2019/20 Regulatory Compliance Update November 14, 2019

Iowa Bankers Association

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PRESENTED BY:

JULIE GLIHA, MBA, CRCM, VP COMPLIANCE RONETTE SCHLATTER, CRCM, SENIOR COMPLIANCE ANALYST III

2019-20 NEW AND REVISED CONSUMER COMPLIANCE REGULATORY REQUIREMENTS

MANDATORY COMPLIANCE DATE

SUMMARY

January 1, 2019 2019 REG. Z THRESHOLDS A series of final rules adjust annual thresholds as required by Reg. Z and detailed below. • HOEPA (HIGH COST MORTGAGE OR HCM) THRESHOLDS

o A loan is considered a HCM if the loan amount is $21,549 or more AND the points & fees exceed 5% of the total loan amount; or

o The loan amount is less than $21,549 and the points & fees exceed the lesser of 8% of the total loan amount or $1,077.

August 27, 2018 Federal Register: https://www.federalregister.gov/documents/2018/08/27/2018-18209/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified

• ABILITY TO REPAY/QUALIFIED MORTGAGE POINTS AND FEES THRESHOLDS – To meet the repayment ability test under Reg. Z and/or qualify as a Qualified mortgage, the Points and Fees on a covered loan cannot exceed:

o 3 percent of the total loan amount for a loan greater than or equal to $107,747 o $3,232 for a loan amount greater than or equal to $64,648 but less than

$107,747 o 5 percent of the total loan amount for a loan greater than or equal to $21,549

but less than $64,648 o $1,077 for a loan amount greater than or equal to $13,468 but less than $21,549 o 8 percent of the total loan amount for a loan amount less than $13,468

August 27, 2018 Federal Register: https://www.federalregister.gov/documents/2018/08/27/2018-18209/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified

• CREDIT CARD PENALTY FEE SAFE HARBOR was increased by $1 to $28 for a first late payment and $39 for subsequent late payment safe harbor August 27, 2018 Federal Register: https://www.federalregister.gov/documents/2018/08/27/2018-18209/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified

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• NON-REAL ESTATE SECURED: The annual adjustment to the exemption threshold above which non-real estate-secured, consumer credit transactions are exempt from Reg. Z coverage is increased to $57,200 for 2019. November 23, 2018 Federal Register: https://www.federalregister.gov/documents/2018/11/23/2018-25398/truth-in-lending-regulation-z Iowa Consumer Credit Code (ICCC) also increased to same amount.

• HPML APPRAISAL EXEMPTION THRESHOLD: The threshold for small loans that are exempt from the appraisal requirement for “higher priced mortgage loans” (HPMLs) is increased to $26,700 for 2019. HPMLs in the amount of $26,700 or less are not subject to Reg. Z’s HPML appraisal (with interior inspection) requirement in 2019. November 23, 2018 Federal Register: https://www.federalregister.gov/documents/2018/11/23/2018-25400/appraisals-for-higher-priced-mortgage-loans-exemption-threshold

January 1, 2019 REG. M THRESHOLD The annual adjustment to the exemption threshold above which consumer lease transactions are exempt from Reg. M coverage is increased to $57,200 for 2019.

November 23, 2018 Federal Register: https://www.federalregister.gov/documents/2018/11/23/2018-25396/consumer-leasing-regulation-m

January 1, 2019 FHA 2019 LOAN LIMITS The maximum conforming loan limits for mortgages the Federal Housing Administration (FHA) will insure increased in 2019. The loan limit in lower-cost areas is $314,827, or 65 percent of the national conforming loan limit of $484,350. In high-cost areas, the limit is $726,525. FHA-insured reverse mortgages is capped at $726,525. https://www.hud.gov/program_offices/housing/sfh/lender/origination/mortgage_limits

January 1, 2019 2019 CRA AND HMDA ASSET-SIZES ADJUSTED The federal bank regulatory agencies announced the annual adjustment to the asset-size thresholds used to define small bank, small savings association, intermediate small bank, and intermediate small savings association under the Community Reinvestment Act (CRA) regulations. The definitions of small and intermediate small institutions for CRA examinations will change as follows: • "Small bank" or "small savings association" means an institution that, as of Dec. 31 of

either of the prior two calendar years, had assets of less than $1.284 billion.

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• "Intermediate small bank" or "intermediate small savings association" means a small institution with assets of at least $321 million as of Dec. 31 of both of the prior two calendar years and less than $1.284 billion as of Dec. 31 of either of the prior two calendar years.

