75 Late Filers in Second Quarter
Seventy-five federally insured credit unions were late filing Call Reports for the second quarter and now face potential civil money penalties, the National Credit Union Administration said today.
NCUA is reviewing the cases to determine whether any of the late filers have mitigating circumstances that warrant a waiver of penalties. NCUA expects to notify late filers in September of the penalties they face. Penalties are determined by three factors: size of the credit union, lateness in filing the Call Report and history of violations. The Federal Credit Union Act requires any penalties be sent to the U.S. Treasury.
Four credit unions that filed late in the second quarter also filed late in the first quarter. Sixty-three of the late-filing credit unions have assets of less than $50 million. NCUA will make public the names of late filers at a later date.
“The situation continues to improve, but we’re not yet at full compliance, which is where we need to be,” NCUA Board Chairman Debbie Matz said. “It is imperative that every credit union file its Call Report on time.”
In the first quarter of this year, 104 credit unions missed the Call Report filing deadline. After the agency reviewed the cases, 62 credit unions agreed to civil money penalties totaling $57,750.
Matz said NCUA has posted a video explaining the Call Report submission process, and the agency has begun sending out email reminders to credit unions in advance of the filing deadline. Credit unions needing assistance with or having questions about submitting waiver requests can call the agency’s new hotline at 703-548-2242. The hotline can also be reached by email at CallReportLateFiler@ncua.gov.
CFPB Adjusts Reg Z Thresholds
On an annual basis, the Consumer Financial Protection Bureau is required to adjust certain threshold amounts within Regulation Z, based on inflation, which implements the Truth in Lending Act, based on inflation. Below are the revised thresholds which were published in the Federal Register on Aug. 15, 2014, and become effective on Jan. 1, 2015.
The safe harbor amount for penalty fees has been raised by $1. After Jan. 1, 2015, a card issuer cannot impose a fee that exceeds $27 or $38 for violating the terms of the account if the card issuer previously imposed a fee for a violation of the same type that occurred during the same billing cycle or one of the next six billing cycles. A few examples of the fees subject to these limitations include late payment fees, returned payment fees and fees for an over-the-limit transaction.
Home Ownership Equity Protection Act
The dollar amount threshold used in connection with calculating whether a transaction meets the percentage point thresholds in the points and fees coverage test for a high-cost mortgage will be increased by two percent to $20,391. Therefore, after Jan. 1, 2015, if the loan amount is above $20,391 and the points and fees exceed eight percent of the total loan amount or $1,020, which was also increased by two percent (whichever is less), the loan would be considered high-cost under the rule.
Ability to Repay/Qualified Mortgage Thresholds
When determining whether a transaction is a qualified mortgage, the total points and fees cannot exceed certain limits. Below are the revised thresholds as of Jan. 1, 2015.
Points and Fees Limit
$61,172 - $101,952
$20,391 - $61,171
$12,744 - $19,999.99
$12,743 or less
FSR: Unverified complaint narratives could work against consumers
The Consumer Financial Protection Bureau's (CFPB) plan to allow consumer narratives in its complaint portal could likely work against consumers, as well as financial institutions, by spreading inaccurate information, according to the Financial Services Roundtable (FSR).
The FSR, which represents large integrated financial services companies, launched a campaign featuring social media and multimedia advertisements highlighting problems with the bureau's proposal.
The CFPB has accepted consumer complaints since it opened in 2011 and, to date, has handled more than 400,000 complaints. It announced the proposal to expand its consumer complaint database to include the consumer's narrative account of their experience and the problem they would like to see resolved.
The bureau said this would give context to complaints, spotlight specific trends and help consumers make more informed decisions. Those against the proposal worry it would spotlight inaccurate information without giving a named financial institution the chance to respond.
"The CFPB's plan will feature only one side of the story, and such one-sided accounts will not advance the CFPB's mission of better informing and helping consumers," said FSR President/CEO Tim Pawlenty.
The FSR cites the CFPB's own Consumer Response Report from 2013 that found, among other things, that almost 70% of all complaints filed were closed with a simple comment or clarification to the consumer.
According to the FSR, there are many unanswered questions in the CFPB's proposal, including how the CFPB plans to protect the identities of contributing consumers from the Freedom of Information Act and other public record requests and how the bureau will verify that a consumer is posting under a correct identity with an accurate account of what transpired.
On Aug. 6, the CFPB blog posted an item about universities in the Big Ten Conference that did not disclose partner contracts with financial partners for products. The report named four credit unions as failing to disclose details of the school and the financial institution it partnered with, but had to remove two credit unions from the article after it was found there was no such agreement in place.
The Credit Union National Association's Deputy General Counsel Mary Dunn took to the blog's comments to express concern that the blog entry, particularly the headline, made the impression that nondisclosure of a partnership meant these institutions were hiding information from consumers, when in fact many such disclosures are public, in accordance with state law or practices.
CUNA maintains that the other two credit unions should not have been named because there is no legal or regulatory requirement for such disclosures.
"There is no current regulatory requirement to publicly disclose a financial institution's contract with a college or university. Even so, some credit unions voluntarily choose to disclose these agreements, including two credit unions that were listed in your blog," Dunn wrote.
CUNA is currently pursuing issues related to consumer narratives being added to the CFPB complaint database with its consumer protection subcommittee.
