Reminder to Review Policies/Procedures for Year-end updates

At the end of each year, the CFPB and other regulatory agencies may update certain monetary thresholds based on the Consumer Price Index (CPI) or IRS changes. Please review existing policies and procedures to ensure compliance with the new changes.

Credit Cards
Credit card programs are governed by the open-end credit provisions of Regulation Z.

The Federal Reserve Board (FRB) amended Regulation Z and the Official Staff Commentary (OSC) to the regulation in order to implement provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the Credit Card Act).

Note: Under the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB) has inherited oversight of Regulation Z.

How do the credit card rules under Regulation Z affect credit unions?

Credit unions that offer credit cards must comply with the open-end (not home-secured) credit provisions of Regulation Z.

Credit Cards: FAQs

Question: Can the credit union extend a credit card account to a non-working spouse under Regulation Z’s Ability to Repay?

Answer: Effective May 3rd, 2013 with a mandatory compliance date of November 4, 2013, assuming an applicant is age 21 or older the Final Rule states, in determining a consumer’s ability to repay, the final rule permits issuers to consider income or assets to which an applicant or accountholder who is 21 or older - thus subject to 1026.51(a) – has a reasonable expectation of access.

Furthermore the Official Interpretations to this section goes on to state for instance; Assume that an applicant is not employed and that the applicant is age 21 or older, if a non-applicant’s salary or other income is deposited regularly into a joint account shared with the applicant, a card issuer is permitted to consider the amount of the non-applicant’s income that is being deposited regularly into the account to be the applicant’s current income for purposes of the regulation.

Question: Do the ability to repay rules contain any exception for share-secured credit card accounts?
Answer: No. The rule does not have an exception for share-secured credit card accounts. Therefore, a consumer would be required to have either an independent source of income sufficient to make the required payments or have a cosigner, guarantor or a joint applicant on the account.

For additional information, click here for the topic.

Review the information today to help your credit union remain in compliance.


Supreme Court TILA Disclosure Ruling – How it Affects Credit Unions

A new ruling from the Supreme Court will make it even more important for credit unions to provide thorough Truth in Lending disclosures as part of their mortgage closing process.
In Jesonoski v. Countrywide Home Loans, the court unanimously agreed with homeowners Larry and Cheryle Jesonoski that U.S. law only required they notify Bank of America in writing within three years of closing that they were rescinding their mortgage because of disclosure problems.

The law did not, as Bank of America argued, require the homeowners to have sued within three years to rescind, the court said. “Section 1635(a) explains in unequivocal terms how the right to rescind is to be exercised,” wrote Justice Antonin Scalia for the court. “It provides that a borrower “shall have the right to rescind . . .by notifying the creditor, in accordance with regulations of the Board, of his intention to do so” (emphasis added).

The language leaves no doubt that rescission is affected when the borrower notifies the creditor of his intention to rescind, according to the court. It follows that so long as the borrower notifies within three years after the transaction is consummated, his rescission is timely, the court said. The statute does not also require him or her to sue within three years.

Analysts speaking to media outlets said the ruling would have only a limited impact now. However, it would likely take on more importance if another economic downturn led more homeowners to leave mortgages on properties that had fallen below their loan balances.

Sources: Credit Union Times

RBC2 improves: Still solution in search of problem, CUNA says

ALEXANDRIA, Va. (1/16/15)--While the National Credit Union Administration's revised risk-based capital (RBC2) proposal contained many changes wanted by the Credit Union National Association, the organization believes further changes are needed.

The proposal was approved by the NCUA board Thursday by a 2-1 vote, with board member J. Mark McWatters casting the dissenting vote.

See the below video (1 hour, 42 minutes), for the risk-based capital discussion from Thursday's meeting. The video is also available at CUNA's Risk-Based Action Center.

CUNA President/CEO Jim Nussle called the proposal a "solution in search of a problem," particularly given the likely costs to credit unions.

NCUA Director of Examination and Insurance Larry Fazio estimated that the one-time costs for credit unions to read the rule and make the appropriate operational changes to be approximately $5.1 million. He also estimated an annual cost of less than $1 million from credit unions in labor for new call report requirements.

This has led Nussle, along with National Association of Federal Credit Unions President/CEO Dan Berger, to again question the necessity of having the rule at all.

"Based on the healthy capital levels across the credit union industry and the millions of dollars in costs associated with this proposed rule, our respective organizations still have serious issues with it and continue to question the necessity of the proposal," the two said in a joint statement Thursday.

However, the rule does contain many improvements sought by CUNA in its original comment letter, and in its advocacy efforts throughout last year.