January 31, 2019 Federal Register: https://www.federalregister.gov/documents/2019/01/31/2018-28373/home-mortgage-disclosure-regulation-c-adjustment-to-asset-size-exemption-threshold The HMDA asset-size exemption threshold was increased from $45 million to $46 million. December 27, 2018 Federal Register: https://www.federalregister.gov/documents/2018/12/27/2018-27791/community-reinvestment-act-regulations

January 1, 2019 ANNUAL ASSET-SIZE ADJUSTMENT TO DEFINITION OF “SMALL CREDITOR” The Official Staff Commentary to Reg. Z is amended to reflect a change in the asset size threshold for a creditor to qualify as a “small-creditor.” The exemption threshold is adjusted to $2.167 billion (from $2.112 billion). Thus, creditors with assets of $2.167 billion or less as of December 31, 2018 are eligible to make balloon payment and small creditor qualified mortgages and are exempt from the requirement to escrow for first-lien HPMLs, provided the other criteria are met. December 28, 2018 Federal Register: https://files.consumerfinance.gov/f/documents/bcfp_final-rule_truth-in-lending-act-escrows_threshold-adjustment_12-2018.pdf

January 1, 2019 REGULATION CC FINAL RULE CLARIFIES LIABILITY PROVISIONS The Federal Reserve Board published a final rule that amends Subpart C of Reg. CC to address situations where there is a dispute as to whether a check has been altered or was issued with an unauthorized signature, and the original paper check is not available for inspection because the paper item has been converted to an electronic or substitute check and then presented for payment. This rule adopts a presumption of alteration for disputes between banks over whether a substitute check or electronic check contains an alteration or is derived from an original check that was issued with an unauthorized signature of the drawer. The presumption does not apply to a dispute between banks where the original check was transferred between those banks, even if that check is subsequently truncated and destroyed. Sept. 17, 2018 Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2018-09-17/pdf/2018-20029.pdf

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January 28, 2019 FINAL RULE – EXTENDING EXAM CYCLE Federal banking agencies issued a final rule implementing a provision in the S. 2155 regulatory reform bill that makes qualifying banks with up to $3 billion in assets eligible for an 18-month on-site exam cycle. Insured depository institutions, including federal or state branches of foreign banks, qualify if they have an “outstanding” or “good” composite rating. December 28, 2018 Federal Register: https://www.govinfo.gov/content/pkg/FR-2018-12-28/pdf/2018-28267.pdf

March 2019 June 17, 2019

AGENCIES RELEASE 2019 LIST OF RURAL, UNDERSERVED COUNTIES CFPB released the lists of rural counties and rural or underserved counties that entities can use in 2019 to determine whether they are exempt from certain regulatory requirements under the bureau’s Ability-to-Repay, escrow, HOEPA and appraisal rules. In addition to the lists, the CFPB has also updated its tool for helping bankers determine whether a property is located in a rural or underserved area. https://files.consumerfinance.gov/f/documents/cfpb_rural-underserved-list_2019.pdf The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency release their 2019 list of distressed or underserved nonmetropolitan middle-income geographies, where revitalization or stabilization activities are eligible to receive Community Reinvestment Act (CRA) consideration under the community development definition. https://www.ffiec.gov/cra/pdf/2019distressedorunderservedtracts.pdf

March 7, 2019 OCC NOTIFIES BANKS OF KEY HMDA DATA FIELDS The OCC issued bulletin 2019-12 informing banks about the key data fields that examiners will typically use to test and validate the accuracy and reliability of home mortgage loan data collected in 2018. The OCC provided the 37 key data fields that will apply to full HMDA reporters, as well as the 21 data fields that will apply to banks that qualify for the partial exemption from HMDA data collection. https://www.occ.gov/news-issuances/bulletins/2019/bulletin-2019-12.html?utm_campaign=Newsbytes-20190308&utm_medium=email&utm_source=Eloqua

March 18, 2019 Effective: April 17, 2019

FDIC RESCINDS PART 350 The FDIC issued a final rule to rescind Part 350 from the Code of Federal Regulations, removing an annual disclosure requirement that was duplicated by data publicly available on the FDIC’s website. March 18, 2019 Federal Register: https://www.govinfo.gov/content/pkg/FR-2019-03-18/pdf/2019-04944.pdf

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May 2019 FED HISPANIC SURNAMES LIST UPDATED The Federal Reserve System (Fed) updated its list of female and male Hispanic surnames to include additional Hispanic names currently being used by the Fed when assessing risks for upcoming examinations and other supervisory activities. https://consumercomplianceoutlook.org/assets/outlook-live/2013/frb-female-and-hispanic-names-list.xlsx?la=en

May 28, 2019 REGULATORS UPDATE HOST-STATE LOAN-TO-DEPOSIT RATIOS The federal banking agencies issued updated host-state loan-to-deposit ratios they use to determine compliance with Section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act. Section 109 prohibits banks from establishing or acquiring branches outside their home states primarily for the purpose of deposit production. Congress enacted Section 109 to ensure that interstate branches would not take deposits from a community without helping to meet its credit needs. https://www.fdic.gov/news/news/press/2019/pr19041.html

