Compliance Update with Amy K

by Amy Kleinschmit, Chief Compliance Officer 

​FCC final rule for robocalls; a proposed rule regarding QM loan definition; FHFA extends COVID-19 foreclosure eviction moratoriums; updates from InfoSight and Policy Pro, and more. 

 CFPB Proposed Rule
As was alluded to in the CFPB’s statement regarding QM rules (and discussed in last week’s Memo article) the CFPB has issued a proposed rule to delay the mandatory compliance date of the General QM loan definition recent final rule.  This proposed rule can be found here and comments are due April 5.
 
As you will recall, in December 2020, the CFPB issued a final rule amending the General QM definition.  The December final rule replaced the General QM DTI limit with a limit based on loan pricing and made other changes to the General QM loan definition.  The General QM Final Rule took effect on March 1, 2021 and it provided a mandatory compliance date of July 1, 2021.
 
The CFPB is now proposing to delay the mandatory compliance date of the General QM Final Rule until October 1, 2022.  If this proposal is finalized, for covered transactions for which creditors receive an application on or after March 1, 2021 and before October 1, 2022, creditors would have the option of complying with either the revised General QM loan definition or the General QM loan definition in effect prior to March 1, 2021.  Under the proposal, the revised regulations would apply to covered transactions for which creditors receive an application on or after October 1, 2022.
 
This delay of the mandatory compliance date would also impact the Temporary GSE QM loan definition.  The Temporary GSE QM loan definition would expire upon the earlier of October 1, 2022 or the date the applicable GSE exits Federal conservatorship (rather than on the current mandatory compliance date of July 1, 2021 or the date the applicable GSE exits Federal conservatorship).
 
This proposal would not make other changes to the General QM loan definition, however, as discussed in the summary of the proposed rule, the CFPB “plans to evaluate the General QM Final Rule’s amendments to the General QM loan definition and will consider at a later date whether to initiate another rulemaking to reconsider other aspects of the General QM Final Rule.”
 
FCC Final Rule - TRACED Act
The Federal Communications Commission (FCC) has issued a final rule to implement the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act).  This final rule can be found here and is effective March 29, 2021, “except for the amendments to § 64.1200(a)(3)(ii) through (v), (b)(2) and (b)(3), and (d), which are delayed indefinitely.”
 
Among other things, the rule:

• codifies the Telephone Consumer Protection Act (TCPA) exemptions for calls to wireless numbers into the rules to make those exemptions clearer and more understandable for both callers and consumers;
• amends the TCPA exemptions for artificial or prerecorded voice calls made to residential telephone lines so each satisfies the TRACED Act's requirements to identify who can call, who can be called, and any call limits.

 
Financial Institutions calls to a wireless number – for fraudulent transactions, security data breaches, and identity theft – were part of the TCPA exemptions that were codified into the rules.  The FCC found that these calls are “intended to address exigent circumstances in which a quick, timely communication with a consumer could prevent considerable consumer harms.”  This exemption has been in place for five years and to utilize this exemption a number of criteria/conditions must be met.
 
These conditions include:

• Voice calls and text messages must be sent only to the wireless telephone number provided by the customer of the financial institution;
• Voice calls and text messages must state the name and contact information of the financial institution (for voice calls, these disclosures must be made at the beginning of the call);
• Voice calls and text messages are strictly limited to those for the following purposes: transactions and events that suggest a risk of fraud or identity theft; possible breaches of the security of customers' personal information; steps consumers can take to prevent or remedy harm caused by data security breaches; and actions needed to arrange for receipt of pending money transfers;
• Voice calls and text messages must not include any telemarketing, cross-marketing, solicitation, debt collection, or advertising content;
• Voice calls and text messages must be concise, generally one minute or less in length for voice calls (unless more time is needed to obtain customer responses or answer customer questions) or 160 characters or less in length for text messages;
• A financial institution may initiate no more than three messages (whether by voice call or text message) per event over a three-day period for an affected account;
• A financial institution must offer recipients within each message an easy means to opt out of future such messages; voice calls that could be answered by a live person must include an automated, interactive voice- and/or key press-activated opt-out mechanism that enables the call recipient to make an opt-out request prior to terminating the call; voice calls that could be answered by an answering machine or voice mail service must include a toll-free number that the consumer can call to opt out of future calls; text messages must inform recipients of the ability to opt out by replying “STOP,” which will be the exclusive means by which consumers may opt out of such messages; and,
• A financial institution must honor opt-out requests immediately.

 
Credit unions can review the existing requirements for the TCPA here in the InfoSight summaries.
 
FHFA Extends COVID-19 Forbearance and Foreclosure Eviction Moratoriums
 
The Federal Housing Finance Agency (FHFA) recently announced that Fannie Mae and Freddie Mac are extending the moratoriums on single-family foreclosures and real estate owned (REO) evictions until June 30, 2021.  The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only.  The REO eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu of foreclosure transactions.  The current moratoriums were set to expire on March 31, 2021.
 
