Banking regulation compliance is steadily changing and evolving. New updates are being released all the time and stay updated on what they are and what they mean is essential. From disaster insurance to CRA there has been quite a bit of movement in this industry.
Understanding the changes that have occurred is crucial for those in the industry and consumers. While FFIEC Cybersecurity will remain a top priority, there are other changes to know about, as well.
1- CRA Compliance Updates
At the last Consumers Bankers Association conference, the chairwoman of the FDIC stated she hoped that the OCC, FRB, and FDIC would have a plan for CRA modernization within a year. Others have projected a quicker timeline, but the goal is to meet these compliance standards as quickly as possible.
Many regulatory agencies have already started creating a formal, rulemaking proposal and it is believed the CRA reform will be focused on both metrics and clarity, which is needed in the industry.
2- Freddie Mac and Fannie May Make Revised URMLA Use Mandatory
In 2019, Fannie Mae and Freddie Mac announced they would be accepting the revised Universal Residential Mortgage Loan Application -; URMLA, which is Form 1003. It became mandatory to submit this form in February of 2020.
The URLA Form 1003 is a standardized document that is used by a borrower who is trying to acquire a mortgage. It is jointly published by the GSEs and it has been used for more than two decades. Fannie and Freddie also updated the DU Spec that is available for applicants to use.
3- Facebook Charged with Housing Discrimination by HUD
Recently, HUD began to investigate Facebook for the advertising practices that they believed allowed “digital redlining.” This resulted in HUD filing formal charges of housing discrimination against the social media giant.
In response to this investigation, Facebook updated its advertising practices quite a bit, but according to HUD, the changes were not enough. According to the charge filed, it was alleged that Facebook helped advertisers exclude anyone classified in groups that aligned with protected classes according to the FHA. It also lets advertisers exclude people based on geography by adding red lines to a map.
4- Updates Made to the Consumer Compliance Examination Manual by the FDIC
Updates were recently made to the Consumer Compliance Examination Manual by the FDIC. Usually, this crucial resource is updated once per year by the FDIC. Some of the things that were updated this time include the SOURCE Violation Codes, the Truth in Lending Act, Home Mortgage Disclosure Act, Consumer Leasing Act, Electronic Fund Transfer Act, and Community Reinvestment Act. There were also changes made to the CRA data review timeframes and the sampling guidelines.
5- Vendor Management a Renewed Focus for the NCUA
Some credit unions across the country have shared that the NCUA has begun spending more time on vendor management in various compliance examinations. This is information provided by the NAFCU.
Some of the possible problem areas for credit unions, according to the most recent guidance provided include risk measurement, control, and monitoring, due diligence, and risk assessment and planning. The FDIC has also stated it will increase its focus on vendor risk management issues in the coming months.
6- Final Rule Released by Agencies for Private Flood Insurance Acceptance
Several years have passed since the passing of the Biggert Waters Act. This requires that financial institutions accept private flood insurance if it can meet the set criteria. Now, the agencies have announced a final rule regarding the acceptance of private flood insurance. The new rule was put into effect in July of 2019. According to industry experts, there are a few specifics that people need to know.
Lenders must accept any flood insurance that meets the statutory definition of being private flood insurance along with the mandatory purchase requirement. Also, the final rule includes a “compliance aid” in every section, which helps lenders accept privacy policies with ease.
Lenders can also accept private policies that do not meet the precise statutory criteria but that provide enough coverage (based on the opinion of the lender) from a soundness and safety perspective. The Final Rule lets lenders also use their discretion to accept flood insurance by issuing the “mutual aid societies,” like agreements from the Amish community to cover any flood losses to someone’s property.
7- Regulators and Congress Pushing to Let Banks Provide Service for Marijuana Businesses
Over 20 Senators have filed bipartisan legislation to help ensure marijuana-related businesses have access to the banking services needed. This legislation, which is called the SAFE (Secure and Fair Enforcement) Banking Act allows the federally regulated banks to provide service to any state-licensed marijuana grower, dispensers, or processors without the threat of any type of compliance or legal repercussions.
The top regulators have also pushed for Congress to actively reform the stance it has on marijuana banking. Over 25 of the top regulators in territories and states came together to sign a letter that urged Congress to offer financial services to any state-authorized cannabis business while providing clarity on regulatory enforcement and authority.
The federal regulators have not been silent on this topic, either. Many leaders of the Treasury and the Federal Reserve have been urging Congress to take some type of action to provide more clarity on this topic for the industry.
Understanding the Latest Banking Regulation Compliance Updates
Like many other things in the world today, banking regulation and compliance are constantly changing and evolving to better meet the needs of modern consumers. Knowing what the latest changes are is the best way to know what to expect and what to do to achieve the desired results.
Being informed is the best way to ensure that people know what to expect and what to do to ensure they are meeting the latest standards that have been set by the industry. As changes continue, remaining updated is essential for anyone in the industry and consumers to know what is expected and what is required.
