Updates: CA and NV; NCUA Board Recap; CDFI, FinCEN, and CFPB

Gavel and law book

California Department of Business Oversight (DBO) Commissioner Manuel Alvarez is inviting licensees to submit creative ideas and suggestions to make the department more efficient, including where wet signature and/or notarization requirements force the DBO and credit unions into a paper-based system.

He also stated that he wants to hear from licensees about how the DBO could ease burdens through regulatory efficiencies and the use of technology, including changing paper-based processes to electronic processes and replicating efficiencies that have already been implemented by other financial regulators. Alvarez welcomes ideas no later than Oct. 16 by emailing efficiencies@dbo.ca.gov.

California DBO’s New Sacramento Address
The DBO has relocated its Sacramento office. Please use this new address: 2101 Arena Blvd., Sacramento, CA 95834 (phone number is 916-576-4941). To ensure mail is properly delivered to the department, please start using the new address immediately.

Clark County, NV Secures $20M: Rental and Mortgage Assistance
The Las Vegas Review-Journal reports that Clark County expects to assist as many as 15,000 households struggling with housing payments due to the coronavirus pandemic, using $50 million in federal relief dollars either earmarked by commissioners or provided by the state.
 
The county commission unanimously approved on Tuesday an agreement with the Nevada Housing Division for $20 million in CARES Act funds for the county’s housing assistance program, adding to the $30 million the county had already set aside.
 
But there is also reason to believe the pool of funding for such assistance could grow: Commission Chairwoman Marilyn Kirkpatrick said the county has lobbied the state’s Interim Finance Committee for more money. Read the entire story here.

NCUA Allows CUs to Extend Liquidity Amid COVID-19
The National Credit Union Administration (NCUA) Board has finalized a recent interim final rule that defers the requirement to obtain an appraisal or written estimate of market value for up to 120 days following the closing of certain residential and commercial real estate transactions, excluding transactions for acquisition, development, and construction of real estate. Credit unions should make best efforts to obtain a credible estimate of the value of real property collateral before closing the loan, and otherwise underwrite loans consistent with safety-and-soundness principles. The final rule allows credit unions to extend liquidity to creditworthy households and businesses in light of recent strains on the U.S. economy due to the COVID-19 pandemic. The flexibility provided by this final rule is scheduled to expire at the end of 2020. NCUA indicated that as year-end approaches, it would work with other federal financial regulators to determine if an extension is appropriate.

Recap of NCUA’s September 2020 Board Meeting
In addition to approving changes to its real estate appraisal rule during the September board meeting, the NCUA Board received a briefing on the Share Insurance Fund Quarterly Report. The report showed a net income of $20.5 million and $17.7 billion in assets for the second quarter of 2020. The fund also reported $72.1 million in total income for the second quarter of 2020. The fund’s equity ratio declined to 1.22 percent as of June 30, which is below the board-approved normal operating level of 1.38 percent. The primary driver of the decline was the rapid growth in insured shares, which increased nearly 13 percent from December 2019. NCUA staff, in response to a question from NCUA Chairman Rodney Hood, said that no NCUSIF restoration plan was necessary at this time, which is required if the equity ratio drops below 1.2 percent. They also noted that as a result of share growth, many credit unions’ capitalization deposits have dropped below the statutorily required 1 percent of insured shares. Therefore, these credit unions will be invoiced to maintain the 1 percent capitalization deposit. These invoices will amount to $1.5 billion in aggregate. Invoices will be sent out later this week, and deposits will be due in October. Chairman Hood said that vigilance is needed to manage and monitor the situation.

Additionally, the board approved an interagency order granting an exemption from BSA Customer Identification Program (CIP) requirements for certain loans extended to facilitate the financing of property and casualty insurance policies. Premium Financing Arrangements are typically same-day finance arrangements, where CIP requirements can prove a competitive impediment to financial institutions and a burden to offering such financing with immediacy. In addition, the Financial Crimes Enforcement Network (FinCEN) has already exempted this type of financing arrangement from Customer Due Diligence and Beneficial Owner requirements, concluding that it represents a very low risk of money laundering or terrorist financing. Credit unions engaging in premium finance lending must continue to comply with all other regulatory requirements, including Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulations that require the filing of suspicious activity reports. The exemption is effective once all of the federal banking agencies approve it.

The board was also briefed on the status of the Enterprise Solution Modernization Program’s first project, known as the Modern Examination and Risk Identification Tool (MERIT). This system will replace the agency’s legacy examination platform that has reached the end of its service life.

CUs Receive ‘Low Income Credit Union’ Grants and Loans
Seven credit unions in California and one in Nevada were the most recent recipients of urgent-needs grants and no-interest loans from the NCUA, ranging from $10,000 to $250,000 for COVID-19 emergencies and other urgent needs (a combined $315,000 for both states). Recipients include Episcopal Community FCU, Cal Poly FCU, Calcom FCU, Comunidad Latina FCU, Members 1st CU, Organized Labor CU, Pahranagat Valley FCU, and Rolling F CU. In total, the NCUA awarded $3.7 million to 162 federally-insured low income credit unions across the nation, helping them provide affordable financial services to members and communities during the COVID-19 pandemic.