June 6, 2019 NFIP EXTENDED On June 6, 2019, President Donald Trump signed into law a bill which provides for aid to address the consequences of various natural disasters and also includes an extension of the National Flood Insurance Program (NFIP) until Sept. 30, 2019. Note: this was further extended to November 21, 2019. During the extension period it’s expected Congress will debate broader NFIP program policy matters including restructuring of the program entirely. https://www.fema.gov/national-flood-insurance-program/national-flood-insurance-program-reauthorization-guidance

June 12, 2019 NEW URLA USE POSTPONED At the direction of the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac announced that the optional use period for the redesigned Uniform Residential Loan Application (URLA) form and corresponding datasets will not begin on July 1, 2019, as previously scheduled. The effective date of the form will be revised and an updated version will be provided at a later date. https://www.fanniemae.com/content/news/urla-announcement-august-2019.pdf

July 1, 2019 PRIVATE FLOOD INSURANCE RULE The financial regulatory agencies released a final rule governing the acceptance of private flood insurance. The rule, which will be effective on July 1, 2019, implements the 2012 Biggert Waters Act provision that requires federally regulated lending institutions to accept private flood insurance policies that meet certain statutory criteria.

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February 20, 2019 Federal Register: https://www.govinfo.gov/content/pkg/FR-2019-02-20/pdf/2019-02650.pdf

July 1, 2019 2019 IOWA LEGISLATIVE CHANGES • GROUNDWATER HAZARD STATEMENTS — Language was added to the standing

appropriations legislation in section 7 of SF 638 prohibiting Iowa County Recorders from assessing charges for the submission or filing of a Groundwater Hazard Statement (GHS) for purchase money real estate transactions. The Iowa County Recorders Association last January sent a letter to all stakeholders informing them that due to recent changes requiring the GHSs be transmitted to the Department of Natural Resources through the Iowa Land Records system, the form is now being indexed and recorded. As a result, the recorders planned to begin charging for the recording of the document on July 1, 2019. Because many of GHS include septic inspection reports with a varying number of pages, the recording of the document would have been challenging for TRID compliance purposes, as the exact fee may not be known until just before consummation. The IBA, along the Iowa State Bar Association and the Iowa Association of Realtors supported maintaining the “status quo” by not charging for recording of this document. This new prohibition went into effect on July 1, 2019. SF 638: https://www.legis.iowa.gov/legislation/BillBook?ga=88&ba=sf638

• REMOTE NOTARIZATION — SF 475 amended Iowa’s notary laws to provide for remote electronic notarization. The legislation allows Iowa notaries to notarize transactions with a remotely located individual through a live two-way video conference paving the way for fully paperless transactions. The effective date is July 1, 2020 due to the need for extensive rulemaking by the Iowa Secretary of State to set up a system for approving the technology for identification, storage and record retention of these transactions. The IBA will be involved in helping to develop the rules for the new law. SF 475: https://www.legis.iowa.gov/legislation/BillBook?ga=%24selectedGa.generalAssemblyID&ba=SF475

• CHANGES TO IOWA CONSUMER CREDIT CODE (ICCC) — o HF 260 amended the Iowa Consumer Credit Code to add a new authorized fee

— “service charge” — to the list of allowable fees. This new fee, considered a prepaid finance charge under Regulation Z, is limited to the lesser of ten percent of the amount financed or $30. A “service charge” can be assessed for consumer credit transactions closed on or after July 1, 2019.

o HF 263 amended existing code section 537.2501(1)(j) to clarify the “application fee”, not to exceed the lesser of ten percent of the amount financed or $30, authorized by this section for loans in which the amount financed does not exceed $3,000 and the loan term does not exceed 12 months, may be charged solely to applicants that are approved or to all applicants The fees must be included in the loan’s APR calculation if only charged to applicants that are approved, however is not included in APR for purpose of Iowa usury rate

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determination provided an additional notice is made available to the consumer disclosing this fact.

HF 260: https://www.legis.iowa.gov/legislation/BillBook?ga=88&ba=hf260 • NEW CONSERVATORSHIP PROVISIONS – HF610 appears to impose new duties and

responsibilities on both new and existing conservators, specifically to file an “initial financial management plan” with the court. Under existing law, conservators had powers and authority without a court order for many of these functions under two different Iowa Code sections which will be repealed effective Jan. 1, 2020. This change appears to indicate conservators may only act on financial matters with prior court authorization beginning Jan. 1, 2020. The IBA, in participating in a task force along with the Iowa State Bar Association, Iowa Trust Association and the Iowa Academy of Trust and Estate Counsel provide the following guidance related to the new conservatorship provisions:

o If the conservatorship’s next annual report is due before Jan. 1, 2020, conservators should include in the report all information required to be in the new initial financial management plan and designate powers.

o If the next annual report is due after Jan. 1, 2020, conservators should seek a court order continuing their existing powers until the next annual report is due, at which time the conservator will file the initial financial management plan. Note: There is a model form to obtain this court order.

