Compliance Blog

In the past, when leading up to a substantial compliance deadline, the CFPB has issued guidance indicating that in the early stages of implementation, the Bureau will look for "good faith efforts" to comply. We saw this with TRID in 2015 and with the Dodd-Frank mortgage servicing rules in 2014. We received questions from credit unions regarding whether a similar approach might be taken for HMDA. It turns out, the CFPB has stated this will be its exam approach for HMDA, but the information is buried in a recent edition of the Bureau's Supervisory Highlights. Here is an excerpt from page 41:

As noted above, the 2015 Final [HMDA] Rule’s new data requirements will apply to data collected beginning on January 1, 2018. Given the recent updates to the rule, the Bureau’s current principal focus is on providing regulatory implementation support to financial institutions, to assist them in operationally implementing the recent changes to the HMDA requirements. After the rule takes effect, consistent with our approach to the implementation of other Bureau rules requiring significant systems and operational changes, our approach will generally be diagnostic and corrective, not punitive. In our initial examinations for compliance with the rule, we intend to consider whether companies have made good faith efforts to come into compliance with the rule in a timely manner. Specifically, we will be evaluating a company’s overall efforts to come into compliance, including assessing the compliance management system and conducting transaction testing. If errors are identified, we will work with the institution to determine the root cause of the issue and determine what corrective actions, if any, are necessary (emphasis added).

What about NCUA? In the past, the agency has adopted a similar approach to examinations as the CFPB, such as this Supervisory Letter issued to examiners on the Dodd-Frank mortgage rules back in January 2014. Last week, NAFCU asked NCUA to once again take a similar position as the CFPB and look for credit unions' good faith efforts to comply with the new HMDA provisions in the early phases of implementation. We will keep credit unions posted on the issue.

Meanwhile, as we mentioned last week, the beta version of the CFPB's HMDA Platform is now available for testing. Those responsible for the credit union's HMDA data may want to start testing the platform as the beta version will be removed when the 2017 HMDA filing period opens on January 1, 2018. Issues with the beta version can be reported directly to the CFPB at HMDAFeedback@cfpb.gov (although the Bureau reminds users not to include personal information in these inquiries).

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MLA FAQ – MAPR on Periodic Statements

Many credit unions have asked us whether it is required to indicate a covered borrower's Military Annual Percentage Rate (MAPR) on disclosures including periodic statements. The MLA does not require numeric disclosure of the MAPR and in fact, in the preamble to the rule, the Department of Defense indicated that providing both the Regulation Z APR and the MLA MAPR may be confusing to borrowers:

The Department believes that, in light of section 987(i)(4) (“ ‘annual percentage rate’ has the same meaning as in section 107 of [TILA], as implemented by the [Bureau]”), section 987(c)(1)(A) of the MLA (“A statement of the annual percentage rate of interest”) should be interpreted so as not to require a creditor to calculate and disclose to a covered borrower a definitive figure for the “annual percentage rate” of interest applicable to the consumer credit that could include additional charges that must be counted as “interest,” and thereby would be materially different from the figure the creditor is required (under section 987(c)(1)(B) of the MLA) to compute and disclose under TILA. Instead, the Department believes that the appropriate approach to interpret the tension between sections 987(i)(4), 987(c)(1)(A), and 987(c)(1)(B) is to subject a creditor to one set of requirements for calculating and disclosing the costs of the extension of credit, namely, the requirements under TILA. One clear and beneficial consequence of interpreting these ambiguous provisions of the MLA under this approach is that a creditor is not required to provide to a covered borrower two different numerical disclosures, which inevitably would lead to confusion (emphasis added).

While the MLA does require a boilerplate disclosure explaining the MAPR, the rule does not require a numeric disclosure of the MAPR.

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Palate Cleanser - Trick or Treat

This year, Nolan was a dragon for Halloween which was a far cry from his first Halloween, where he was 3 weeks old so we put silver fabric over his swaddle and stuck a famous burrito company's logo on his chest. Lemmy's not big on costumes, although he really wanted to steal candy. Alas, he was unsuccessful.