Compliance Question of the Week

In today’s banking environment as soon as one big new regulation is implemented another pops up. Our compliance resources help your community bank stay one step ahead of the regulators.

Regulations and Guidance

Question: Under the small institution lending test performance standards of the Community Reinvestment Act, will examiners consider both loan originations and purchases?


ANSWER: 

Yes, consistent with the other assessment methods in the regulation, examiners will consider both loans originated and purchased by the institution. Likewise, examiners may consider any other loan data the small institution chooses to provide, including data on loans outstanding, commitments, and letters of credit.

Reference: CRA: Interagency Q&As Regarding Community Reinvestment; Guidance, 07/25/2016.

 

 
 

 

 


 

Q&A Archives

ANSWER:

The creditor who reduces the interest rate on the obligations must forgive interest in excess of 6%.

Reference: Section 207; 50 USC 527.



 

 

 

 

ANSWER:

In general, FinCEN regulations require certain MSB principals to register with FinCEN. Many MSBs, including many in the US, operate through a system of agents. An agent may not be required to register with FinCEN. FinCEN states that a money services business that is an agent of a principal money services business will generally have contracts and agreements with the principal money services business and agents should be expected to provide these agreements to the bank upon request. Additionally, many large money services businesses list information about their agents on their public web sites.

Reference: FinCEN: FAQs in Interagency Interpretive guidance on Providing Banking Services to Money Services Businesses Operating in the United States, April 2005.



 

 

 

 

ANSWER:

Regulation B defines a self-test as any program, practice, or study that:

  • Is designed and used specifically to determine the extent or effectiveness of a creditor's compliance with the Act or this regulation; and
  • Creates data or factual information that is not available and cannot be derived from loan or application files or other records related to credit transactions.
Certain types of information are privileged. The privilege under this section applies to the report or results of the self-test, data or factual information created by the self-test, and any analysis, opinions, and conclusions pertaining to the self-test report or results. The privilege covers workpapers or draft documents as well as final documents.

Some types of information are not privileged. The privilege under this section does not apply to:

  • Information about whether a creditor conducted a self-test, the methodology used or the scope of the self-test, the time period covered by the self-test, or the dates it was conducted; or
  • Loan and application files or other business records related to credit transactions, and information derived from such files and records, even if the information has been aggregated, summarized, or reorganized to facilitate analysis.

Reference: 12 CFR 1002.15.



 

 

 

 

ANSWER:

The Filing Instructions Guide (FIG) at the Bureau's website contains the file specifications, edit specifications, and additional resources to help you file HMDA data.

Reference: HMDA Filing FAQs - https://hmdahelp.consumerfinance.gov/knowledgebase/s/



 

 

 

 

ANSWER:

In general, compliance with Regulation E (12 CFR Part 1005) is deemed to satisfy the disclosure requirements of Regulation DD 1030.3, such as when:

  • An institution changes a term that triggers a notice under Regulation E, and uses the timing and disclosure rules of Regulation E for sending change-in-term notices.
  • Consumers add an ATM access feature to an account, and the institution provides disclosures pursuant to Regulation E, including disclosure of fees (see 12 CFR 1005.7.)
  • An institution complying with the timing rules of Regulation E discloses at the same time fees for electronic services (such as for balance inquiry fees at ATMs) required to be disclosed by this part but not by Regulation E.
  • An institution relies on Regulation E's rules regarding disclosure of limitations on the frequency and amount of electronic fund transfers, including security-related exceptions.
But any limitations on “intra-institutional transfers” to or from the consumer's other accounts during a given time period must be disclosed, even though intra-institutional transfers are exempt from Regulation E.

Reference: Official Staff Interpretation 1030.3(c).



 

 

 

 

ANSWER:

The FDIC addresses letters of credit in its Risk Management manual of examination polices.

Letters of Credit are also addressed under 12 CFR 337.

Also see FFIEC call report instructions.

Reference: Off-Balance Sheet Activities (12-04) 3.8-2 DSC Risk Management Manual of Examination Policies Federal Deposit Insurance Corporation FDIC 12 CFR 337.



 

 

 

 

ANSWER:

The Homeowners Protection Act addresses failures by a provider, in part it states:

In general, with respect to a residential mortgage transaction, the failure of a servicer to comply with the requirements of this chapter due to the failure of a mortgage insurer or a mortgagee to comply with the requirements of this chapter, shall not be construed to be a violation of this chapter by the servicer.

Reference: Homeowners Protection Act: 12 USC 490(c)



 

 

 

 

ANSWER:

The bank provides a reasonable means to exercise the right to opt out, if the bank:

1. designates check-off boxes in a prominent location on the opt out notice;

2. includes a a reply form with the opt out notice;

3. provides an electronic means to opt out (e.g. a from that can be sent via e-mail or a process on the bank's website, if the consumer agrees to receive information electronically); or

4. provides a toll-free telephone number.

Reference: 12 CFR 1016.7(a)



 

 

 

 

Ask an Expert

We want to hear your pressing questions about compliance at your bank. Please fill in the form below. Not all questions will be featured. Your questions will be kept anonymous.