These include:

  • Lowering the requirement to be well-capitalized to 10%, from the originally proposed 10.5%;
  • Lowering of risk weights for mortgage loans, member business loans, long-term investments and credit union service organizations. CUNA pushed for a lower weight for mortgage servicing assets as well, but this was not lowered;
  • Removal of interest-rate risk from the proposal. The NCUA has said interest-rate risk may be addressed in a separate rulemaking, which CUNA is against;
  • Removal of the individual minimum capital requirement; and
  • Changing the implementation period to Jan. 1, 2019. An 18-month period was originally proposed.

"The changes respond to the major criticisms we levied against the original proposal. As a result, it is a step toward a more palatable final rule, and the entire NCUA board is to be commended," Nussle said. "However, RBC2 is far from perfect, and CUNA and the leagues will again provide analysis and support for credit unions to generate comments to drive further improvements."

The 90-day comment period for the proposal will not start until it is published in the Federal Register , which could be a few weeks.

For more information, check's CUNA's Risk-Based Capital Action Center , Risk-Based Capital blog and future issues of News Now.

Source: CUNA News Now

Palm Springs FCU gets $50K from NCUA for data breach
​ALEXANDRIA, Va. (1/16/15)--Palm Springs (Calif.) FCU will receive payment of up to $50,000 for costs associated with a data breach caused when a thumb drive given to an examiner was lost during an examination. The agency announced the reimbursement during its open board meeting Thursday.

The NCUA funds are intended to pay the credit union for activities such as credit report monitoring for members, credit union staff time associated with the breach and legal fees.

The agency noted in a release, "To date, the related costs associated with the data breach are approximately $36,000. Payments will come from NCUA's existing operating funds. In the event costs ultimately exceed $50,000, subsequent board action would be required."

Almost from the outset the NCUA has said the lost stored data was the results of a failure to follow longstanding agency policies on securing sensitive data. The agency has said the thumb drive did not include passwords or personal identifications numbers--PINs--and that the NCUA has received no indication of any unauthorized access to members' accounts or attempts to gain improper access.

The agency statement declares: NCUA takes its responsibilities for the security of credit union members' personally identifiable information very seriously and is committed to ensuring data shared in exams is protected at all times. The agency is taking appropriate action with staff involved in the incident and is reinforcing training on protecting sensitive information and reviewing regulations, policies and procedures in this area. NCUA is also moving as quickly as possible to consider and adopt additional safeguards to protect electronic data.

Source: CUNA News Now

CFPB releases new toolkit for prospective homebuyers
WASHINGTON (1/14/15)--On the heels of a report declaring that nearly half of mortgage borrowers do not shop around, the Consumer Financial Protection Bureau (CFPB) unveiled a toolkit designed to help potential homebuyers assess mortgage options. The "Owning a Home" toolkit contains resources about understanding loan options, a portal to check interest rates and more.

"'Owning a Home' has great new tools to help consumers throughout the home buying experience, from the very start of the process all the way to the closing table," said Richard Cordray, CFPB director, as he announced the toolkit. He added that in addition to the tools helping consumers decide how much they can borrow, get a grasp on new mortgage disclosure forms and other information, the bureau plans to add additional tools over the course of this year.

One feature Cordray highlighted while speaking at the Brookings Institution Tuesday is the Rate Checker. It incorporates information from lenders' internal rate sheets, which is used to calculate available interest rates for specific consumers.

"Borrowers looking to buy a single-family home can use the Rate Checker to input their own information and find out what interest rates they are likely to be offered from lenders in their area," he said. "By plugging in their credit score, their location, and information about the loan they are seeking, they can see the rates that lenders are offering to borrowers like them."

The CFPB report, "Consumers' mortgage shopping experience," features data from the 2013 National Survey of Mortgage Borrowers, an initiative from the CFPB and Federal Housing Finance Agency to better understand mortgage markets. The survey results come from more than 5,000 respondents who answered approximately 100 questions pertaining to the entire mortgage process.

The report found:

  • Almost half (47%) of consumers who take out a mortgage only seriously consider a single lender or mortgage broker. This tendency is somewhat higher among first-time homebuyers;
  • The primary source of information for borrowers is a lender or broker, followed by a real estate agent;
  • A sizable share of borrowers report that outside factors, such as a lender or broker's reputation and geographic proximity, are very important in their decision makers. These borrowers are much less likely to shop around; and
  • Borrowers who prioritize the terms of the loan over the characteristics of the lender and who are more confident in their knowledge about the mortgage process are more likely to shop around

Source: CUNA News Now


Comments due March 23 on prepaid financial product protections

WASHINGTON (12/31/14)--Comments on a Consumer Financial Protection Bureau (CFPB) proposal to create consumer protections for prepaid financial products are due March 23.

The proposal, if approved in final form, would amend Regulation E (which implements the Electronic Fund Transfer Act), Regulation Z (which implements the Truth in Lending Act) and the official interpretations to the regulations.

The protections, proposed by the CFPB in November, were published in the Dec. 23 Federal Register, thereby establishing the comment deadline.

