NCUA Actions, President’s Order, FHFA, FinCEN, and HMDA

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The National Credit Union Administration (NCUA) Board has issued one proposed rule and one interim final rule (IFR).

A proposed rule regarding share insurance for joint-ownership share accounts is intended to facilitate the prompt payment of share insurance in the event of a FICU’s failure to produce a membership or signature card by explicitly providing alternative methods the NCUA could use to determine the owners of joint accounts (an access device issued to the joint owner).

The IFR makes two temporary changes to the PCA regulations to help ensure FICUs remain operational and liquid during the COVID-19 crisis. First, the IFR amends §702.201 to temporarily waive the earnings retention requirement for any credit union that is adequately capitalized; second, the IFR modifies and simplifies §702.206(c) with respect to net worth restoration plans for FICUs that fall to undercapitalized because of share growth. These temporary modifications will be in place until Dec. 31, 2020.

Also, the Board also considered an IFR that would have replaced the maximum 45-day time limit in a FCU’s written overdraft (OD) policy with a requirement the policy establish “a specific time limit that is both reasonable and applicable to all members.” Chairman Rodney Hood supported the IFR due to the current COVID-19 impact on consumers; Mr. Harper opposed the IFR; Mr. McWatters was disappointed the OD rule was presented as an IFR rather than as a proposed rule with a comment period. The motion was tabled.

The Board also received a briefing on the Share Insurance Fund Quarterly Report.

Additionally, Chairman Hood stated the NCUA will be following the spirit of President Donald Trump’s Executive Order regarding regulatory relief issued on Tuesday.

President Issues EO to Cut Regulations, Support Economic Recovery
On Tuesday, Trump issued an Executive Order (EO) on Regulatory Relief to Support Economic Recovery. The EO addresses the effects that COVID-19 has had on the economy and generally calls on all agencies, including the NCUA and other federal financial regulators, to:

  • Rescind, modify, waive, or provide exemptions from regulations and other requirements that may inhibit economic recovery.
  • Consider exercising appropriate temporary enforcement discretion or appropriate temporary extensions of time as provided for in enforceable agreements.
  • Accelerate procedures by which a regulated person or entity may receive a pre-enforcement ruling (an NCUA Opinion Letter, CFPB No Action Letter) with respect to whether proposed conduct in response to the COVID-19 outbreak is consistent with statutes and regulations administered by the agency.
  • Consider whether to formulate, and make public, policies of enforcement discretion that decline enforcement against persons and entities that have attempted in reasonable good faith to comply with applicable statutory and regulatory standards.
  • Adopt the “Principles of Fairness” in administrative enforcement and adjudication.
  • Review any regulatory standards the agency has temporarily rescinded, suspended, modified, or waived during the public health emergency; determine which, if any, would promote economic recovery if made permanent; and report the results of such review to the Director of the Office of Management and Budget (OMB), the Assistant to the President for Domestic Policy, and the Assistant to the President for Economic Policy.

The Director of the OMB, in consultation with the Assistant to the President for Domestic Policy and the Assistant to the President for Economic Policy, shall monitor compliance with the EO and may also issue guidance for implementation, including setting deadlines for the reviews and reports noted above.

Interagency Lending Principles for Responsible Small-Dollar Loans
On May 20, the NCUA, along with the other federal financial institution regulatory agencies, issued principles for offering small-dollar loans in a responsible manner to meet financial institution customers’ short-term credit needs. On March 26, the joint agencies issued a statement encouraging financial institutions to offer responsible small-dollar loans to consumers and small businesses in response to COVID-19. This new statement reviews the lending principles regarding offering small dollar loans.

