OTS Releases Mortgage Loan Consumer Brochure
The Office of Thrift Supervision has recently released a Mortgage Loan Consumer Brochure which describes key changes in the mortgage loan process and conveys information about the importance of credit scores in the lending process. If we think the mortgage process is confusing to us, think what it is like for the consumer; especially a first time home buyer. The brochure may be accessed through the following web site: http://www.ots.treas.gov/_files/482130.pdf
Regulation E - Overdraft Services While much of the attention to this upcoming change has focused on the “opt-in” requirement and related processes, do not overlook section 205.17(b)(3) which says you must "apply the same account terms, conditions, and features regardless of the consumer's opt-in choice” to those accounts with or without overdraft services. Presumably this applies to terms such as the circumstances under which you close an account. While this section may not be receiving much attention right now, it may become an important section in working with your consumers in the future.
FinCEN Issues Civil Money Penalty for Bank Secrecy Violation FinCEN and FDIC issued concurrent penalties against Eurobank, San Juan, Puerto Rico for not adopting adequate anti money laundering programs. This included not monitoring accounts for suspicious activity, relative to the types of products and services, volume of business and nature of customers at the bank. Each regulator issued a $25,000 penalty, but they were satisfied by one $25,000 payment to the US Treasury. Information on this action may be found at: http://www.fincen.gov/news_room/nr/html/20100504.html
The Unlawful Internet Gambling Enforcement Act (UIGEA) mandatory for June 1. The Federal Reserve’s Regulation GG carries a mandatory compliance date of June 1, 2010. Among other requirements, the regulations addresses the following:
- | establish and implement policies and procedures to identify and block restricted internet gambling transactions, or rely on those procedures established by the payments system. |
- | have policies and procedures in place that demonstrate they are exercising enhanced due diligence when opening business accounts to prevent illegal internet gambling operations from setting up accounts at the institution. |
| - | have policies and procedures to prevent credit/debit card transactions from being made to unlawful Internet gambling perations – this applies to all accounts, not just business account owners. |
| Regulation GG may be found at: http://ecfr.gpoaccess.gov/cgi/t/text/text-idxc=ecfr&sid=1b6b5ba59e0b3d8fe0e8601a7ee06cdf&rgn=div5&view=text&node=12:3.0.1.1.14&idno=12 |
FTC Grants Waiver from Merger Waiting Period Rule The Federal Trade Commission has granted waivers from the standard merger waiting period for several financial institution mergers and acquisitions. Credit unions are among the financial institutions that are covered by the FTC's pre-merger filing requirement under the Hart-Scott-Rodino Act Antitrust Act of 1976. The Act's pre-merger notification provisions require "persons contemplating certain mergers or acquisitions" to provide the FTC and the Assistant Attorney General of the United States with "advance notice" of the plans and "wait designated periods before consummation" of those plans. However, in some cases the FTC may terminate the waiting period for reaching its end date. If you are contemplating a merger, you should be sure this step is addressed during the planning phase.
OTS Updates Examination Handbook for Unfair or Deceptive Acts or Practices The updated section to the Handbook provides guidance on what may be considered as an Unfair or Deceptive Act or Practice. While you may not be subject to the OTS regulation, documents which provide information on what may constitute such a practice are valuable to all financial institutions as a “guidance”. UDAP if broadly written, so considering as many sources as possible is advisable. A copy of this document may be found at: http://www.ots.treas.gov/?p=RegulatoryBulletins&ContentRecord_id=746de193-ef50-dd26-43cb-eb88cac6639e
FinCEN Updates the SAR Activity Review FinCEN has released the 17th iteration of the Suspicious Activity Review, Trends, Tips and Issues. This is another resource for financial institutions when watching for, and training employees on what to look for, in recognizing and reporting suspicious activity. It can be accessed at: http://www.fincen.gov/news_room/rp/sar_tti.html
NCUA Provides Mortgage Loan Originator Registration Rule Staff at the NCUA have provided a briefing on what the NCUA believes will be the final rule mortgage loan originator registration under the SAFE Act. Among other things the final rule provides for the following:
- | all credit unions originating residential mortgage loans will have to adopt policies and procedures to assure compliance with the law; |
- | all credit union employees and volunteers originating these loans will need to register as a mortgage loan originator and receive a unique identifier (originate more than 5 loans in a 12 month period); |
- | the registration and unique identifier will have to be maintained; |
The requirements are effective 60 days after publication in the Federal Register and compliance is mandatory 180 days after registration is commenced by the NMLS and registry.
OTS Issues Penatly for Overdraft Services Unfair to Consumers
Woodforest Bank agreed today to pay a penalty of $400,000 and to refund an additional more than $12 million to consumers who were charged excessive fees for overdraft protection on bank accounts. The OTS said Woodforest’s customers were misled about the cost of overdraft protection and charged excessive overdraft-protection fees. In the Agreement the OTS gave the following “guidance”, stating institutions must clearly represent the features of such programs, provide consumers with the opportunity to choose whether to participate, explain the thrift’s policies on clearing transactions and place reasonable aggregate limits on overdraft fees. With the Regulation E changes coming about in a month, this may be more of what you encounter during your examinations.
FTC States Rules for non Federally Insured Institutions
The FTC says such institutions must disclose that fact in their branches, their advertising and periodic statements. They must also obtain acknowledgements from new depositors that they are aware that the institution isn’t federally insured and if it fails the government won’t reimburse them for their losses. A copy of the notice may be found at: http://www.ftc.gov/os/2010/05/100525fdicafinalrule.pdf
New “Gift Card” Rules apply to Branded Cards
Regulation E changes made by the FRB that restrict dormancy, inactivity and service fees and expiration dates that apply to store gift cards will also apply to network-branded gift cards, such as those tied to VISA or MasterCard and redeemable at retailers. However, be sure to check your state laws as well, as if they are more restrictive than the new Regulation E requirements, they are not preempted.