For banks holding conservatorship accounts as commercial deposits, most commentators believe banks can continue to transact business on these accounts as normal. Banks have traditionally relied on letters of appointment to evidence a conservator’s authority to transact business on an account, and such letters should be sufficient under the new law. Once the new report is filed, the bank may want to have a copy on file. HF 610: https://www.legis.iowa.gov/legislation/BillBook?ga=88&ba=hf610

July 22, 2019 AGENCIES FINALIZE VOLCKER RULE EXEMPTION FOR COMMUNITY BANKS

The federal financial regulatory agencies finalized a rule implementing a section of the S. 2155 regulatory reform law that grants an exclusion from the Volcker Rule for certain community banks. To qualify for the exemption, community banks and their controlling entities must have $10 billion or less in total consolidated assets and total trading assets and liabilities equal to 5 percent or less of total consolidated assets. July 22, 2019 Federal Register: https://www.govinfo.gov/content/pkg/FR-2019-07-22/pdf/2019-15131.pdf

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August 19, 2019 (Rule Stayed by Texas Court) ATR requirements delayed until 11/19/20

PAYDAY LENDING RULE The Consumer Financial Protection Bureau (CFPB) issued a final rule on Oct. 5, 2017, to create consumer protections for certain consumer credit products. Among other things, lenders making these covered loans will generally be required to evidence the borrower’s repayment ability. In addition, covered loans are subject to certain payment transfer prohibitions, lenders making covered loans are required to register information related to the loans with registry systems to be created by the CFPB and lenders must develop and follow written policies reasonably designed to ensure compliance with the regulation. Importantly, the rule exempts any lender that make 2,500 or fewer covered loans in each of the current and preceding calendar years if the lender derives no more than 10 percent of its receipts from those loans. Note: On June 7, 2019, the Consumer Financial Protection Bureau extended the compliance date for the mandatory underwriting provisions of its final rule governing short-term, small-dollar loans to November 19, 2020. The CFPB has separately proposed to rescind those underwriting requirements. Although the mandatory compliance date has passed, the rule has not gone into effect due to a stay issued by a court in Texas. November 17, 2017 Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2017-11-17/pdf/2017-21808.pdf ATR Provision Delay: https://files.consumerfinance.gov/f/documents/cfpb_payday_final-rule-2019-delay.pdf?utm_campaign=Newsbytes-20190607&utm_medium=email&utm_source=Eloqua CFPB Small Entity PayDay Rule Compliance Guide: https://files.consumerfinance.gov/f/documents/cfpb_payday_small-entity-compliance-guide.pdf

September 3, 2019 FED, CFPB ISSUE FINAL RULE EXPANDING REG. CC COVERAGE The Federal Reserve and the Consumer Financial Protection Bureau finalized changes to Regulation CC (the Expedited Funds Availability Act) to implement a provision of the 2018 Economic Growth, Regulatory Relief and Consumer Protection Act by extending coverage of Regulation CC to American Samoa, the Northern Mariana Islands and Guam effective September 3, 2019. July 3, 2019 Federal Register: https://www.govinfo.gov/content/pkg/FR-2019-07-03/pdf/2019-13668.pdf

October 1, 2019 FDIC DEPOSIT RECORDKEEPING RULE The FDIC approved a final rule to amend Part 370 of the FDIC’s regulations for “recordkeeping for timely deposit insurance determination”. The regulations require banks

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with at least two million deposit accounts to upgrade deposit recordkeeping so that the FDIC could use the system to make deposit insurance assessments in the event of bank failure. The rule was effective Oct. 1, 2019 with mandatory compliance as of April 1, 2020. However the final rule offers covered institutions that became covered institutions on the effective date the option to extend their April 1, 2020 compliance date by up to one year. July 30, 2019 Federal Register: https://www.govinfo.gov/content/pkg/FR-2019-07-30/pdf/2019-15535.pdf

October 9, 2019 INTERAGENCY FINAL RULE INCREASES RESIDENTIAL APPRAISAL THRESHOLD TO $400,000 The OCC, Board, and FDIC (collectively, the agencies) adopted a final rule to amend their rules requiring appraisals of real estate for certain transactions. The final rule increases the threshold level at or below which appraisal are not required for residential real estate transactions from $250,000 to $400,000. The final rule also defines a residential real estate transaction as a real estate-related financial transaction that is secured by a single 1-to-4 family residential property. For residential real estate transactions exempted from the appraisal requirement as a result of the revised threshold, regulated institutions must obtain an evaluation of the real property collateral that is consistent with safe and sound banking practices. October 8, 2019 Federal Register: https://www.govinfo.gov/content/pkg/FR-2019-10-08/pdf/2019-21376.pdf

