Proposed Regulations

Recently, the National Credit Union Administration (NCUA) issued an advance notice of proposed rulemaking (ANPR) on permitting natural person credit unions to engage in certain derivative activities for purposes of hedging interest rate risk.

NCUA has proposed to amend its rule that governs the process by which the agency solicits, receives, evaluates and acts on credit union applications for loans and technical assistance from NCUA's Community Development Revolving Loan Fund (CDRLF).

This proposal implements several provisions required under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). The proposal requires remittance transfer providers (providers) to provide pre-payment disclosures to senders containing specific information about the transfer, including the exchange rate, the applicable fees and taxes and the amount to be received by the designated recipient. These disclosures may be made orally if the transaction is conducted entirely by telephone. Additionally, the proposal requires a written receipt with the above information as well as additional information including the date of availability, the recipient's contact information and information regarding the sender's error resolution rights. Alternatively, the provider may make all of the written disclosures in a single pre-payment disclosure.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) grants the newly created Bureau of Consumer Financial Protection (the Bureau) authority to enforce most consumer financial protection laws.

NCUA has announced that it is considering a voluntary prepayment program for federally-insured credit unions to prepay assessments associated with the Temporary Corporate Credit Union Stabilization Fund.

The proposal would implement the requirements in Dodd-Frank that a lender determine a consumer's ability to repay before making a closed end mortgage loan. Regulation Z already includes an ability to repay requirement for higher-priced mortgage loans. This rule would apply to all consumer mortgage loans with the exception of HELOCs, timeshare plans, reverse mortgages or temporary loans. The proposal details four different ways to comply with the requirements. Two of the proposed methods are for more traditional loans. The other two proposed methods detail the process for balloon-payment mortgages and refinancing deals.

The proposed rule would make a number of changes to various parts of NACHA's rules that address risk management.

The Treasury, Railroad Retirement Board, Social Security Administration and Department of Veterans Affairs (VA) issued an interim final rule to provide guidance to financial institutions that receive a garnishment order for an account which holds exempt federal benefit payments.

The proposed rule revises the definition of “net worth” so that NCUA-contributed capital can be included in the calculation of regulatory capital under some circumstances. NCUA would permit a credit union to include § 208 assistance as regulatory capital where the assistance consists of capital accounts that: have a remaining maturity of five years or more; are not insured by the NCUSIF; may not be pledged as security on a loan to, or other obligation of, any party; have non-cumulative dividends; and are subordinate to the NCUSIF, shareholders, and creditors.

The proposed rule would require federally-insured credit unions (FICUs) to adopt and implement an interest rate risk (IRR) policy and management program. The requirements would apply to all FICUs with assets over $50 million and FICUs with assets between $10 and $50 million if the total of first mortgage loans held plus total investments with greater than 5 years maturities is equal to or greater than 100% of net worth.

The Treasury Department is seeking comment on the type of information the Consumer Financial Protection Bureau (CFPB) should request from consumers filing complaints.

The proposal would condition a depositary credit union's right of expeditious return on the depository credit union agreeing to accept returned checks electronically either directly or indirectly from the paying credit union.

The proposed rule would require financial institutions to disclose the structure of all incentive-based compensation arrangements.

In January of 2010, the Federal Reserve Board (the Board) and the Federal Trade Commission (the FTC) (collectively the Agencies) issued a rule (the January 2010 Rule) to implement the risk-based pricing provisions of the Fair Credit Reporting Act (the FCRA). That rule went into effect on January 1, 2011. The January 2010 Rule requires creditors that extend credit, based on the individual's credit report, at material terms that are less favorable than the terms available to most customers to provide a risk-based pricing notice. The notice must include several specific disclosures; however, it is generally intended to inform consumers that the creditor used a credit report in making its decision and that information in the credit report impacts the terms available to the consumer.

The proposed rule implements relevant provisions of the Dodd-Frank Act in three ways.

The proposal would require certain disclosures for any mortgage for which an escrow account is established. Previously, such disclosures were only required for “high-priced” mortgages for which escrow accounts were required by Regulation Z.

NACHA is considering proposing rules concerning ACH security, and has issued a framework for issuing the proposal.

FinCEN issued this Advance Notice of Proposed Rulemaking (ANPR) in order to gauge the potential financial crime and money laundering risks that may be posed by non-bank residential mortgage lenders and originators. Assuming that such institutions may pose such a risk, FinCEN is seeking comment on the extent of the risk and the scope of AML regulations which would be appropriate to monitor and safeguard that risk.

In the ANPR, FHFA requests comments on various changes it is considering with respect to its regulations on membership eligibility requirements.

The proposed rule would eliminate three exemptions from the requirement that federally insured credit unions use NCUA's official advertising statement or a specifically-permitted alternative.

The proposed rule provides that the NCUA will fully insure the net amount that any member maintains in a noninterest-bearing transaction account at an insured credit union.