FHFA also announced that borrowers with a mortgage backed by Fannie Mae or Freddie Mac may be eligible for an additional three-month extension of COVID-19 forbearance.  This additional three-month extension allows borrowers to be in forbearance for up to 18 months.  Eligibility for the extension is limited to borrowers who are in a COVID-19 forbearance plan as of February 28, 2021, and other limits may apply.  Further, COVID-19 Payment Deferral for borrowers with an Enterprise-backed mortgage can now cover up to 18 months of missed payments.  COVID-19 Payment Deferral allows borrowers to repay their missed payments at the time the home is sold, refinanced, or at mortgage maturity.
 
InfoSight Update
 
The following updates were made in February:

• The Share Insurance topic in the Accounts channel has been updated to reflect the NCUA’s recent amendment, effective on March 26, 2021. 
• The Paycheck Protection Program topic was updated to provide additional information and resources from the SBA. 
• The Truth in Lending Act topic was updated under “Subpart E – Special Rules for Certain Mortgage Transactions” to reflect the CFPB’s final rule published and effective on February 17, 2021.
• Two of the Model Policies that were created in response to COVID-19 (Policy 7362 – Temporary Policy for Loan Modifications and Reporting – COVID-19 and Policy 7436 – SBA PPP) have been updated to reflect the expiration of certain programs and the extension of others.

 
CU Policy Pro Updates
 
This content update includes the addition of 1 new policy and 11 policy updates.  The tracked changes version of each update can be found in the Resources Area of CU PolicyPro (under the “Updates” tab).  It is important to note that when updates are made to the Model Policies Manual, these updates do not automatically go into your CU Policies Manual.  This is to ensure that your content is not overwritten or content that may not apply to your credit union is added.
 
For each policy update, your next steps are:
 

1. Do nothing and leave your policy as is (usually only if the update does not apply to your credit union, or you are not currently using the policy).
2. Remove the policy from your CU Policies Manual and bring in the updated policy in its entirety (usually if your CU Policies Manual version has little or no customization, or if our updates were very extensive and it would be easier to start with the updated content and re-customize for your credit union).
3. Use the redlined version as a guide and manually incorporate the updates into your CU Policies Manual version (usually if the updates were very minor, or if your CU Policies Manual version is heavily customized and it would be less work to manually add the updates rather than re-customize the policy).

 
The following policy updates were made:
 
Policy 1700 – Providing Products and Services to Limited English Proficiency Members  **NEW POLICY** This policy was created to assist credit unions and to coincide with the statement published by the CFPB to encourage financial institutions to better serve consumers with limited English proficiency (LEP). (Optional)
 
Policy 2610 – ACH Operations was updated to reflect the expansion of the Same Day ACH window.  These changes become effective on March 19, 2021. (Required)
 
Policy 2611 – ACH Management was updated to reflect the expansion of the Same Day ACH window.  These changes become effective on March 19, 2021. (Required)
 
Policy 2612 – ACH Audit was updated to reflect the expansion of the Same Day ACH window.  These changes become effective on March 19, 2021. (Required)
 
Policy 3165 – Loan Workouts and Nonaccrual Standards.  This policy was updated to add more context, detail and examples.  These changes are not driven by a new regulatory requirement or amendment.  An additional key field was also added to assist with applying a limit on the aggregate amount (percentage of net worth) for loan workouts at the credit union.
 
Policy 3170 – Troubled Debt Restructure.  Similar to policy 3165, this policy was updated to add more context, detail and examples.
 
Policy 7330 – Residential Real Estate Loans policy was updated to reflect the Regulation Z amendment to exempt credit unions from escrow requirements for higher-priced mortgage loans if certain conditions are met.  These changes became effective upon publication in the Federal Register, which was February 17, 2021.
 
Policy 7350 – Ability to Repay. Changes were made to both the ability-to-repay policies to reflect two changes to the CFPB qualified mortgage categories.  The first were changes to the general qualified mortgage category and the second was the addition of the seasoned loan qualified mortgage.  These changes become effective on March 1, 2021.
 
Policy 7351 – Small Creditor Ability to Repay. Changes were made to both the ability-to-repay policies to reflect two changes to the CFPB qualified mortgage categories.  The first were changes to the general qualified mortgage category and the second was the addition of the seasoned loan qualified mortgage.  These changes become effective on March 1, 2021.
 
Policy 7362 – Temporary Policy for Loan Modifications and Reporting – COVID-19. This policy was updated to reflect the expiration and extension of COVID-19 relief.  This policy continues to be fluid.  While there has been no formal guidance from the CFPB to revoke the examination lenience from the mortgage servicing rules, these relief items have been removed based on the new leadership’s direction.
 
Policy 7436 – SBA PPP.  This policy was changed to reflect the most recent changes by the SBA, including the Second Draw PPP loan opportunity, loan increase eligibility, and more.
 
Policy 9220 – Home Ownership and Equity Protection Act policy was updated to reflect the Regulation Z amendment to exempt credit unions from escrow requirements for higher-priced mortgage loans if certain conditions are met.  These changes became effective upon publication in the Federal Register, which was February 17, 2021.
 
As always, DakCU members may contact Amy Kleinschmit with any compliance related questions. 

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