October 10, 2019 MANAGEMENT INTERLOCK THRESHOLD ADJUSTMENT The FDIC, Federal Reserve Board and OCC approved a final rule raising the threshold at which bank directors or other management officials are prohibited from serving at more than one depository institution or holding company. Under the existing rule, directors or management officials working at an institution with more than $2.5 billion in total assets may not simultaneously serve at an unaffiliated depository organization with more than $1.5 billion in total assets. The final rule raises both of those thresholds to $10 billion in total assets. October 10, 2019 Federal Register: https://www.fdic.gov/news/board/2019/2019-08-20-notice-sum-c-fr.pdf

October 31, 2019 – November 1, 2021

USDA INTERIM FINAL RULE FOR ESTABLISHMENT OF DOMESTIC HEMP PRODUCTION PROGRAM The United States Department of Agriculture issued an interim final rule establishing new regulations and procedures for the legal production of industrial hemp, as required by the Agricultural Improvement Act of 2018. The regulations provide a standardized framework for how USDA will approve regulatory plans from states and Indian tribes that wish to oversee hemp production, as well as a federal plan for producers in areas without approved local plans. The framework covers how to maintain information on the land

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where hemp is produced, test THC levels and dispose of plants that do not meet the necessary requirements. They also address licensing requirements and compliance. The interim final rule will remain in place from October 31, 2019 through November 1, 2021. October 31, 2019 Federal Register: https://www.govinfo.gov/content/pkg/FR-2019-10-31/pdf/2019-23749.pdf

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2020 January 1, 2020 CFPB ANNOUNCES 2020 REG. Z DOLLAR THRESHOLDS

The Consumer Financial Protection Bureau announced 2020 changes in dollar thresholds for several Regulation Z provisions governed by the CARD Act, the Home Ownership and Equity Protection Act and the Dodd-Frank Act. The thresholds are based on changes in the Consumer Price Index and take effect on Jan. 1, 2020.

• CREDIT CARD PENALTY FEES: For credit cards, the penalty fees safe harbor for 2020 will increase by $1 to $29 for a first late payment. The subsequent late payment safe harbor fee will also grow by $1 to $40. The minimum interest charge disclosure threshold will remain unchanged for 2020 at $1.

• HOEPA: The loan amount at which HOEPA’s points-and-fees test comes into effect

will increase to $21,980, and the HOEPA points-and-fees trigger will rise to $1,099.

• QMS: For Qualified Mortgages, points and fees cannot exceed 3% of loans of $109,898 or more; $3,297 for loans between $65,939 and $109,898; 5% for loans between $21,980 and $65,939; $1,099 for loans between $13,737 and $21,980; and 8% of loans of less than $13,737.

August 1, 2019 Federal Register: https://www.govinfo.gov/content/pkg/FR-2019-08-01/pdf/2019-16300.pdf

• HPML APPRAISALS: The OCC, the Board, and the Bureau finalized amendments to the official interpretations for regulations that implement section 129H of the Truth in Lending Act (TILA) for HPMLs specifically relating to the exemption threshold for the appraisal rule. Based on the CPI-W in effect as of June 1, 2019, the exemption threshold will increase to $27,200 effective 1/1/20.

October 29, 2019 Federal Register: https://www.govinfo.gov/content/pkg/FR-2019-10-30/pdf/2019-21559.pdf

• NON-REAL ESTATE SECURED: The annual adjustment to the exemption threshold above which consumer-credit transactions secured by any real property, or by personal property used or expected to be used as the principal dwelling of the consumer, are exempt from Reg. Z coverage is increased to $58,300 for 2020.

October 30, 2019 Federal Register: https://www.govinfo.gov/content/pkg/FR-2019-10-30/pdf/2019-21557.pdf

January 1, 2020 INTERAGENCY APPRAISAL RULE CHANGES The OCC, Board, and FDIC (collectively, the agencies) adopted a final rule that added to the list of exempt transactions from the appraisal requirement transactions secured by

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residential property in rural areas, in amount of $400,000 or less that meet additional requirements outlined in the in the Economic Growth, Regulatory Relief, and Consumer Protection Act. The final rule requires evaluations for these exempt transactions. The final rule also amends the agencies’ appraisal rules to require regulated institutions to perform a review of all appraisal of federally related transactions for compliance with the Uniform Standard of Professional Appraisals Practice (USPAP). October 8, 2019 Federal Register: https://www.federalregister.gov/documents/2019/10/08/2019-21376/real-estate-appraisals

January 1, 2020 HMDA OPEN-END THRESHOLD TO REMAIN AT 500 FOR 2020 & 2021 The Consumer Financial Protection Bureau issued a final rule providing relief for smaller institutions from the Home Mortgage Disclosure Act data collection and reporting requirements by extending until Jan. 1, 2022, the current temporary coverage threshold of 500 for open-end lines of credit. The CFPB will address permanent coverage thresholds for open-end lines of credit and closed-end mortgage loans in a separate final rule. In addition, this final rule incorporates the interpretive rule the CFPB issued in 2018 implementing the partial exemptions from reporting several HMDA data points for “small filers”, those who originated fewer than 500 open-end or closed-end mortgage loans in each of the two preceding calendar years. October 29, 2019 Federal Register: https://www.govinfo.gov/content/pkg/FR-2019-10-29/pdf/2019-22561.pdf

