May 5

Recent Compliance Issues: 4/18/14 – 5/1/14


1. Staff members from the Consumer Financial Protection Bureau (CFPB) recently responded to question from American Bankers’ Association members regarding mortgage compliance.

Some of the key points during this interchange include the following items:

*Creditors may use lender and seller credits to reduce the amounts that are calculated into the points and fees test. A written statement of who is providing which credits is sufficient to indicate compliance.

*Home equity line of credit resets do not constitute new transactions that would trigger full Ability-to-Repay rule underwriting.

*Loan originator bonuses deriving from funds that exclude mortgage profits are not subject to the otherwise applicable 10 percent limits on loan originator compensation.

Other topics included the definition of delinquency, when to begin foreclosure, construction-to-permanent loans, appraisals and valuations, collection contracts, periodic statements and prompt crediting.

It is not only critical that your institution is up on the latest commentary regarding such topics, but also that it is in compliance with all aspects of mortgage origination, periodic statements, and foreclosure procedures.

Our staff (former federal bank regulators) can review your policies and practices to ensure that your bank is following recent guidance.


2. Banks that have introduced new types of accounts with alternatives to overdraft fees are on the right track, according to some consumer watchdog groups. Smart banking solutions can be a step toward protecting consumers against the malicious effects of overdraft fees.

If your institution provides overdraft privilege programs, our staff should review them to make sure they all comply with applicable guidelines and regulations.


3. As a follow up to an item noted in the prior Recent Compliance Issues, (dated 4/4/14 through 4/17/14), the CFPB and the Office of the Comptroller of the Currency (OCC) have ordered Bank of America to pay $772 million in refunds and fines related to alleged deceptive credit card marketing and billing practices.

Regulators say the bank charged consumers for services that were never received. This serves as a reminder to let our former Federal regulators review appropriate aspects of your bank’s operations to avoid similar actions.