Regulatory Bulletin: April 2017


In This Issue:

  • Do You Still Have to Worry About Fair Lending? Just Ask Alpine Bank!!
  • Did You Hear?  CFPB Has a New Proposal To Help Meet Regulation B of its Rule Implementing ECOA.
  • How Can You Help Educate Customers and Bank Staff to Prevent Elder Financial Exploitation, Increase Customer Relations and Enhance SAR Reporting?
  • Can You Document Your Compliance Management System Program?  If Not, You Need to Do So Now!!
  • Contact Our President or Marketing Director for More Information


Do You Still Have to Worry About Fair Lending? Just Ask Alpine Bank!!


On March 10, 2017, the U.S. Department of Housing and Urban Development (HUD) announced an agreement with Alpine Bank & Trust resolving allegations the lender discriminated against African American and Hispanic mortgage applicants.  The complaint filed with HUD claimed the lender’s business service areas excluded majority African-American and Hispanic neighborhoods, in violation of the Fair Housing Act; the bank’s lack of a presence in majority African-American and Hispanic communities in the Rockford area made financial products less available to potential applicants based on their race and national origin; and that the lender provided white applicants with better information, and offered them more favorable terms and conditions than African American and Hispanic applicants.

As part of the HUD-mediated settlement, Alpine Bank will: establish a $1 million loan program to increase mortgage lending to residents in majority African-American and Hispanic areas in the Rockford metropolitan area; pay $75,000 to HOPE (entity filing complaint); offer targeted community outreach to minority areas, including seminars relating to financial literacy, homeownership, and credit counseling, and conduct a direct mailing campaign in majority African-American areas; provide fair lending training for its mortgage lending staff; and research the possibility of opening a new automated services branch in a majority-minority neighborhood in the Rockford metropolitan area.  See HUD press release at:

FRC can perform a Fair Lending Risk Assessment to help you identify and correct deficiencies before they result in any regulatory action

Did You Hear? CFPB Has a New Proposal To Help Meet Regulation B of its Rule Implementing ECOA.


On March 24, 2017, the Consumer Financial Protection Bureau (CFPB) released a proposal to amend Equal Credit Opportunity Act (ECOA) regulations to provide additional flexibility for mortgage lenders in the collection of consumer ethnicity and race information.  See notice of proposal at

The CFPB states the proposed amendments will provide greater clarity to lenders regarding their obligations under the law, while promoting compliance with rules intended to ensure consumers are treated fairly.

Regulation B, the CFPB’s rule implementing ECOA, includes restrictions regarding lenders’ ability to ask consumers about their race, color, religion, national origin or sex, except in certain circumstances. These circumstances include required collection of the information for some mortgage applications under Regulation B.

The CFPB’s proposal would provide compliance flexibility for individual mortgage lenders, and would also support the broader mortgage industry’s ability to use consistent forms and compliance practices. Under the proposal, mortgage lenders would not be required to maintain different practices depending on their loan volume or other characteristics, allowing more lenders to adopt application forms that include expanded requests for information regarding a consumer’s ethnicity and race, including the revised Uniform Residential Loan Application. Other proposed provisions contain amendments to Regulation B to facilitate compliance with Regulation B’s requirements for the collection and retention of information about the ethnicity, race, and sex of applicants seeking certain types of mortgage loans.  For a copy of the proposal see


How Can You Help Educate Customers and Bank Staff to Prevent Elder Financial Exploitation, Increase Customer Relations and Enhance SAR Reporting?


On March 13, 2017, the FDIC announced enhancements to its Money Smart for Older Adults curriculum that provide new information and resources to help older adults and their caregivers avoid financial exploitation through fraud and scams.  See

Money Smart for Older Adults (MSOA) is an educational program which  identifies common types of elder financial exploitation, such as imposter scams and identity theft, and is designed to inform adults age 62 or older and their caregivers about ways to prevent, identify, and respond to financial exploitation.  Money Smart for Older Adults was developed jointly by the FDIC and the CFPB in response to the financial exploitation of senior citizens—an abuse that is rarely reported, with 90 percent of victims exploited by a relative, friend, or trusted acquaintance.   See

The curriculum covers seven topics: Common Types of Elder Financial Exploitation; Scams Targeting Veterans; Identity Theft; Medical Identity Theft; Scams that Target Homeowners; Planning for Unexpected Life Events; and How to Be Financially Prepared for Disasters.

There are two substantial reasons for banks to develop a training program based upon the MSOA.  First, banks are encouraged by the regulators to use the training curriculum to teach older adults what elder financial exploitation is and why they may be at risk. This may be a tool for bank-community partnership, in which bank staff could deliver this information in collaboration with providers of senior services or adult protective services. The second benefit is for internal training for bank staff to help identify suspicious activity relating to elder abuses so the bank may appropriately file SARs and take any additional actions which may be appropriate.  If you need assistance in developing the training program please contact FRC.


Can You Document Your Compliance Management System (CMS) Program? If Not, You Need to Do So Now!!


All banks are required to have an effective CMS Program.  This consists of: (1) Board and Management Oversight; (2) Compliance Program; and (3) Compliance Audit.  The regulators expect management to take steps to develop a mature compliance program, along with proactive risk assessment and monitoring for compliance with applicable laws and regulations.

In response to negative findings for any component of a bank’s CMS, the regulators have issued Cease and Desist Orders, a Memorandum of Understanding, or Written Agreement or other similar document with findings such as “Operating with inadequate management and Board of Directors oversight.”   For such a negative result to occur, a bank is typically found to be deficient in one or more components such as policies, monitoring or management oversight, but the consequences of such findings are compounded if the bank cannot demonstrate that it has a formal program for documentation of the elements of its CMS Program.

Documentation of the CMS Program should include:

(1) Board of Directors and Management Oversight – The Board and Senior Management set the tone for the Bank’s Compliance Program.  Key actions that a Board and management may take to demonstrate their commitment to maintaining an effective compliance management system and to set a positive climate for compliance include: demonstrating clear and unequivocal expectations about compliance, not only within the institution, but also to third-party providers; adopting clear policy statements; appointing a compliance officer with authority and accountability (e.g. develop compliance policies and procedures; be able to cross departmental lines, and have access to the Bank’s operations and effect corrective action); allocating resources to compliance functions commensurate with the level and complexity of the institution’s operations; conducting periodic compliance audits; and providing for recurrent reports by the compliance officer to the Board

(2) Compliance Program -A sound compliance program is essential to the efficient and successful operation of the institution, much as a business plan. A compliance program includes the following components: policies and procedures; training; monitoring; and consumer complaint response

(3) Compliance Audit – A compliance audit is an independent review of the Bank’s compliance with relevant laws and regulations and adherence to internal policies and procedures.  The Board will determine the scope of an audit, which may be performed “in-house” or by an independent party.  The Board and Senior Management must respond to the audit report and ensure deficiencies are addressed.

An effective method to document the CMS Program is to prepare a package with a series of documents and narrative analyses of the bank’s management oversight; compliance program policies, procedures and other elements; and audit results and actions.  FRC has successfully prepared comprehensive document packages for a bank’s CMS Program and can assist you in developing your own or do it for you.  If you would like our help please contact us.


Contact Our President or Marketing Director for More Information


• Mr. Kevin Kane, President, CEO and Founder of FRC, who has substantial legal, compliance and regulatory experience – (212) 849-6828  
• Ms. Shelly Berman, Marketing Director, who has substantial experience in assisting financial institutions obtain the products and services they need to meet their goals – (301) 262-6987

For more information visit our website at



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