July 1, 2020 FED, CFPB ISSUE FINAL RULE FOR REG. CC INFLATION ADJUSTMENT CALCULATION The Federal Reserve and the Consumer Financial Protection Bureau finalized changes to Regulation CC (the Expedited Funds Availability Act) to adopt a method for making inflationary adjustments to the dollar amounts in Regulation CC every five years pursuant to the Dodd-Frank Act. The adjustments include, for example, an increase in the large dollar exception amount from $5,000 to $5,525. The first adjustments will be effective July 1, 2020. Under the final rule, the agencies based the first set of inflation adjustments on CPI-W data from July 2011 to July 2018. July 3, 2019 Federal Register: https://www.govinfo.gov/content/pkg/FR-2019-07-03/pdf/2019-13668.pdf

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NOTABLE REGULATORY GUIDANCE ISSUE DATE SUMMARY January 7, 2019 CFPB ISSUES POLICY GUIDANCE ON HMDA DATA RELEASE

The Consumer Financial Protection Bureau has released its policy guidance describing the Home Mortgage Disclosure Act loan-level data it plans to release publicly in 2019. The CFPB announced that it would not release property addresses, applicants’ credit scores or automated underwriting results. As expected, the CFPB will release “certain information with reduced precision,” including borrower ages, loan amount and number of units in the dwelling. https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-announces-policy-guidance-disclosure-home-mortgage-data/

Ongoing CFPB ISSUES TRID RULE FAQS The Consumer Financial Protection Bureau issued frequently asked questions on TILA-RESPA Integrated Disclosures regarding providing loan disclosures to consumers. The FAQs address corrected closing disclosures and the three business-day waiting period, model forms, construction loans, and providing loan estimates to consumers. https://www.consumerfinance.gov/policy-compliance/guidance/tila-respa-disclosure-rule/tila-respa-integrated-disclosure-faqs/?utm_campaign=COMPLIANCE-20190805&utm_medium=email&utm_source=Eloqua

February 4, 2019

AGENCIES ISSUE ADVISORY ON EDUCATION LOAN REHABILITATION PROGRAMS The Federal Reserve and FDIC issued an advisory on voluntary private education loan rehabilitation programs to alert banks to an amendment to the Fair Credit Reporting Act that was included in the S. 2155 regulatory reform law. Under the law, consumers may request that a financial institution remove a reported default regarding a private education loan under certain conditions. Banks have the option to establish loan rehabilitation programs and, provided they meet the statutory requirements, become entitled to a safe harbor from potential claims under the FCRA of inaccurate reporting for removing a reported default from a consumer’s credit report. The advisory directs banks wishing to offer these programs to submit a written request to their appropriate regulatory agency. The agencies will provide a decision or feedback within 120 days of receiving a program approval request. FDIC FIL-5-2019: https://www.fdic.gov/news/news/financial/2019/fil19005a.pdf

March 12, 2019 CFPB FLAGS MORTGAGE SERVICING ISSUES IN SUPERVISORY HIGHLIGHTS The Consumer Financial Protection Bureau issued a Supervisory Highlights report focusing on recent examiner observations of several bank products or business lines, including auto loan servicing, deposits, mortgage servicing and remittances. Examiners noted several issues related to mortgage servicing, including: charging consumers unauthorized late fees; misrepresenting the conditions under which private mortgage insurance would be removed;

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failing to exercise reasonable diligence to complete loss mitigation applications; and failing to properly represent the requirements for foreclosure timeline extensions for home equity conversion mortgages. The Bureau also flagged issues related to compliance with the remittance rule and misrepresentations made to consumers about when their deposit account would be debited through an institution’s online bill-pay service. https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-18_032019.pdf?utm_campaign=Newsbytes-20190313&utm_medium=email&utm_source=Eloqua

March 25, 2019 OCC ISSUES CONFIDENTIALITY REQUIREMENTS REMINDER The Office of Comptroller of the Currency (OCC) released Bulletin 2019-15 as a reminder to supervised banks that certain nonpublic OCC information generally cannot be disclosed. In the bulletin, the OCC explains that reports of examination and other nonpublic OCC information are the property of the OCC. Except in very limited circumstances, a bank may not disclose this information without the prior written permission of the OCC. This prohibition applies to any portion of a report of examination, supervisory correspondence, and any representations concerning the report or supervisory correspondence, or their findings, including the assigned CAMELS rating. Any unauthorized disclosure or use of nonpublic information may be subject to criminal penalties. OCC Bulletin 2019-15: https://www.occ.treas.gov/news-issuances/bulletins/2019/bulletin-2019-15.html

