Compliance Update with Amy K

​True to the title, today’s article is all about updates: a simplified CECL tool; updated ACET; annual threshold updates; and CUPolicyPro updates. 

by Amy Kleinschmit, Chief Compliance Officer
 
UPDATED – Simplified CECL Tool
In case you missed it, the National Credit Union Administration (NCUA) issued an update to its Simplified CECL Tool which can be found here. Click on “download the latest Simplified CECL Tool.”
 
With future quarterly updates of the Simplified CECL Tool, a credit union can use the tool to estimate its allowance for credit losses on loans and leases. Timely updates will be provided each quarter for a credit union to incorporate into closing its books and for submitting the NCUA’s Call Report.
 
UPDATED – ACET
The NCUA also announced the release of an update to its Automated Cybersecurity Evaluation Toolbox (ACET). The latest version of the ACET includes security updates and performance improvements. This version no longer requires the use of IIS Express and SQL Server 2012 Express LocalDB, which are no longer supported.
 
Download the latest version of the ACET, as well as finding other cybersecurity resources, here.
 
Annual Threshold Updates
The Consumer Financial Protection Bureau (CFPB) has issued a final rule with annual updates for Regulation Z, specifically 1026.3(b) which are effective January 1, 2023.
 
12 CFR 1026.3 details transactions that are not subject to Regulation Z. 1026.3(b) provides that “An extension of credit in which the amount of credit extended exceeds the applicable threshold amount or in which there is an express written commitment to extend credit in excess of the applicable threshold amount, unless the extension of credit is: (A) Secured by any real property, or by personal property used or expected to be used as the principal dwelling of the consumer; or (B) A private education loan as defined in § 1026.46(b)(5).” Effective January 1, 2023, the exemption threshold amount is increased from $61,000 to $66,400.
 
The CFPB also issued a final rule with annual updates to the threshold exemption relating to appraisal requirements for higher-priced mortgage loans.
 
12 CFR 1026.35(c) sets forth the appraisal requirements for higher-priced mortgage loans, including the exemptions. In general, a creditor shall not extend a higher-priced mortgage loan to a consumer without obtaining, prior to consummation, a written appraisal of the property to be mortgaged. The appraisal must be performed by a certified or licensed appraiser who conducts a physical visit of the interior of the property that will secure the transaction. However, 1026.35(c)(2) lists the exemptions, including, subsection “(ii) An extension of credit for which the amount of credit extended is equal to or less than the applicable threshold amount, which is adjusted every year to reflect increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers, as applicable, and published in the official staff commentary to this paragraph(c)(2)(ii).” Effective January 1, 2023, the exemption threshold amount is increased from $28,500 to $31,000.
 
CU PolicyPro Updates
Creating policies is hard enough, but keeping everything updated as laws, regulations, and guidance changes can be downright scary! One of the benefits provided from CU PolicyPro is content updates (generally quarterly) to help keep you on top of those changes all year long!
The third quarter updates from CU PolicyPro are now available here.
 
Remember – updates are only made to the model policies, not the credit union’s adopted policies in CU PolicyPro. Therefore, review the Update Overview at the link above and the redlined documents related to this update (these can be found in the Resources area of CU PolicyPro under Content Update Archives > October 2022), to determine if you want to:

• 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).

 

• 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).

 

• 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).

 
A video tutorial is available in CU PolicyPro in the Support area which reviews the best practices for each of the options above and provides tips for documenting the updates for auditing purposes.
 
Remember – CU PolicyPro is a dues supported resource available to all DakCU affiliated credit unions. This online policy service provides more than 230 complete operation model policies for credit unions. The full policy management system allows credit unions to edit, store, audit, distribute, and archive policies. Assignments, alerts and reminders help credit unions keep their policies up to date as regulations change over time. CU PolicyPro is provided as a FREE benefit of membership.
 
As always, DakCU members may contact Amy Kleinschmit with any compliance related questions.

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