Compliance Blog

Written by Brandy Bruyere, Regulatory Compliance Counsel

Happy Friday everyone! There’s reason to feel a bit optimistic today, a rare treat for those who spend their time navigating complex regulations. Today we’ll review some of the key provisions of three recent CFPB proposed rules in the areas of privacy, mortgages, and remittances.

Proposed Rule on Privacy Disclosures

On May 6^th, the CFPB proposed a rule that would bring some relief for the requirement to provide annual privacy notices. Currently, credit unions must mail or electronically deliver a privacy notice to each member every year. Under the proposed rule, a credit union could generally post this notice on their website instead, provided that five conditions are met:

(1) the credit union does not share the member’s nonpublic personal information with nonaffiliated third parties in a way that triggers a member’s opt-out rights;

(2) the credit union does not include on its annual privacy notice a FCRA opt-out notice;

(3) the credit union’s annual privacy notice is not the only notice provided regarding sharing consumer reports with affiliates for marketing purposes under the FCRA;

(4) the information included in the privacy notice has not changed since the member received the previous notice; and

(5) the credit union uses the model form provided in Regulation P.

The proposed rule would require credit unions that use this alternative delivery method to provide a “clear and conspicuous statement” annually on a notice or disclosure that is sent to the member announcing that the privacy disclosure is available online. Credit unions would also have to mail the notice to members who request it. Comments are due to the CFPB thirty days after the proposed rule is published in the Federal Register.

Proposed Changes to the Ability-to-Repay/Qualified Mortgage Rule

On April 30^th, the CFPB proposed some “minor” changes to the mortgage rules. Two of these changes relate to certain 501(c)(3) nonprofits and do not impact credit unions, but the third may help some credit unions meet the points and fees requirements of a Qualified Mortgage (QM).  The points and fees calculation under the Ability to Repay (ATR) rule is very complex, and the CFPB acknowledged that this can lead to “inadvertent errors” in making the QM determination. Under the proposed rule, under certain limited circumstances, if a loan inadvertently exceeds the points and fees limit, the credit union could “cure” this problem after consummation.  To be eligible for this relief, the credit union would have to meet three requirements:

• The credit union originated the loan in good faith as a QM and the loan otherwise meets the requirements of the ATR rules;
• The credit union refunds the member any points and fees over the 3% threshold within 120 days of consummating the loan; and
• The credit union maintains policies and procedures for reviewing loans post-consummation  and making refunds as needed.

In addition to these provisions, the CFPB is also seeking comment on whether a similar post-consummation cure could be provided for loans exceeding the ATR rule’s 43% debt-to-income ratio requirement. The Bureau is also seeking feedback from smaller creditors regarding how their lending operations have changed due to the new mortgage rules. Comments are due to the CFPB  by July 7, 2014.

Proposed Changes to Remittance Rule

Finally in case you missed it, on April 15^th, the CFPB is considering some revisions to the remittance rule. First, the proposed rule would extend the temporary exception that allows credit unions to estimate fees and exchange rates in some cases. If finalized, the exception would apply until July 21^st, 2020, the latest date permitted under Dodd-Frank. Second, the Bureau is seeking comment on how to treat US military bases abroad under the rule. The CFPB proposal would consider these military bases to be within a “State” for the purposes of the rule. This would mean that transfers to “designated recipients” located on US military bases from the US or another such base would not be considered a remittance for the purposes of the rule. Other minor proposed revisions include:

• Determine the purpose of the transfer based on the purpose of the sender’s account (i.e. personal, family, or household purposes);
• Revise the CFPB staff commentary to clarify that disclosures may be provided by fax; and
• Change sections of the rule’s error resolution process.

Comments are due to the CFPB by May 27, 2014.

Spoiled Pup

We finally got rid of one of our last “college kid” pieces of furniture and replaced our couch. Of course, it did not take long for Lemmy to decide that he belonged on the chaise lounge. He even prefers to make use of a decorative throw pillow to further cushion his head. I keep telling myself I’ll be firmer with him, but saying no to that face is hard!