April 2, 2019 FDIC WARNING RE: IT VENDOR CONTRACTS The FDIC issued a Financial Institution Letter describing examiner observations about gaps in financial institutions' contracts with technology service providers that may require financial institutions to take additional steps to manage their own business continuity and incident response. Among other things, the FIL reminds the institution’s boards of directors and senior management of their responsibility for managing risks related to relationships with technology service providers. FDIC FIL-19-2019: https://www.fdic.gov/news/news/financial/2019/fil19019.html?source=govdelivery&utm_medium=email&utm_source=govdelivery#continuation

May 1, 2019 CFPB ISSUES FACT SHEET ON TRID REQUIREMENTS FOR ASSUMPTIONS The Consumer Financial Protection Bureau issued a fact sheet to help lenders determine when the TILA-RESPA integrated disclosures—the Loan Estimate and the Closing Disclosure—are required when mortgages are assumed. The fact sheet addresses TRID requirements when a new consumer is added or substituted as an obligor on an existing closed-end credit transaction secured by real property and that is not a reverse mortgage.

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CFPB Fact Sheet https://files.consumerfinance.gov/f/documents/cfpb_tila-respa-factsheet.pdf

May 2, 2019 OFAC COMPLIANCE GUIDANCE The Office of Foreign Assets Control (OFAC) issued guidance to help banks develop appropriate sanctions compliance programs (SCP). The guidance emphasizes the importance of a risk-based approach to sanctions compliance for the development, implementation, and updating of a sanctions compliance program. While there is no one-size-fits-all SCP since each bank's SCP will depend on a variety of factors, every program should include five essential elements. Those five essential elements are: (1) management commitment; (2) risk assessment; (3) internal controls; (4) testing and auditing; and, (5) training. Particularly important is management support, as demonstrated by providing sufficient tools and resources to manage the program, communicating the importance of the program, and ensuring that any problems are properly escalated to management's attention. Finally, as it has for a number of years, OFAC will consider a bank's SCP in imposing any penalties for a sanctions violation. https://www.treasury.gov/resource-center/sanctions/Documents/framework_ofac_cc.pdf

May 9, 2019 FINCEN ISSUES GUIDANCE ON CONVERTIBLE VIRTUAL CURRENCIES The Financial Crimes Enforcement Network issued guidance on how its regulations apply to money transmission involving convertible virtual currencies. FinCEN said the guidance does not impose new regulatory requirements but rather consolidates existing regulations, administrative rulings and guidance. The guidance covers the application of FinCEN’s money transmission to several business models involving convertible virtual currencies, including P2P exchangers, virtual wallets, various kinds of wallet providers, CVC kiosks, decentralized applications, anonymity-enhanced transactions, payment processors and internet casinos. The guidance also lists specific business models involving virtual currencies that may be exempt from the definition of money transmission, including currency trading platforms, decentralized exchanges, initial coin offerings, virtual currency miners conducting transactions with their own currency and transmission by mining pools and cloud miners. FinCEN Fact Sheet: https://www.fincen.gov/sites/default/files/2019-5/FinCEN%20CVC%20Guidance%20FINAL.pdf

June 13, 2019 FDIC FLAGS OVERDRAFT ISSUES IN CONSUMER COMPLIANCE SUPERVISORY HIGHLIGHTS The FDIC released its first edition of Consumer Compliance Supervisory Highlights, a new publication intended to provide institutions with information and observations related to the agency’s consumer compliance supervision activities. This issue highlights findings from the approximately 1,200 consumer compliance examinations conducted by the FDIC in 2018 including improper disclosure of overdraft programs, recurrent issues related to RESPA Section 8, Regulation E, skip-a-payment programs and finance charge calculations for open-end lines of credit. FDIC Consumer Compliance Supervisory Highlights:

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https://www.fdic.gov/regulations/examinations/consumercomplsupervisoryhighlights.pdf

July 16, 2019 FINCEN ISSUES UPDATED ADVISORY AND ANALYSIS ON BUSINESS EMAIL COMPROMISE SCHEMES The Financial Crimes Enforcement Network (FinCEN), in an effort to impede Business Email Compromise (BEC) scammers, updated its 'Advisory to Financial Institutions on E-mail Compromise Fraud Schemes,' first published in 2016. The advisory offers updated operational definitions, provides information on the targeting of non-business entities and data by email compromise schemes, highlights general trends in BEC schemes targeting sectors and jurisdictions, and alerts financial institutions to risks associated with the targeting of vulnerable business processes. In addition, FinCEN issued an in-depth Financial Trend Analysis of BSA data that explores industries targeted and methodologies used by BEC scammers. https://www.fincen.gov/news/news-releases/fincen-exchange-forum-counters-business-email-compromise-scams?utm_campaign=AML-20190719&utm_medium=email&utm_source=Eloqua

