2019 Regulatory Update - WordPress.com · IBA Regulatory Update November 14, 2019 All Rights...

IBA Regulatory Update November 14, 2019

All Rights Reserved 1

2019 Regulatory Update

IBA Compliance Conference

Nov. 2019

More to Know Before You Go!

• State Law Update

• Iowa Conservatorship Changes

• Interagency Appraisal Rule Amendments

• Domestic Hemp Production Program

• Reg. CC Revisions

• HMDA Open-end Threshold Rule

• Revised CTR Completion Guidance

• URLA Update

• On the horizon…



State Law Changes

• Remote Notarization – Senate File 475

– Effective July 1, 2020

– Permits Iowa notaries to notarize transactions with a remotely-

located individual through a live two-way video conference

– Requires rulemaking by Iowa Secretary of State to address:

• Rules for notaries

• Identification technology standards

• Storage & record retention

Outline page 6 Property of the IBA - All Rights

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State Law Changes

• ICCC Revisions – HF 260 Effective July 1, 2019

– Add “service charge” to list of allowable fees for consumer

loans to Iowa Code 537.2501(1)(l) not to exceed the lesser of

10% of the amount financed or $30

• Note: Finance charge & APR fee

• APR cannot exceed 21% w/ fee included


Reserved

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State Law Changes• ICCC Revisions – HF 263

– Effective July 1, 2019

– Revised 537.2501(1)(j) re: “Application fee” not to exceed lesser of

10% of amount financed or $30

• Covered loans: Amount financed does not exceed $3,000 and the

loan term does not exceed 12 months

• Application fee can be charged to all applicants OR only those

applicants who receive loan

• Application fee is a FC & included in APR if charged only to

approved applicants but does not have to be included in usury limit

– Requires notice to consumer of this fact


Reserved

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Updated Tool

Allowable Fees Under the Iowa Code Guide

Property of the IBA - All Rights

Reserved

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State Law Changes• Conservatorship Changes – House File 610

– Effective January 1, 2020

– Two existing code sections repealed that provided conservators certain

conservator powers. For example 633.649 refers to 633.63-633.162

including:

• 633.87 – Power to deposit money in banks

• 633.95 – Release of liens and mortgages

• 633.124 – Investment held in name of nominee of bank or trust

company

– Result: Conservators may need a court order designating powers to

open and transact on bank accounts

• Legal opinions are split

• Iowa courts will not opine


Reserved

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State Law ChangesConservatorship Changes – Two Options

1. Continue “as is” for now

• At time of next annual report,

conservator files, and gets

court approval of a new

financial management plan

and evidence power to open

and transact on bank

accounts

2. Take action now

• Identify conservator accounts

and notify them of law change

& request they take action now

– If annual report is due before Jan.

1, 2020, file financial management

plan w/ annual report and

designate powers

– If annual report is due after Jan.

20, 2020, file one page court order

extending existing authority until

next annual report is due


Reserved

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State Law Changes• Conservatorship Changes – Additional Resources

– House File 610 -

https://www.legis.iowa.gov/legislation/BillBook?ga=%24selectedGa.gener

alAssemblyID&ba=HF610

– Sept Disclosure -

https://www.iowabankers.com/aspx/iba/publications.aspx?snid=1034&aid

=18742

– Conservatorship Provisions of New 633 Law -

https://www.iowabankers.com/userdocs/Mike_Nelson_Conservatorship_I

ssue_Paper_May_2019.pdf

– The Conservatorship Provisions of HF 610 - Reality vs. Misconceptions -

https://www.iowabankers.com/userdocs/Baltimore_HF610_Guidance__fo

r_Conservators_Reality_v_Misconceptions.pdf


Reserved

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Appraisal Rule Changes

• Final Rule: October 8, 2019 Federal Register

• Effective:

