Compliance Blog

Posted by Anthony Demangone

Here are a few items to kick off your week.

Garnishments.  Federal agencies have issued an interim final rule on garnishments.  Read the NAFCU Today article on the rule, which provides a nice overview.  

The rule establishes procedures that financial institutions must follow when they receive a garnishment order against an account holder who receives certain types of Federal benefit payments by direct deposit. The rule requires financial institutions that receive such a garnishment order to determine the sum of such Federal benefit payments deposited to the account during a two month period, and to ensure that the account holder has access to an amount equal to that sum or to the current balance of the account, whichever is lower.

The rule is effective May 1, 2011.  NAFCU is preparing a "Final Regulation" to provide a detailed overview of the new requirement.

Escrow.  The Fed recently issued a final rule  regarding escrow requirements for certain "jumbo" mortgage loans.

The final rule implements a provision of the Dodd-Frank Act that increases the annual percentage rate (APR) threshold used to determine whether a mortgage lender is required to establish an escrow account for property taxes and insurance for first-lien, "jumbo" mortgage loans. Jumbo loans are loans exceeding the conforming loan-size limit for purchase by Freddie Mac, as specified by the legislation.

In July 2008, the Board issued final rules requiring creditors to establish escrow accounts for first-lien higher-priced mortgage loans. A first-lien mortgage is considered a higher-priced mortgage loan if its APR is 1.5 percentage points or more above the current average prime offer rate. Under the final rule being issued today, the escrow requirement will apply to first-lien jumbo loans only if the loan's APR is 2.5 percentage points or more above the average prime offer rate. The APR threshold for non-jumbo loans remains unchanged. The final rule is effective for covered loans for which the creditor receives an application on or after April 1, 2011. (Emphasis added.)

BSA. The Fed has published a Spanish version of the 2010 FFIEC BSA Manual. 

HMDA.  NCUA has issued Regulatory Alert 10-RA-02 to highlight data collection requirements related to HMDA and Regulation C for 2011.