Source: CUNA News Now
Guidance on mortgage servicing transfers includes do's, don'ts
New guidance issued by the Consumer Financial Protection Bureau (CFPB) illustrates things the bureau's examiners will look for loan servicing responsibilities are transferred. The CFPB's new mortgage servicing rules took effect Jan. 10 and are intended to protect borrowers from runarounds by loan servicers.
The guidance comes with several months of examinations under the new rules and highlights policies that are likely to get a financial institution flagged, as well as policies that meet the rule's requirements.
The new rule requires servicers to maintain accurate records, promptly credit payments, correct errors on request and maintain policies and procedures to facilitate handing over information when a servicer transfers a loan to a new company.
The CFPB currently has examination authority for financial institutions with more than $10 billion in assets. While that currently means only a few credit unions fall under the bureau's examination supervision, the new guidance is important for credit unions of all sizes, said Colleen Kelly, senior assistant general counsel for regulatory affairs for the Credit Union National Association.
"This guidance provides helpful compliance information for all credit unions that transfer mortgage servicing," she said.
The guidance lays out several specific scenarios in which CFPB examiners concluded that the servicers had engaged in unfair practices, including:
- Failing to properly identify loans that were trial or permanent modifications with the prior servicer at time of transfer;
- Failing to honor trial or permanent modification offers unless the servicer could independently confirm that the prior servicer properly offered a modification or that the offered modification met investor criteria; and
- Borrowers subsequently receiving a new modification with inferior terms, and in one case, the servicer conducted a foreclosure sale.
According to the CFPB, the servicers in the scenarios above were directed "to adopt policies and procedures to prevent continued unfair practices in this area and to remediate harmed consumers."
CFPB examiners consider transferors flagging all loans with pending loss mitigation applications, as well as approved loss mitigation plans (including trial modification plans) as having met the new rule's requirements.
Transferees requiring the transferor servicer to supply a detailed list of loans with pending loss mitigation applications, as well as approved loss mitigation plans will also be considered at having met the new requirements.
Source: CUNA News Now
What NCUA examiners look for on cybersecurity efforts: NCUA Report
With National Credit Union Administration examiners trying to identify and assess cybersecurity risks, the agency has released a list of cyber-security areas examiners look at. The information is featured in this month's The NCUA Report.
The assessment includes the following questions:
- Does the credit union have a board-approved information security policy commensurate with its size and complexity that meets the NCUA requirements?
- Has management recently performed and documented an information security risk assessment to identity threats, assess potential effects and are risk-remediation plans in place?
- Is the network and critical components such as servers and computers running updated virus and malware protection software?
- Does the credit union have a password policy that meets or exceeds industry standards? According to the NCUA, this means passwords with at least eight alphanumeric and special characters; and
- Is there a vendor management program, information security awareness training program, incident response and crisis management plan, and do they comply with NCUA regulations?
The article also recommends credit union management consider the possibility of cybersecurity insurance, which should cover costs associated with business interruptions, legal fees, public relations initiatives and hiring of additional staff or vendors.
A recent Ponemon Institute study cited by the agency estimates the average cost of a data breach is $3.5 million, which includes costs for investigations, notifications to members and reissuing credit and debit cards.
The NCUA Report also featured monthly commentary from Chair Debbie Matz. Her column listed several aspects of the agency's risk-based capital proposal that would likely be changed in response to feedback received through comment letters and the three Listening Sessions held during the summer.
She acknowledged that all risk weights in the proposal should be reviewed, and that the agency is considering lowering risk weights for investments, mortgages, member business loans, credit union service organizations and corporate credit unions.
"Examiners would have to undergo a rigorous process to convince their supervisory examiner, regional director and ultimately the NCUA board, if they believe a credit union needs to hold more capital than required by regulation," she wrote.
She also said the rule's implementation period will go "well beyond" the originally proposed 18 months, and that it would be enough time to give the NCUA time to update the call report system, train examiners on the revised rule and allow affected credit unions time to adjust their balance sheets.
Source: CUNA News Now
Internal CFPB report finds workplace challenges
Consumer Financial Protection (CFPB) internal report outlines employee concerns ranging from a perceived lack of diversity and a lack of clarity around processes, according to Politico (Aug. 12)
The CFPB's Office of Minority and Women Inclusion prepared the report, which is based on 48 listening sessions conducted by the bureau between April and June.
The report "frequently mentioned frustrations with insufficiency in infrastructure, lack of transparency and communication, and perceived unfairness in application of practices and procedures which permeated throughout the various areas of concern they mentioned," according to Politico.
According to an Aug. 12 Reuters article, the report also found that staff believed their supervisors micro-managed projects, were unclear about priorities, lacked uniform standards for employee performance and had misunderstandings concerning the bureau's hiring, promotion and pay practices, which contributed to the impression those decisions were unfair.
The CFPB announced in May it would remove its performance system after lower scores and bonuses were given to older employees and minorities, an action that led to the series of listening sessions.
According to Reuters , the report said the bureau's rapid expansion and pressure to churn out rules "fostered a culture of aggressiveness and a pace that could not be sustained long-term."
The report recommends additional internal communications mechanisms, additional training and creation of a forum to assess workplace trends.
CFPB Director Richard Cordray said he "embraces the recommendations" made in the report, and would work to ensure they are implemented, according to Politico.
Source: CUNA News Now