– Residential Real Estate Threshold Increase – October 9, 2019

– Rural exemption & Appraisal Review requirement Jan 1, 2020

• Agency Rules

– OCC – 12 CFR Part 34

– FRB – 12 CFR Part 225

– FDIC – 12 CFR Part 323

Outline page 9 Property of the IBA - All Rights Reserved 10

https://www.legis.iowa.gov/legislation/BillBook?ga=%24selectedGa.generalAssemblyID&ba=HF610

https://www.iowabankers.com/aspx/iba/publications.aspx?snid=1034&aid=18742

https://www.iowabankers.com/userdocs/Mike_Nelson_Conservatorship_Issue_Paper_May_2019.pdf

https://www.iowabankers.com/userdocs/Baltimore_HF610_Guidance__for_Conservators_Reality_v_Misconceptions.pdf




• New Definitions

– Residential Real Estate transaction – a real estate-related

financial transaction that is secured by a SINGLE 1-to-4 family

residential property

– Complex appraisal for a residential real estate transaction

means one in which the property to be appraised, the form of

ownership or market conditions are atypical



• Appraisals required; transactions requiring a state

certified or licensed appraiser

– Modified exemption

• A residential real estate transaction that has a

transaction value of $400,000 or less

• Banks may elect to maintain previous $250,000 or

lower exemption threshold based on transaction risk

– New exemption

• Transaction subject to rural residential exemption

under 12 USC 3356 (S. 2155) also at $400,000


Reserved

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• Residential Rural Exemption

Property is residential real estate

Property is located in designated “Rural” area

Transaction value of $400,000 or less

Loan must be retained in bank’s portfolio

Not later than 3 days after Closing Disclosure is given to

consumer, bank has contacted no fewer than 3 state licensed or

certified appraisers; and

Has documented no appraiser is available within 5 business

days beyond customary & reasonable fee to complete appraisal

All the

boxes

must be

checked!


Appraisal RequirementProperty Type Appraisal required for

transactions:

Evaluation permitted

for transactions

Single 1-4 family residential

property

Above $400,000* $400,000 or less

Single 1-4 family residential

property in a rural area

Above $400,000* $400,000 or less

Commercial Real Estate –secured by property that is NOT a

single 1-4 family residential property

Above $500,000* $500,000 or less

Business-purpose real

estate-related transaction

Above $1 million* >$500,000 but ≤ $1 million

where repayment source

is NOT sale of or rental

income from property* Unless another exemption applies

Property of the IBA - All Rights Reserved 14



Exemptions to Appraisal

Requirements

• Transactions below

thresholds

• Abundance of caution

security interest

• Loans not secured by real

estate

• Liens for purpose other

than real estate value

• Renewals, Refinances &

Subsequent Loans– No obvious and material change

in market conditions, or physical

aspects of the property

• New monies can be advanced

– OR No advance of new monies

• Other than reasonable closing costs

• Obvious and material change in

market conditions or the physical

aspects of the property may occur



• Evaluation Required

– If transaction meets exemption from appraisal requirement,

an appropriate evaluation of real property is required that is

consistent w/ safe and sound banking practices

• Including Rural Residential Exemption

– Refer to 2010 Interagency Appraisal and Evaluation

Guidance





• Minimum Appraisal Standards

– New requirement to review

appraisal for compliance w/ USPAP

standards

• Previously in 2010 Interagency

Guidance but now in the rule

• Preamble references 2010

Interagency Guidance for review

expectations


Domestic Hemp Production Program

• Interim Final Rule issued by US Dept. of Agriculture

• Oct. 31, 2019 Federal Register

• Effective: Oct. 31, 2019 – Nov. 1, 2020

• Comments due by Dec. 30, 2019

– Then USDA must issue a final rule within 2 years

• This rule:

– Outlines provisions USDA will consider when approving state plans to

regulate hemp production

– Establishes Federal plan for producers in states that do not have USDA

state-approved plans

Outline page 9-10 Property of the IBA - All Rights

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Domestic Hemp Production Program

