Compliance Blog

Posted by Anthony Demangone 

I'm still digging out from under an avalanche of emails following last week's annual conference.  But here's some stuff that caught my eye. 

BSA.  It seems that FinCEN now provides a  Spanish version of its Money Services Business BSA examination manual.  Umm. I was unaware they had an English version.  Here's a link to the English version.   And here's how this could come in handy.  If you serve MSBs, this manual provides a good overview of examiner expectations that can help you in your due diligence efforts with any member MSBs that you serve.

Foreclosures.  The reg reform law that President Obama recently signed will expand tenant rights in the case of foreclosures. Here's a great blog post from That Credit Union Blog that discusses the issue.   Here's a scary snippet:

The Dodd-Frank Act’s amendment to the PTAF clarifies the ambiguity to a large extent by stating:  â€œFor purposes of this section, the date of a notice of foreclosure shall be deemed to be the date on which complete title to a property is transferred to a successor entity or a person as a result of an order of a court or pursuant to provisions in a mortgage, deed-of-trust, or security deed.”

Therefore, it can no longer be argued, for example, that the PTAF is only applicable to leases or tenancies entered into prior to the lis pendens date.  While some ambiguity still remains, the PTAF as now amended, will likely be interpreted to apply to leases or tenancies entered into any time prior to the recording of the sheriff’s deed or other conveyance resulting from the foreclosure.  In other words, the PTAF will now apply to a tenant, other than the mortgagor, or the child, spouse or parent of the mortgagor, who enters into a lease or tenancy even after the sheriff’s sale, and probably even after confirmation of the sheriff’s sale, until the sheriff’s deed is recorded, as long as the lease or tenancy appears to be an arms-length transaction for an amount not substantially less than fair market rent, unless subsidized.

The amendment does not provide an express exception even if the tenant had actual knowledge of the foreclosure proceedings, as long as the lease or tenancy otherwise qualifies.  This opens the door wider than before to potential fraudulent leases or tenancies through the use of straw-man tenants or others, as a strategy to significantly delay the REO owner from recovering possession of the property.  It may be difficult to prove that such a lease or tenancy was not an arms-length transaction.  â€œStrategic renting” may now join “Strategic defaults” in our lexicon.

Yikes.  

Truth in Savings.  The Fed has released Consumer Affairs Letter 10-9.   The letter discusses recent changes to the Reg DD exam procedures for banks.  You may find the procedures handy, as the requirements for Reg DD practically mirror those for NCUA's Truth in Savings regulation.