July 2019 CFPB ISSUES ADVISORY ON REPORTING ELDER FINANCIAL ABUSE The Consumer Financial Protection Bureau (CFPB) released an advisory to financial institutions for reporting suspected elder financial exploitation. The document updates the CFPB’s 2016 recommendations for preventing and responding to elder financial abuse, and urges financial institutions to report suspected exploitation to the appropriate local, state and federal authorities. In particular, the CFPB recommends filing Suspicious Activity Reports in such cases. https://files.consumerfinance.gov/f/documents/cfpb_suspected-elder-financial-exploitation-financial-institutions_report.pdf

July 22, 2019 FINCEN AND FEDERAL BANKING AGENCIES ISSUE STATEMENT ON BSA EXAM TRANSPARENCY FinCEN along with the federal banking agencies issued a joint statement to emphasize their risk-focused approach to Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance exams. The statement indicated the federal banking agencies conduct risk-focused BSA/AML examinations, and tailor examination plans and procedures based on the risk profile of each bank. The information gained from assessing the bank’s risk profile assists examiners in scoping and planning the examination and initially evaluating the adequacy of the BSA/AML compliance program. https://www.fdic.gov/news/news/press/2019/pr19065a.pdf

July 31, 2019 OCC ISSUES CRA-RELATED BULLETINS The Office of the Comptroller of the Currency (OCC) issued two Community Reinvestment Act (CRA) related bulletins. The first bulletin reminds banks of guidelines for requesting designation as a wholesale or limited purpose bank for CRA, or requesting confirmation of its exemption status under CRA regulation. The bulletin includes information that the bank should provide to the OCC to substantiate its request, instructions on submitting requests and an

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overview of the OCC’s review and approval process. The second bulletin informs banks about the current guidelines for requesting approval to be evaluate under the CRA using the strategic plan option, as well as requesting approval to amend an approved strategic plan. Wholesale/Limited Purpose Banks Bulletin 2019-40: https://www.occ.treas.gov/news-issuances/bulletins/2019/bulletin-2019-40.html Strategic Plan Bulletin 2019-39: https://www.occ.treas.gov/news-issuances/bulletins/2019/bulletin-2019-39.html

September 25, 2019 (Effective 1/1/20)

CFPB ISSUES 2020 FILING INSTRUCTION GUIDE (FIG) The Consumer Financial Protection Bureau issued the Filing Instruction Guide for data collected in 2020 (to be reported in 2021). Filing Instructions Guide and Supplemental Guide for Quarterly Filers can be accessed at: https://ffiec.cfpb.gov under Help for Filers

September 25, 2019

CFPB ISSUES FAQS ON SAFE ACT The Consumer Financial Protection Bureau published 4 FAQs on the SAFE Act and the impact of the amendments to the SAFE Act made by section 106 of the Economic Growth, Regulatory Relief, and Consumer Protection Act. https://www.consumerfinance.gov/policy-compliance/guidance/secure-fair-enforcement-for-mortgage-licensing-act/secure-and-fair-enforcement-mortgage-licensing-act-faqs/

October 1, 2019

FINCEN CHANGES GUIDANCE FOR CTR COMPLETION FinCEN released a statement in their BSA E-Filing Notification System alerting banks to a change in completing the “roles” section in Part I of a Currency Transaction Report (CTR). The FinCEN CTR XML Schema User Guide (version 1.4) and FAQ # 16 were modified to require multiple Part I’s for a conductor who conducts multiple transactions in multiple roles. FinCEN also modified the instructions for use of the Multiple Transaction box in Part I. It now states: Item 3 Multiple transactions (new text underlined for emphasis): Check box 3 if multiple cash in or cash out transactions of any amount were conducted in a

single business day by or for the person recorded in Part I. Multiple transactions includes all transactions made whether reportable or not. If a customer makes a $12,000 deposit and a $300 withdrawal, box 3 will be checked even though only $12,000 is reportable. This applies when multiple Part I sections with different Item 2 person types are filed on the same person. Box 3 will be checked in all Part I sections on that person. “Multiple transactions” is not the same as the Item 24 option “Aggregated transactions,” which only involves aggregated transactions all of which are below the reporting requirements.

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October 23, 2019

FANNIE & FREDDIE RELEASE REDESIGNED URLA Fannie Mae and Freddie Mac (the GSEs) have published the static components of the updated redesigned Uniform Residential Loan Application (URLA) (Fannie Mae Form 1003 / Freddie Mac Form 65), reflecting revisions announced on August 8, 2019. Changes have been made to the Borrower Information, Additional Borrower Information, Lender Loan Information, Continuation Sheet, and Unmarried Addendum components. The documents referenced in this announcement, as well as other supporting materials, are located on Fannie Mae’s URLA web page. The GSEs are on track to publish their respective updated automated underwriting system (AUS) specifications and supporting documents in November 2019, and to announce the updated implementation timeline and mandate before the end of 2019.