• USDA requires state plans to:– Require hemp producers to be licensed

– Maintain information on the land on which hemp is produced

• Including reporting crop acreage to FSA

– Develop procedures for testing THC concentration levels of hemp

– Develop procedures for disposal of non-compliant plants

– Implement procedures which insure hemp is being produced in compliance with

state rules including conducting annual inspections of a random sample of

producers

– Have procedures for handling violations

– Include procedures for information sharing with the USDA

• During 2019 Session, Iowa Legislature approved a measure to

develop a state plan in compliance w/ USDA requirements

Outline page 9-10 Property of the IBA - All Rights

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Reg. CC Revisions

• Final Rule: July 3, 2019 Federal Register

• Effective

– Sept. 3, 2019 & July 1, 2020

• Key Provisions– Extend EFA coverage of Reg. CC

– Clarify the regulation’s application to proprietary ATMs

– Implement statutory requirement to adjust the EFTA dollar threshold

amounts every five years to for inflation

Outline pages 8 & 12 Property of the IBA - All Rights Reserved 20



Reg. CC Revisions

• Effective Sept. 3, 2019

– Revised Reg. CC to define “state” to include American Samoa, the

Commonwealth of the Northern Mariana Islands, and Guam

• As a result, US banks located in these “states” are subject to Reg.

CC’s funds availability, interest payment, and disclosure provisions,

as well as check collection and return rules and the checks

deposited in and drawn on them

– Revised definition of “ATM” to clarify the regulation’s application to

ATMs “located in the U.S”

• 229.2(c) Automated teller machine or ATM means an electronic device

located in the United States at which a natural person may make deposits to

an account by cash or check and perform other account transactions.


Reg. CC Inflation Adjustments

• Effective July 1, 2020

– Amounts may be adjusted every 5 years

– Based on Consumer Priced Indexed

– Rounded to nearest multiple of $25


Impacted Reg. CC Section Now July 1, 2020

Minimum next-day availability §229.10(c)(1)(vii) $200 $225

Cash withdrawal §229.12(d) $400 $450

New account holds §229.13(a) $5,000 $5,525

Large dollar exception holds §229.13(b) $5,000 $5,525

Repeat overdraft exception holds §229.13(d) $5,000 $5,525



Reg. CC Inflation Adjustments

• Change in terms notices required to account holders

– 229.18(e) Changes in policy. A bank shall send a notice to holders of

consumer accounts at least 30 days before implementing a change to

the bank's availability policy regarding such accounts, except that a

change that expedites the availability of funds may be disclosed not

later than 30 days after implementation.

– Notice must be “clear and conspicuous”

• May provide entire Reg. CC disclosure and highlight changes

• May be provided w/ statement

• May be provided electronically with appropriate E-Sign consent


HMDA Open-End Threshold

• CFPB Final Rule – October 29, 2019 Federal Register

– Effective January 1, 2020

– Extends the 500 open-end LOC threshold to Jan. 1, 2022

– Codifies partial exemption for “small filers”

– Clarifies several aspects of small filer exemption

• Applicability during mergers/acquisitions

• Data points covered by the exemption

• Only loans and LOCs that would be reportable count toward

threshold for exemption




Revised FinCEN CTR Guidance

• Announced October 1, 2019 via BSA E-Filing System

• Modification to CTR instructions for “Conductor”

– Revised to require multiple Part 1’s for a conductor who

conducts multiple transactions in multiple roles

• If more than one Item 2 option (Role) applies to a Part I person, a

separate Part I section will be prepared on that person for each

Item 2 option.

Outline page 17 & 18 Property of the IBA - All Rights

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Revised FinCEN CTR Guidance

• From the instructions:

– For example, if the Part I person conducted a $5,000 deposit into

their personal account and a separate $7,000 deposit into the

account of another person/entity, there will be one Part I on that

person reporting option 2a on the personal deposit with that

amount and account number in Item 21 “Cash in amount…”.

