Compliance Blog

Written by Shereefat Balogun, Regulatory Compliance Counsel

Happy Monday ya'll and happy November!  October was a pretty busy month on the regulatory side.  We had TRID implementation in the beginning of the month.  A few weeks later, NCUA's final RBC requirements and CFPB's final HMDA rule dropped on the same day!  It was pretty rough.  So to start off the new month, we're going to keep it light and just give you some compliance tid-bits for your general consumption. 

October Issue of NCUA Report Now Available.  NCUA's latest report is now available.  The report covers topics such as expansion of the small credit union threshold, NCUA's plan to acquire vendor authority, and possible field of membership changes.  Some highlights:

• NCUA Board Expands Small Credit Union Threshold to $100 Million- NCUA recently raised the asset ceiling for a small credit union from $50 million to $100 million under the Regulatory Flexibility Act.  The change adds 733 more federally insured credit unions to the classification of small entity, and thus makes them eligible for special consideration of regulatory relief in future rulemaking and assistance from the agency's Office of Small Credit Union Initiatives.  The final rule is effective November 23, 2015.
• NCUA Highlights Push for Vendor Authority- NCUA has stated that acquiring vendor authority is one of the agency's top legislative priorities.  NCUA wants the ability to examine and regulate third-party service providers.  Opponents of this plan argue that it will be another undue burden for credit unions; or that NCUA's current policies requiring credit unions to exercise due diligence in their monitoring of third-party service providers is sufficient to quell any concerns. 
• McWatters Suggests Field of membership Changes- Also in this issue, NCUA Board Member, J. Mark McWatters explains that the FCU Act can support more flexibility for credit union as it relates to field of membership.  Moreover, McWatters opines that the agency's current requirements on field of membership go beyond what the FCU Act authorizes.  McWatters challenges the agency to be bold, and present to credit unions a field of membership proposal that will facilitate growth for credit unions.  While acknowledging that the most significant changes on field of membership can only come from Congress, McWatters urges credit unions to agree upon and decide what changes they want to pursue and develop a plan to of action for Congress to consider.

Delegation of Community Charter Amendments.  Speaking of field of membership- NCUA recently issued a final rule relating to the approval of community charters.  We have been asked about how the new rule impacts a credit union's request for expansion.  The new rule does not change the process by which a community chartered credit union applies for an expansion of its geographic boundaries; rather it transfers the authority to review and approve such requests that may result in a membership pool of more than 1 million people from the NCUA Board to the Office of Consumer Protection (OCP).  NAFCU has put together a summary of the final rule which can be found here.  Here are the highlights of the new Delegation:

• The NCUA Board delegated to the Office of Consumer Protection (OCP) its authority to review and approve community charter expansion requests involving a potential membership pool of more than one million people.
• Under the approved change, the Director of OCP now has the authority to approve all community charter application, conversion or expansion requests.
• OCP is required to request review and comment by the Office of Examination and Insurance prior to making any determination involving community charters with a potential membership pool of more than one million people.
• After approving a community charter conversion or expansion, OCP will continue to follow up with the federal credit union every year for three years to monitor progress.
• The NCUA Board reserves the right to hear appeals of any charter denials by OCP.

CFPB Releases 2016 List of Rural or Underserved Counties.  The 2016 list of rural or underserved counties is now available. What does that mean for you? Some businesses with volume in rural or underserved counties that outweighs volume in other counties are exempt from certain regulatory requirements in Ability to Repay and Qualified Mortgage standards, as well as escrow requirements, under TILA.  You can find the list here.

NCUA Proposed Rule: Investment and Deposit Activities- Bank Notes.  The NCUA Board proposes to amend the maturity requirement for bank notes to be permissible investments for federal credit unions by removing the word original from the current requirement that bank notes have original weighted average maturities of less than 5 years.  If this proposed rule is finalized, federal credit unions will be able to purchase bank notes that were originally issued with maturities greater than 5 years, but have remaining maturities of less than 5 years.  There is a 30-day comment period, rather than the traditional 60-day period.  The comment period ends on November 23, 2015.

See, not too bad!