Regulatory Bulletin: October 2010


We Hear That…

TISA Overdraft fees: The examiners have started to notice that the institutions are having problems in understanding the disclosure of how overdraft fees will be incurred, and consistency of fee terminology between initial disclosures and statements.

Customer Due Diligence: The ongoing CDD procedures might not be sufficient enough, if not based on the size and complexity of the institution. Information requested needs to be thorough, enough and appropriate to perform an assessment.

Have you completed?

S.A.F.E. Act (UPDATE): The Secure And Fair Enforcement Act requires the federal registration and the state licensing of mortgage loan originators, and registration must be accomplished through the National Registry. Also, there should be policies and procedures in place for the enforcement of this act. This interagency requirement is effective October 1st, 2010. The NMLS for employees of a financial institution could be accepting registrations as soon as January 28, 2011.

Did you know?

The Home Mortgage Disclosure Act (HMDA) Reporting Requirements have been amended under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

I. Introduction

Title X of the Act (Consumer Financial Protection) creates the Bureau of Consumer Financial Protection and also includes provisions that amend HMDA. There are new data fields to be reported to the Bureau.

II. Expansion of HMDA Reporting
a) In addition to already existing requirements for reporting the number and dollar amounts of mortgage loans and completed applications involving mortgagors or mortgage applicants grouped according to census tract, income level, racial characteristics and gender, the Act added a requirement to group the data by age.

b) Data must also be reported for the number and dollar amount of mortgage loans grouped according to measurements of:

i. the total points and fees payable at origination in connection with the mortgage;
ii. the difference between the annual percentage rate associated with the loan and a benchmark rate;
iii. the term in months of any prepayment penalty or other fee or charge payable on repayment of some portion of principal or the entire principal; and
iv. Such other information as the Bureau may require.

c) Data must also be reported for the number and dollar amount of mortgage loans and completed applications grouped according to measurements of:
i. the value of the real property pledged or proposed to be pledged as collateral;
ii. the actual or proposed term in months of any introductory period after which the rate of interest may change;
iii. the presence of terms or proposed terms that would allow the mortgagor or applicant to make payments other than fully amortizing payments during any portion of the loan term (e.g. interest only or negative amortization information);
iv. the actual or proposed term in months of the mortgage loan;
v. the channel of origination (e.g. retail, broker or other relevant categories;
vi. a unique identifier that identifies the loan originator under the S.A.F.E. Mortgage Licensing Act of 2008;
vii. a universal loan identifier;
viii. the parcel number that corresponds to the real property pledged or proposed to be pledged as collateral (to permit geocoding);
ix. the credit score of mortgage applicants and mortgagors; and
x. such other information as the Bureau may require.

III. Effective Date
The provisions are effective on the designated transfer date under the Act, which has now been set by the Treasury Secretary as July 21, 2011.

Getting to know us….

Richard Friedman, Senior Managing Consultant of FRC.
Prior to joining FRC, Mr. Friedman was a Bank Compliance Attorney for over 25 years for a major retail and institutional bank located in New York City. His responsibilities included oversight of ten business banking units, managing a staff of compliance officers nationwide to effect regulatory compliance, and interfacing with Federal and State regulators for examinations. Mr. Friedman joined FRC in 2008 and, in addition to performing regulatory reviews, has developed innovative risk assessment and compliance programs customized for FRC clients. In addition, Mr. Friedman developed the FRC Regulatory Bulletin to keep clients informed of regulatory changes and, along with other FRC contributors, has authored analyses, updates and articles, such as those relating to the Dodd-Frank Act. Mr. Friedman holds a Bachelor of Science Degree in Economics from the Wharton School, University of Pennsylvania and a Jurist Doctorate Degree from the School of Law, St. John’s University. Mr. Friedman is admitted to the Bar to practice law in New York and Pennsylvania.

Joint rules and guidance…

Final CRA rule to implement provision of Higher Education Opportunity Act: The provision requires the agencies to consider low-cost higher education loans to low-income borrowers as a positive factor when assessing a financial institution’s record of meeting community credit needs under the Community Reinvestment Act.

Guidance on mitigating risk posed by information stored on photocopiers, fax machines and printers: This guidance describes the risk posed by sensitive information stored on certain electronic devices and mitigating those risks. Nowadays, these types of office equipments may contain storage drives and may archive images of documents that are copied or transmitted. These equipments may also be leased by institutions. Information stored on these devices may be confidential in nature and may pose risks of compromising such information. Institutions should be aware of these risks and should implement written policies and procedures mitigating such risks. This guidance was issued on September 15, 2010.

FinCEN proposes regulatory requirement to report Cross-Border Electronic Transmittal of Funds: On September 27, 2010, FinCEN submitted a notice of proposed rulemaking that would require certain depository institutions and money-service businesses to provide records of certain cross border electronic transmittals of funds. This proposal is to meet the requirements of the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA).


This entry was posted on Sunday, October 17th, 2010 at 7:18 pm and is filed under BSA/AML/OFAC, Consumer Credit, CRA and Higher Education Opportunity Act, Cross Border Electronic Funds Transfers, Customer Due Diligence, Data Stored on Copiers and Printers, Deposits, Dodd-Frank Act, Dodd-Frank HMDA Changes, Electronic Banking, Information Technology, Lending, Regulatory Bulletins, S.A.F.E. Act, TISA Overdraft Fees. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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