC


The proposal is also reopening the comment period for the 2011 proposal.  It states:


The Agencies recognize there may have been important changes in markets, technology, or industry practice since the public submitted comments seven years ago in response to the Board’s 2011 Funds Availability Proposal. The Board and the Bureau, therefore, are now reopening the comment period in order to provide an opportunity for the public to provide comments with new, additional, or different views on the 2011 Funds Availability Proposal. In taking this step, the Agencies have not made any decision on whether to pursue any particular course with regard to the 2011 Funds Availability Proposal, including whether to make it or any aspects of it final. Instead, reopening the comment period will provide the Agencies with up-to-date public input to consider in deciding on a future course with regard to the 2011 Funds Availability Proposal. Comments on the 2011 Funds Availability Proposal that were previously submitted during the initial comment period, which ended on June 3, 2011, remain part of the rulemaking docket. To assist with reconciling comments from parties who submitted comments in 2011 and who again submit comments in 2018 that reflect changes to their previous viewpoints, the Agencies request that such commenters clarify the relationship between their two comments. Specifically, the Agencies request that the commenters clarify whether their 2018 comments in part or in whole supersede their previously submitted comments.


That seems awfully confusing, not only for the agencies but also the commenters. Such is the world of regulation. 🙂


Comments on both proposals are due 60 days from publication in Federal Register.


Amy Kudlacek

TRID Step-by-Step

Two weeks ago we wrapped up our three-part webinar series on TRID.  TRID A to Z does exactly what its title suggests.  It walks you through the TRID requirements step by step, from beginning to end, in our signature Plain English style.  This series would be perfect for an employee that is new to lending, as well as, a great refresher for an experienced lender.  The detailed manual alone is worth every penny!  On top of that, you get the answers to all the questions asked during the live event.  Questions such as:


Question: Are we in violation if we don’t document the intent to proceed if we don’t charge any fees prior to closing the loan?

Answer: There is a strict requirement to document the applicant’s intent to proceed.  So, we would expect to find it with every file, regardless of when fees are charged.  


Don’t just take our word for it, take it from one of our delighted participants:


“I have a couple of new employees to the department and this webinar gave some of the basic information they needed to hear. Jerod covered a lot of information in great detail. It was delivered in a manner that our new employees could understand. Thank you! I feel like this is one of the best webinar’s we have attended.”


The TRID A to Z webinar is now available for purchase in our online store. Don’t miss out on six hours of valuable compliance training!



Warning on Loan Pricing Discretion

We’ve been saying it for several years now…the level of discretion allowed in loan pricing decisions can have major implications when it comes to Fair Lending.  We’ve seen many amy11 - Warning on Loan Pricing Discretionbanks that have taken this to heart and made changes to their underwriting guidelines/practices and others who have been a little more hesitant.  Well, the Federal Reserve Bank of Kansas City recently fired a warning shot in their most recent FedConnections eAlert.  It states:


One of the most common credit practices that elevates a bank’s fair lending risk profile is the allowance of discretion with pricing or underwriting decisions for consumer loans.  The more discretion a bank allows its lenders, the more fair lending risk is present as inconsistent treatment between borrowers may result.


This is not to say that pricing discretion is prohibited, rather it’s something that needs to be evaluated, closely monitored and controlled.  The more pricing discretion your bank allows, the more monitoring you will need to do.  This is also something that your Board and Senior Management should be kept up to speed on.


For example, if lenders are not permitted to deviate from the bank’s rate sheet, loan originators pricing decisions should simply be monitored for compliance with the rate sheet.  In contrast, if loan originators are permitted broad flexibility in making pricing decisions, and deviations from the rate sheet and/or underwriting criteria are frequent and for numerous reasons, more robust monitoring activities are needed.  With broad discretion, credit and exception data should be collected electronically, and analyzed regularly for potential disparities on a prohibited basis.


The Federal Reserve addresses their expectations regarding pricing discretion in their 2017 Outlook Live Webinar entitled, Interagency Fair Lending Hot Topics.  If you want a Plain English training solution on pricing discretion and Fair Lending as a whole, be sure to check out our 2-hour, Fair Lending webinar which is available now in our store.


Either way, we strongly encourage you to begin evaluating the level of discretion you allow at your institution and to take steps to mitigate any Fair Lending risk.  Consider yourself warned!


Amy Kudlacek

HMDA Chart

In our August Newsletter, we covered what we know regarding the HMDA data reporting requirements for those banks considered to be “small filers”.  This small filer exemption was originally announced by amy11 - HMDA Chartthe CFPB on July 5th.


You are considered a “small filer” (and exempt from full HMDA data reporting in 2018) IF your bank originated less than:


  • 500 closed-end mortgage loans in each of the two preceding calendar years (2016 & 2017); or,
  • 500 open-end lines of credit in each of the two preceding calendar years (2016 & 2017); and,
  • Your institution has at least a satisfactory CRA rating.


While this seems pretty straightforward, it’s actually a little more complicated than that.  Since our mission is to put things in Plain English, we created an HMDA Volume Test Chart to help walk you through the requirements.


If you want more on the “small filer” requirements be sure to check out our August Newsletter and our video blog.


Amy Kudlacek

Regulation P Updated – Finally

Finally!!  On August 10th, the CFPB announced it had finalized amendments to Regulation P.  And to think it only took a little under three years to get it done!  amy11 - Regulation P Updated - Finally


Back in December 2015, we alerted you that President Obama signed the FAST Act into law, which effectively eliminated the annual privacy notice requirement for banks whose sharing practices:


  1. Do not require an opt-out under the Gramm-Leach-Bliley Act; and,
  2. Have not changed since the last time they sent their Privacy Notice.


Our advice to banks at the time was that the law is the law and they could begin to follow the FAST Act rules right away.  Many have and to our knowledge did not experience any difficulties with their examiners.  Others were a little hesitant to follow the law until a regulation was finalized.  Thankfully, the wait is over.


Amy Kudlacek