Update on Mortgage Appraisal Threshold
The NCUA’s Letter to Credit Unions 20-CU-10 (see "From the Desk of Diana" on April 23) recapped the agency’s final rule to increase the residential appraisal threshold from $250,000 to $400,000. The letter also recapped an interim final rule to temporarily allow credit unions to defer appraisals and written estimates of market value for up to 120 days after the closing of a loan. This flexibility will expire on Dec. 31, 2020. Credit union leaders should know that NCUA’s appraisal rule (Part §722) applies to all federally insured credit unions. In addition, for California state-licensed credit unions, CA Code of Regulations §30.901(b) provides that they follow NCUA Rule Part §722, which increases the appraisal threshold to $400,000.

CDRLF Grant Applications Due May 22
Recognizing the immediate needs of credit unions and their members during the COVID-19 pandemic, the NCUA is committing the majority of the 2020 Community Development Revolving Loan Fund appropriation for COVID-19 assistance. More than $1.3 Million will be available. The application deadline is Friday, May 22. Click here for more information.

FHFA Forbearance: Eligibility to Refinance or Purchase
The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac have issued temporary guidance stating that borrowers who are in forbearance, or recently ended their forbearance, are eligible to refinance or buy a new home if they are current on their mortgage (in forbearance but continued to make their mortgage payments or reinstated their mortgage).

Additionally, the FHFA is extending the GSEs’ previously announced ability to purchase single-family mortgages in forbearance. Fannie Mae and Freddie Mac are now able to buy forborne loans, with note dates on or before June 30, 2020, as long as they are delivered to the GSEs by Aug. 31, 2020 and have only one mortgage payment that has been missed. The previous policy was set to expire on May 31, 2020.

VA-Mortgage Foreclosure Moratorium Extended
On May 15, the U.S. Department of Veterans Affairs (VA) imposed a further foreclosure moratorium on VA-guaranteed loans through June 30, 2020 (Loan Guaranty Circular 26-20-18). This is in line with the foreclosure moratorium extensions by Fannie Mae, Freddie Mac, and HUD.

FinCEN: Medical Scams; Companion Notice Instructions for FIs
The Financial Crimes Enforcement Network (FinCEN) has issued an advisory to alert financial institutions regarding rising medical scams related to the COVID-19 pandemic. This advisory contains red flags, descriptions of COVID-19 related medical scams, and information on reporting suspicious activity. This is the first of several advisories FinCEN intends to issue concerning financial crimes related to the COVID-19 pandemic.

FinCEN also issued a companion notice that provides detailed filing instructions for financial institutions, which will serve as a reference for future COVID-19 advisories.

Unemployment Insurance Fraud-Alert for FIs
The California and Nevada Credit Union Leagues’ latest Risk Alert — entitled "U.S. Secret Service Alert on Massive Fraud Against State Unemployment Insurance Programs" — discusses an alert issued by the U.S. Secret Service on May 14. Credit unions in the Northwest have reported instances where members are receiving multiple ACH deposits from the Washington State Employment Security Department.

This fraud network is believed to consist of hundreds, if not thousands, of “mules” with potential losses in the hundreds of millions of dollars. The financial institutions targeted have been at all levels, including local credit unions, local banks, and large national banks.

You can view the Secret Service’s Information Only Alert here.

New FAQs on Regulation D
In response to inquiries on whether the Federal Reserve’s recent interim final rule eliminating the six-per-month transfer limit between savings and checking accounts is permanent, the Fed updated its FAQs. The new FAQs make clear that the change is permanent and the board “does not have plans to re-impose transfer limits.”

HMDA Reporting Thresholds for CUs
On May 12, the Consumer Financial Protection Bureau issued a final rule amending parts of Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The final rule increases the threshold for collecting and reporting data about closed-end mortgage loans from 25 to 100, effective July 1, 2020. It also increases the threshold for collecting and reporting data about open-end lines of credit, from 100 to 200, effective Jan. 1, 2022 (when the current temporary threshold of 500 open-end lines of credit expires).
 
The final rule does not change the 2020 institutional asset size threshold. Credit unions with total assets less than or equal to $47 million as of Dec. 31, 2019 are not subject to HMDA in 2020.
 
For more comprehensive information, please refer to the CFPB’s final rule.

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