Important Updates: CCPA, NCUA, Fannie-Freddie, Fed and CFPB

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California Attorney General Xavier Becerra submitted final proposed regulations under the California Consumer Privacy Act (CCPA) to the California Office of Administrative Law (OAL). The regulations will provide guidance to businesses on how to comply with the CCPA and will enable consumers to exercise new rights over their personal information.

Besides California credit unions, Nevada credit unions should know that if they do business with California consumers, they must comply with the CCPA as well.

Under Executive Order N-40-20 related to the COVID-19 pandemic, OAL has 30 working days and an additional 60 calendar days to determine whether the regulations satisfy the procedural requirements of the Administrative Procedure Act. Once approved by the OAL, the final regulation text will be filed with the secretary of state and become enforceable by law.

The attorney general’s office has requested an expedited review by the OAL, and the California Credit Union League expects the final regulations will be done timely and will become law on/before July 1. As a reminder, the CCPA statute becomes enforceable on July 1, 2020.

A copy of the complete rulemaking package submitted to OAL, including a text of the regulations, can be found here.

The League will review the final proposed regulations and provide more information soon.

NCUA Makes Changes to 2Q Call Reports
The National Credit Union Administration is making changes to second-quarter call reports due to the CARES Act and recent amendments to regulations as a result of the pandemic. They include:

  • New accounts to capture both the number and dollar amount of forbearance loans that credit unions have granted. Those loans will not be reported on either delinquency or troubled debt restructuring (TDR) schedules.
  • Sections to specify both the number and dollar amount of loans that credit unions have issued through the Small Business Administration’s Paycheck Protection Program (PPP).
  • An account capturing the amount of PPP loans pledged as collateral to the PPP Lending Facility (PPPLF).
  • Risk-based net worth calculations will also be modified to apply a zero-risk rating to PPP loans. Similarly, PPP loans pledged as collateral to the PPPLF will be excluded from total assets.
  • The asset threshold requirement for risk-based net worth has been changed from $50 million to $500 million.

NCUA Updates Supervision and Exam Approach
Last week the NCUA issued a new Letter to Credit Unions (LCU) 20-CU-17 regarding its updated examination and supervision approach, effective June 1, 2020. The key components of the updated approach include continuing offsite work and a return to issuing examination reports for exams completed offsite.

Generally, this LCU is very positive; however, the following statements raised some concern: “NCUA examiners will not criticize a credit union’s efforts to provide prudent relief for members when such efforts are conducted in a reasonable manner with proper controls and management oversight. However, examiners will consider whether such efforts elevate, or reduce, a credit union’s risk exposure. If a credit union has taken on additional risk, even if done prudently, this may be reflected in the credit union’s applicable CAMEL and risk ratings.”

This message seemed inconsistent, so the California and Nevada Credit Union Leagues reached out to NCUA leadership to get clarification. If a credit union is working with its members in a prudent way, then its CAMEL rating should not change. However, if a credit union lacks internal controls over its efforts to provide relief and/or its efforts materially increase the risk in the balance sheet, then this may be reflected in its CAMEL and risk ratings.

While credit unions are mindful of their CAMEL rating, it is also an internal rating for the NCUA on the risk to the share insurance fund, how it reserves for the NCUSIF, and also how it deploys its resources.

The Leagues welcome credit union input and feedback regarding your next exam process so that a close watch can be kept on this issue.

Fannie and Freddie Update COVID-19 Servicing FAQs
On May 29, Fannie Mae and Freddie Mac updated their COVID-19 FAQs related to the servicing of mortgage loans. The FAQs cover various topics addressed in the agencies’ more recent updates to their COVID-19 servicing guidance. Fannie Mae questions 25 - 27 provide examples of eligibility for COVID-19 payment deferrals. Freddie Mac has substantially similar FAQs.

Main Street Lending Program Update 
One of the Federal Reserve district banks has published the relevant forms and agreements that eligible lenders and borrowers will need to complete to participate in the Fed’s Main Street Lending Program, including loan participation agreement and form certifications. An official launch date for the program has yet to be announced.

The program was established by the Federal Reserve pursuant to authority and funding granted by the CARES Act. It is comprised of three loan facilities through which eligible small and medium-sized businesses may apply for loans to combat the financial impact of the COVID-19 pandemic. Click here to download the program’s FAQs.

CFPB Issues Remittance Rule FAQs
Yesterday, the Consumer Financial Protection Bureau issued FAQs to provide clarification on the bureau's remittance rule. The remittance rule was recently amended to increase the safe harbor threshold from 100 transfers in the previous and current calendar year to 500 transfers.

CFPB on Helping Consumers Receive Credit Card Relief
The CFPB has taken action to help consumers receive relief during the COVID-19 crisis more quickly from credit card issuers. Regulation Z requires that creditors provide written disclosures to consumers for account-opening and temporary rate or fee reductions. During the pandemic, consumers may seek to open a new account or request a temporary reduction in APR or fees for an existing account or a low-rate balance transfer. The bureau is providing temporary and targeted flexibility for credit card issuers regarding electronic provision of certain disclosures required to be in writing during this pandemic.

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