"The proposal would expressly bring such products within the ambit of Regulation E as prepaid accounts and create new provisions specific to such accounts," reads the notice in the Federal Register . "The proposal would generally cover those prepaid accounts that are cards, codes, or other devices capable of being loaded with funds and usable at unaffiliated merchants or for person-to-person transfers, and are not gift cards."

The proposal would:

  • Modify Regulation E to establish specific prepaid account requirements that would require financial institutions to provide certain disclosures to consumers prior to and after the acquisition of a prepaid account;
  • Include an alternative to Regulation E's periodic statement requirement that would permit prepaid product providers to make available certain methods for access to account information in lieu of sending periodic statements;
  • Apply Regulation E's limited liability and error resolution provisions to prepaid accounts with certain modifications, including applying these provisions after account registration;
  • Require prepaid account issuers to provide the bureau with terms and conditions for such accounts, to be posted on a website maintained by the CFPB. Issuers would also be required to post the terms and conditions on their own sites or make them available upon request;
  • Subject prepaid cards that access overdraft services or credit features to Regulation Z's credit card rules;
  • Require that consumers consent to overdraft services or credit features and give them at least 21 days to repay the debt incurred in connection with using such services or features;
  • Amend Regulation E to include disclosures about overdraft services or credit features that could be linked to prepaid accounts; and
  • Amend the compulsory use provision under Regulation E to prohibit prepaid account issuers from requiring consumers to set up preauthorized electronic fund transfers to repay credit extended through an overdraft service or credit feature.

While only a limited number of credit unions offer prepaid cards, the Credit Union National Association has a variety of concerns about the impact of the proposal on these financial products now and into the future, such as treating overdrafts on prepaid cards as a loan.

CUNA will be working with its consumer protection subcommittee, payments subcommittee and CUNA Council credit union members to identify all concerns and develop recommendations to modify or oppose various provisions in the proposal.

Comments on the proposal are due to the CFPB by March 23.

Source: CUNA

Regulatory Advocacy Report

The CUNA Regulatory Advocacy Report keeps you on top of the most important changes in Washington for credit unions--and what CUNA is doing to monitor, analyze, and influence government agencies and federal law. You can view the current report and past reports from the archive.

Compliance eNEWSLETTER

January 23, 2015
Vol. 9, Issue 3

Created in partnership with the

Credit Union National Association

CU Compliance Connection – 2014 Year End Review

This presentation on CUBE TV is a 2014 year-in-review and will provide credit unions with a summary of the compliance items that became effective in 2014. You will want to be sure your credit union is in compliance with all of the changes that occurred during this past year.


January, 2015 February, 2015
  • February 16th, 2015: Washington's Birthday/President's Day - Federal Holiday
March, 2015 April, 2015 May, 2015
  • May 25th, 2015: Memorial Day - Federal Holiday
July, 2015


CUNA offers hundreds of online training events that make it easy for you to learn right at your desk. Whether you are looking for a beginner course or want a comprehensive understanding on a specific topic, CUNA webinars, audio conferences and eSchools have what you need. Click here for updates on compliance, operations, lending topics and more!

BSA Training for the Frontline and Beyond webinar 1/21/2015

2015 Frontline Compliance webinar series 1/21/2015

2015 ACH Rule Changes webinar 1/21/2015

Servicemembers Civil Relief Act webinar 1/22/2015

The Current State of UDAAP Unfair, Deceptive or Abusive Acts or Practices webinar 1/29/2015

ID Theft, Red Flags and Check Fraud for the Frontline webinar 2/4/2015

Expiring ITINs and Form W-8BEN webinar 2/18/2015

Payments Systems Fraud for Compliance Staff webinar 2/19/2015

Collection Compliance Do’s and Don’ts for the Frontline webinar 3/4/2015

Recognizing Financial Elder Abuse for the Frontline webinar 3/11/2015

New Accounts for the Frontline – Compliance Issues to Watch For webinar 4/1/2015

CUNA Regulatory Compliance School (Spring Las Vegas) 4/12/2015

Cyber Crime - No Gun Needed, Detecting and Preventing a Corporate Account Takeover webinar (5/13/2015

CUNA Consumer Lending eSchool (2015) 6/1/2015

The Basics of Consumer Lending – Part 1 webinar 6/1/2015

Home Equity Lending webinar (2015) 6/4/2015

The Basics of Consumer Lending – Part 2 webinar 6/8/2015

Consumer Lending Compliance 101 webinar 6/11/2015

Top 100 Trends in New and Used Car Lending - Plus Unsecured Lending webinar 6/15/2015

Advanced Exceptions with International ACH Transactions (IAT) - OFAC Compliance webinar 6/17/2015

Financial Counseling - What to Look for and What to Know as a Lender webinar 6/18/2015