There will be a second Part I on that person reporting option 2b

on the person/entity account transaction with that amount and

account number in Item 21.

Outline page 17 & 18 Property of the IBA - All Rights Reserved 26



Revised FinCEN FAQ #16

Outline page 17 & 18 Property of the IBA - All Rights Reserved 27

What if more than one “role” (Item 2) applies to the person

being listed in Part I?

If more than one Item 2 option applies to a Part I person, a

separate Part I section will be prepared on that person for each

Item 2 option. For example, if the Part I person conducted a

$5,000 deposit into their personal account and a separate

$7,000 deposit into the account of another person/entity, there

will be one Part I on that person reporting option 2a on the

personal deposit with that amount and account number in Item

21 “Cash in amount”. There will be a second Part I on that

person reporting option 2b on the person/entity account

transaction with that amount and account number in Item 21.

Redesigned URLA

• August 8, 2019 – GSEs announced delay in use and

revisions required Federal Housing Finance Agency

• October 23, 2019 – GSEs published redesigned URLA

– Changes to Borrower Information, Additional Borrower

Information, Lender Loan Information, Continuation Sheet, and

Unmarried Addendum components.

– Updated AUS & supporting docs expected in November 2019

– Implementation timeline & mandatory use date announcement

before year end 2019




Redesigned URLA

https://www.fanniemae.com/singlefamily/uniform-residential-loan-application


On the horizon…


https://www.fanniemae.com/singlefamily/uniform-residential-loan-application



ATR-QM Final Rule

• GSE QM expires January 10, 2021

• CFPB plans to let GSE QM expire

• Investor options without further rulemaking: – General QM

– ATR without QM safe harbor

• ANPR issued July 25; comment period ended Sept. 16

• IBA Sept. 10 comment letter– Remove 43% DTI cap & required use of App. Q for General QM

– Clarification re: ATR residual income option


HMDA Threshold Final Rule

• Proposed HMDA Threshold Changes– May 13 Federal Register

– Increase Closed-end Mortgage threshold from 25 to 50 (or possibly 100)

originations in each of the two prior years

– Maintain threshold for Open-end LOC low volume exemption at 500

until Jan. 1, 2022, then permanently adjust to 200 originations in each of

two prior years

• Comment period closed June 12, 2019, then reopened until Oct. 15

• IBA June 3 comment letter

– Increase closed-end mortgage threshold to at least 100, consider 250

– Retain current 500 open-end LOC threshold permanently




HMDA Data Point Final Rule

• Advanced Notice of Proposed Rulemaking

– May 8, 2019 Federal Register

– Seeks comment on:

• Cost/burden vs benefit of data points added by CFPB

• Value of data on business loans secured by multifamily dwellings

• Value of freeform text fields

• Data points on which additional clarification is needed

– Comment period closed July 8, 2019, then reopened until Oct. 15

– IBA June 26 comment letter

• Remove data points that do not serve HMDA’s purpose

• Identified data points which need more clarification

• Stop reporting business loans made to non-natural persons (legal entities)


Small Business Data Collection Proposal

• Required by Sect. 1071 of DFA

• On CFPB 2020 Rule-Making Agenda

• DFA requires specific data be maintained, & reported,

including but not limited to:

– Type of loan applied for

– Amount of credit applied for

– Action taken

– Census tract of the principal place of business of the loan applicant

– Race, Sex, and Ethnicity of the principal owners of the business

• Expect a proposal in 2020




Also likely in 2020…

• BSA Exam Manual update

• Proposal to revise Community Reinvestment Act

• HUD Disparate Impact Final Rule

• Remittance Rule Threshold Final Rule

• SAFE Banking Act


Questions???

[email protected]

844-REGS-411(844-734-7411)

mailto:[email protected]

2019 Regulatory Update - WordPress.com · IBA Regulatory Update November 14, 2019 All Rights...

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