Compliance Update with Amy K

​Scams increasing for younger adults; changes to the HMDA and closed-end mortgage threshold; NCUA letter to credit unions as emergency exemptions to in-person meetings expire, and more. 

by Amy Kleinschmit, Chief Compliance Officer

FTC Report – Scams increasing for younger adults
The Federal Trade Commission recently released a “data spotlight” illustrating that anyone, not just older adults, can be scammed. In fact, Gen Xers, Millennials, and Gen Z young adults (ages 18-59) were 34 percent more likely than older adults (ages 60 and over) to report losing money to fraud.
​
The FTC’s Data Spotlight report found that consumers under the age of 60 are significantly more likely—86 percent—to report losing money to online shopping scams than older adults. In addition, the report shows that adults under 60 are more than four times more likely than older adults to report losing money to an investment scam, and the majority of those losses happened in scams involving some form of cryptocurrency investments.

In fact, younger adults (18-59 years old) were more likely than older adults to lose money in the following frauds: online shopping; investment scams; government imposters; fake check scams; and job scams/employment agencies. Older adults were more likely to lose money in these fraud categories: business imposters; tech support scams; prizes, sweepstakes/lotteries; and family and friend imposters.

The median individual reported fraud loss by people 18-59 was $500 in 2021. The median reported loss was $800 for people 70-79, and $1,500 for those 80 and over.

Education is key – be sure you are educating your members, of all ages, on how to avoid being a victim of scams and frauds.
 
HMDA – Closed-End Threshold Change
As a reminder, last week we noted that the Consumer Financial Protection Bureau (CFPB) had issued a blog post concerning changes to the HMDA threshold – specifically, the closed-end mortgage threshold is 25, which is a decrease from 100. 

On September 23, 2022, the United States District Court for the District of Columbia issued an order vacating the 2020 Home Mortgage Disclosure Act (HMDA) Final Rule as to the loan volume reporting threshold for closed-end mortgage loans. The decision means that the threshold for reporting data on closed-end mortgage loans is now 25 loans in each of the two preceding calendar years, which is the threshold established by the 2015 HMDA Final Rule, rather than the 100 loan threshold set by the 2020 HMDA Final Rule.

Unfortunately, as of the time of writing this, the CFPB had yet to provide any additional information and/or guidance. They did however, issue a technical amendment which can be found here. The amendment revises Regulation C, which implements the Home Mortgage Disclosure Act, to reflect the Court’s action of vacating the 2020 rule, discussed above – thus the regulation now reflects the 25 closed-end mortgage loan threshold.
Whether an institution is a “financial institution” and is therefore subject to HMDA reporting depends in part on whether the institution originated at least 25 closed-end mortgage loans in each of the two preceding calendar years or at least 200 open-end lines of credit in each of the two preceding calendar years.
 
Letter to Federal Credit Unions – In-person meetings
The National Credit Union Administration (NCUA) recently issued Letter to Federal Credit Unions 22-FCU-03 which can be found here.

As you will recall, the NCUA issued several letters in 2020 and 2021 providing flexibility to FCUs to conduct their membership and board of director meetings completely virtually in response to COVID-19. These emergency exemptions will expire on December 31, 2022.

If your credit union adopted the bylaw amendment to Article IV of the NCUA’s Federal Credit Union Bylaws, the NCUA explains FCUs may retain the provision in their bylaws, but it will not be applicable after the end of 2022 unless NCUA issues a new notification allowing federal credit unions to invoke it.

The NCUA does note that “Although “virtual-only” member meetings will no longer be an option, the NCUA reminds federal credit unions that they may choose to hold hybrid meetings if that suits their needs. Hybrid meetings consist of a meeting held virtually in conjunction with an in-person component for members who wish to or need to attend that way. While general quorum requirements still must be met for hybrid meetings, federal credit unions may count attendees at both the virtual and in-person components toward those requirements.” Review your bylaws to determine if it allows for hybrid meetings.
 
CFPB Proposed Rule
The Consumer Financial Protection Bureau (CFPB) recently issued a proposed rule that would establish a registry that would collect information about certain public agency and court orders and facilitate the CFPB’s supervision of certain companies. Per the CFPB, “In this way, the Bureau would more effectively be able to monitor and to reduce the risks to consumers posed by entities that violate consumer protection laws. The Bureau also proposes to publish the registry online for use by the public and other regulators.”

The proposed rule would require certain nonbank covered person entities (with exclusions for insured depository institutions, insured credit unions, related persons, states, certain other entities, and natural persons) to register with the CFPB upon becoming subject to a public written order or judgment imposing obligations based on violations of certain consumer protection laws. Those entities would be required to register in a system established by the CFPB, provide basic identifying information about the company and the order (including a copy of the order), and periodically update the registry to ensure its continued accuracy and completeness.
 
NCUA Webinar – Diversity Self-Assessment
The NCUA will be hosting a free webinar on January 5, 2023 on - Q&A on the Credit Union Diversity Self-Assessment. During this webinar, participants can find out why the Credit Union Diversity Self-Assessment is so important and how easy it is to submit. Staff from NCUA’s Office of Minority and Women Inclusion will answer questions about the survey, its submission process, and how your credit union can foster greater diversity and inclusion. Registration can be found here.

As always, DakCU members may contact Amy Kleinschmit with any compliance related questions.
 

---