LICU Natural Disaster ‘Urgent Needs’ Grants Still Available
Urgent-needs grants and no-interest loans for natural disasters remain available by the NCUA for eligible federally insured low-income-designated credit unions that need emergency and natural disaster relief due to sudden costs to restore operations. Low-income credit unions that wish to apply should review the NCUA’s grant guidelines and apply through the agency’s CyberGrants portal. Agency examiners can assist credit unions that wish to apply for those grants.

NCUA’s Streamlined Process for 2nd CDFI Application Round
The NCUA opened its second application round for eligible credit unions that want to qualify to use the agency’s streamlined process for Community Development Financial Institution (CDFI) certification. Federally insured, low-income-designated credit unions can find all the necessary information about CDFI qualification in the NCUA’s program guide. The application round closes on Oct. 17. To qualify, eligible credit unions should submit their loan-origination data to the NCUA by emailing CURECDFI@ncua.gov (secured email encryption) and complete a Participation Form.
 
The NCUA’s Office of Credit Union Resources and Expansion will analyze each applicant credit union’s products, services, and other indicators to determine whether it qualifies for the streamlined application process. The NCUA will provide qualified credit unions with the necessary information to complete and submit the streamlined certification application to the CDFI Fund, which will make the final determination on certification.
 
Credit unions that do not qualify for the streamline process may still use the standard CDFI certification application.
 
Any credit union that obtains certification may apply for the CDFI Fund’s training and competitive award programs. These resources can enhance credit unions’ capacity to provide insured, affordable financial services to unserved or underserved communities.

FinCEN Seeks Comments: Effectiveness of Anti-Money Laundering Programs
The Financial Crimes Enforcement Network (FinCEN) issued an Advance Notice of Proposed Rulemaking (ANPRM) to solicit public comment on a wide range of questions pertaining to potential regulatory amendments under the Bank Secrecy Act (BSA). The proposals under consideration are intended to provide financial institutions greater flexibility in the allocation of resources and greater alignment of priorities across industry and government, resulting in the enhanced effectiveness and efficiency of anti-money laundering programs. Comments from all interested parties will help inform the scope of any future regulatory actions and should be submitted within 60 days of the ANPRM’s publication in the Federal Register. Read the news release here and the ANPRM here.

CFPB Proposals for Small Business Lending Data Collection Rulemaking
The Consumer Financial Protection Bureau (CFPB) has released an Outline of Proposals Under Consideration for the small business lending data collection and reporting rulemaking pursuant to Section 1071 of the Dodd-Frank Act. Section 1071 requires financial institutions to collect certain data regarding applications for credit for women-owned, minority-owned, and small businesses, and to report that data to the bureau on an annual basis.
 
A high-level summary of the outline can be found here. The outline describes proposals being considered to implement Section 1071 along with the relevant law, the regulatory process, and an economic analysis of the potential impacts of the proposals on directly affected small entities.

The CFPB, in collaboration with the U.S. Small Business Administration (SBA), will convene a Small Business Review panel in October 2020 to consult with small entities regarding the potential impact of the proposals under consideration, in advance of issuing a notice of proposed rulemaking. The CFPB also welcomes stakeholders to provide written feedback on the proposals under consideration. Feedback should be emailed to 2020-SBREFA-1071@cfpb.gov prior to Dec. 14, 2020.

Webinar: Coronavirus Scams, Older Adults, Financial Protection
You can join experts from the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), and the Administration for Community Living at Health and Human Services (HHS) for a free webinar on Oct. 6 at 11 a.m. (Pacific). The FTC will begin the program with an overview of coronavirus-related scams targeting older adults. The CFPB will share resources to help older adults avoid financial distress due to the pandemic. HHS will conclude the webinar with a discussion of the role of the aging network, including Adult Protective Services, legal services attorneys, and Long-term Care Ombudsman program experts. Panelists will share government resources for aging service providers and older consumers. If you have questions, contact olderamericans@cfpb.gov.

Freddie Mac: Disaster Relief Options for Wildfires Victims
Freddie Mac is reminding mortgage servicers of its disaster relief policies for homeowners amid the ongoing wildfires threatening Western states. Freddie Mac's disaster relief options are available to homeowners whose homes or places of employment are located in presidentially-declared Major Disaster Areas where federal individual-assistance programs are made available to affected individuals and households. Mortgage servicers may immediately leverage Freddie Mac’s short-term forbearance programs to provide mortgage relief to homeowners who have been affected by the natural disasters. Affected homeowners currently on a COVID-19 related forbearance or other relief plan should contact their servicer to discuss options. Read more here.

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