There were four noteworthy regulatory and compliance updates for banks and credit unions in January of 2023. Below are the details on these changes and how they affect you and your institution.
CFPB Updates Mortgage Servicing Exam Manual
The Consumer Financial Protection Bureau (CFPB) released their updated Mortgage Servicing Exam Procedures. The updates cover forbearance and other tools that mortgage servicers have used during the COVID-19 national emergency.
Why Is This Important to Me?
Share the updated Exam Procedures booklet with your Mortgage Servicing department staff.
Federal Reserve Board Provides Additional Details on How Pilot Climate Scenario Exercise Will Be Conducted
The Federal Reserve Board provided additional details on how its pilot climate scenario analysis exercise will be conducted and the information on risk management practices that will be gathered over the course of the exercise. The pilot exercise includes physical risk scenarios with different levels of severity affecting residential and commercial real estate portfolios in the northeastern United States and directs each bank to consider the impact of additional physical risk shocks for their real estate portfolios in another region of the country. For transition risks, banks will consider the impact on corporate loans and commercial real estate portfolios using a scenario based on current policies and one based on reaching net zero greenhouse gas emissions by 2050. These scenarios are not forecasts or policy prescriptions but can be used to build understanding of climate-related financial risks.
Why Is This Important to Me?
Climate change related discussions will become more prominent throughout the coming years. The 6 largest banks will be participating in this analysis, and the outcomes will likely inform future regulatory actions.
OCC Issues Revisions to the Fair Lending Booklet
The revised booklet reflects changes to laws since it was last published to explain the OCC’s current approach to fair lending examinations and to provide additional instructional guidance to examiners.
Why Is This Important to Me?
Share the revised booklet with your lending departments to ensure your institution remains in compliance.
CFPB Releases Fall 2022 Regulatory Agenda
The CFPB recently released its Fall 2022 Regulatory Agenda, listing rules and projects in the final, proposed rule, and pre-rule stages. Selected entries from the agenda include:
Final stage:
- Small business lending data collection under the ECOA (Section 1071 of the Dodd-Frank Act). A final rule is anticipated this quarter.
Proposed rule stage:
- Credit card penalty fees: The CPFB is considering whether to propose amendments to the rules implementing the CARD Act relating to penalty fees levied by card issuers, including the safe harbors for penalty fees. On June 22, 2022, the CFPB issued an advance notice of proposed rulemaking (ANPRM) seeking information from credit card issuers, consumer groups, and the public regarding credit card late fees and late payments, and card issuers’ revenue and expenses. The CFPB is considering the comments received on the ANPRM in its development of the NPRM, which could be issued this quarter.
- Amendments to FIRREA concerning automated valuation models: The CFPB is participating in an interagency rulemaking process to develop regulations to implement the amendments made by the Dodd-Frank Act to FIRREA concerning automated valuation models. The FIRREA amendments require the implementation of regulations for quality control standards for automated valuation models. A proposed rule could be issued this quarter.
- Property Assessed Clean Energy (PACE) financing: Section 307 of EGRRCPA amended the Truth in Lending Act to require the CFPB to prescribe regulations relating to “Property Assessed Clean Energy” (PACE) financing, which results in a tax assessment on a consumer’s real property and covers the costs of home improvements. The required regulations must carry out the purposes of TILA’s ability-to-repay (ATR) requirements, currently in place for residential mortgage loans, with respect to PACE financing, and apply TILA’s general civil liability provision for violations of the ATR requirements the CFPB will prescribe for PACE financing. The CFPB is working on a proposed rule, on the Agenda for April 2023.
Pre-rule stage:
- Overdraft fees: The CFPB is considering whether to propose amendments to Regulation Z with respect to its special rules on whether overdraft fees are considered finance charges.
- NSF fees: Although many institutions have stopped charging NSF fees, the CFPB is considering whether to issue new rules regarding them.
- FCRA rulemaking: The CFPB is considering whether Regulation V should be amended.
- Personal financial data rights: The CFPB continues its fact finding. Its next step is to convene a Small Business Regulatory Enforcement Fairness Act (SBREFA) panel on the matter and issue a report summarizing feedback from the panel.
Why Is This Important to Me?
Share this with compliance leaders to ensure your institution is prepared for any upcoming changes.
About the Author
Rachel Davis
Product Manager at OnCourse Learning
Rachel Davis is the Product Manager of GRC and professional education for banks, credit unions, and non-bank financial services at OnCourse Learning. Rachel has worked in the financial services industry for 12 years and keeps up to date on financial industry hot topics. Rachel received her Bachelor of Arts in English Literature from Saint Louis University.
About the Author
Rachel Davis
Product Manager at OnCourse Learning
Rachel Davis is the Product Manager of GRC and professional education for banks, credit unions, and non-bank financial services at OnCourse Learning. Rachel has worked in the financial services industry for 12 years and keeps up to date on financial industry hot topics. Rachel received her Bachelor of Arts in English Literature from Saint Louis University.