ViClarity Compliance Update

​June Q & A; three hot topics and rules review at next Town Hall; CFPB begins inquiry into mortgage “junk fees”; and registry to target financial corporate offenders.
 

The Dakota Credit Union Association’s dues-supported compliance solution –  ViClarity – is a world leader in credit union compliance. To read the complete articles that are linked, you will need to log in with your username and password. If you have questions about establishing your members-only account with ViClarity, click here for detailed instructions or contact John Alexander in the DakCU office.
 
Q: What are the details for FinCEN’s request for Beneficial Ownership comments?
A:  FinCEN is issuing a notice to renew the OMB control number for the beneficial ownership requirements for legal entity customers' regulations contained in 31 CFR 1010.230. Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. All comments will become a matter of public record. Comments are invited on: whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; the accuracy of the agency's estimate of the burden of the collection of information; ways to enhance the quality, utility, and clarity of the information to be collected; ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

Q: Is an Early Disclosure required for a closed-end Home Equity loan at the time of application?
A: Early disclosures for closed-end home equity loans at the time of application are not required. However, under 12 C.F.R § 1026. 40(b), an early disclosure and brochure are required to be given at the time an application is provided to the consumer for an open-end Home Equity loan (i.e. HELOC).

Q: How should overdrawn share accounts be reported on the 5300 Call Report?
A: Overdrawn non-commercial share accounts of all types, regardless of an existing overdraft protection program, should be reported in Schedule A, Section 1, line 4 - All Other Unsecured Loans/Lines of Credit.
More Q & As including sources available here.
 
Q2 Town Hall Webinar: 3 Hot Topics + Upcoming Rules Review
Join ViClarity for our quarterly town hall webinar exploring the latest trends and challenges in fraud, cybersecurity and fair lending – three topics we are asked about frequently via our league compliance hotlines. We will share strategies to assist with fraud prevention, help you understand cybersecurity vulnerabilities, and ensure your credit union maintains adherence to fair lending regulations. We’ll also review upcoming rules and regulations from NCUA and other agencies that impact credit unions. Don’t miss this opportunity to enhance your knowledge and stay ahead of upcoming changes in an ever-evolving compliance environment. Sign up today!
 
The CFPB Issues Requests for Information on Mortgage Fees
The Consumer Financial Protection Bureau (CFPB) has begun a public inquiry into “junk fees” related to the increase in closing costs for mortgages. This announcement is the latest in a string of CFPB inquiries into purported “junk fees” levied by financial institutions for various financial products such as overdraft fees and nonsufficient funds fees. The underlying motivation for the CFPB’s inquiry is so that it can understand “why closing costs are increasing, who is benefitting, and how costs for borrowers and lenders could be lowered.” Read more on the topic here.
 
FTC Releases Annual Report to CFPB
The Federal Trade Commission (FTC) submitted a report to the Consumer Financial Protection Bureau (CFPB) detailing its enforcement activities on the Truth-in-Lending Act (TILA, Regulation Z), Consumer Leasing Act (CLA, Regulation M), and the Electronic Funds Transfer Act (EFTA, Regulation E). The report covers the activities of the FTC for the year 2023 and gives information on many different regulatory areas such as automobile financing and leasing, payday lending, other credit and leasing, and electronic fund transfers. The report highlights the FTC’s initiatives and enforcement actions as well as implementation efforts under the above-listed regulations. Details here.
 
CFPB Creates Registry to Target Repeat Financial Corporate Offenders
In order to identify repeat offenders, the Consumer Financial Protection Bureau (CFPB) has created a corporate registry to “detect and deter corporate offenders that have broken consumer laws and are subject to federal, state, or local government or court orders.” The registry was created as a result of a finalized rule issued by the CFPB. According to the CFPB, it is part of an on-going effort to hold “lawbreaking companies accountable and stopping corporate recidivism.” Additionally, the CFPB is attempting to deter companies from treating financial penalties from being the “cost of doing business.” In the words of CFPB Director Rohit Chopra, “Too often, financial firms treat penalties for illegal activity as the cost of doing business. The CFPB’s new rule will help law enforcement across the country detect and stop repeat offenders.” Read the full article here.
 
CFPB Release Circular Warning Against Using Deceptive Contract Language
The Consumer Financial Protection Bureau (CFPB) has released a circular warning against using unlawful or unenforceable terms in contracts for consumer financial products. The circular indicates that individuals or entities that engage in this type of contract drafting may be violating the Consumer Financial Protection Act. The CFPB believes that some companies use “fine print tricks” to deceive or entrap consumers into a contractual arrangement with terms that are harmful to the consumer. Specifically, these types of deceptive companies or individuals “hide” terms in the fine print to trick consumers into thinking that they have given up a legal right or protection. Read more here.