Community Bank Compliance

Latest Compliance News

  • Agencies Adjust CRA Asset-Size Thresholds

    Dec 21, 2018
    Federal regulators announced the annual adjustment to Community Reinvestment Act thresholds. Effective Jan. 1, the “small bank” or “small savings association” designation applies to institutions that as of Dec. 31 of either of the prior two calendar years had assets of less than $1.284 billion.
  • Senate Spending Bill Would Extend Flood Program

    Dec 20, 2018
    A Senate spending bill that would avoid a partial government shutdown tomorrow includes an ICBA-supported extension of the National Flood Insurance Program.
  • Agencies Encourage Innovative BSA/AML Compliance

    Dec 05, 2018
    Federal agencies issued a joint statement encouraging depository institutions to consider and responsibly implement innovative approaches to meeting Bank Secrecy Act and anti-money laundering compliance obligations.
  • Congress Extends Flood Program Until Friday

    Dec 03, 2018
    Congress extended the National Flood Insurance Program through this Friday. With the program set to expire at the end of last week, the last-minute vote averted a lapse. Congress could extend the NFIP this week using a must-pass spending bill due this Friday or a separate six-month extension passed by the Senate last week.

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Upcoming Events

February 24 - March 01, 2019
March 01, 2019
Compliance Institute* - TX
Event Type: Seminar/Institutes
Lending, Deposit/Operations/Payments, Lending, Operations, Featured on Homepage, Compliance Certification, Compliance
Dallas, TX
February 26 - February 26, 2019
February 26, 2019
Webinar: Insurance for Community Banks
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Question of the Week

  • QUESTION: Some lenders are sticking to the ECOA having a section entitled “husband and wife”. They are using this phrasing in order to deny same sex married couples. How is this viewed by examiners in regards to fair lending?

    ANSWER:  Under Regulation B discrimination based on marital status is prohibited. Regulation B does not distinguish or define marital status as “husband and wife”. The CFPB policy applies to all of the laws, regulations, and policies that we administer, including the Equal Credit Opportunity Act (ECOA), Fair Debt Collection Practices Act (FDCPA), Truth in Lending Act (TILA), and Real Estate Settlement Procedures Act (RESPA). That means that when it comes to administering, enforcing, or interpreting the laws, regulations, and policies within our jurisdiction, we use and interpret the terms like “spouse,” “marriage,” “married,” “husband,” “wife,” and any other similar terms related to family or marital status to include lawful same-sex marriages and lawfully married same-sex spouses.

    Reference: Regulation B 12 CFR 1002.4, 1002.5, 1002.6. CFPB memo: Memorandum on Ensuring equal treatment for same sex couples, issued June 25, 2014.

  • QUESTION: A borrower's flood insurance was cancelled. The bank was including the premium payments in the escrow account. Because flood insurance wasn’t required by the bank due to the SFHD, is it the bank’s responsibility to replace the insurance?


    Under RESPA, if the borrower asserts an error the bank must follow the error resolution procedures including, this includes for RESPA. Regardless of the reason for the flood insurance policy, it was part of the escrow account, and the servicer is responsible for payments of insurance and other items for which the bank maintains an escrow account. The bank must address immediately the lack of flood policy, even though it was not required by flood insurance regulations. It is the bank’s responsibility to contact the insurance company and reinstate the policy or find a new company. The bank needs to review and remedy the error in payment, for example was there a change in address and the bank wasn’t informed, or was the payment missed internally? The bank must also address any procedural issues that led to the error – for example: Why wasn’t the insurance policy premium paid from escrow? Was it a human error, or software error? Once review has determined the issue, it must be determined whether it was isolated or systemic and corrected accordingly. Consider updating procedures, testing of software, training, etc. The incident should be documented and reported to the Board.

    Reference:  Real Estate Settlement Procedures Act 1024.37.

  • QUESTION: The bank is developing a self-testing program to determine whether all applicants for credit are being treated fairly. Is the bank permitted to collect normally prohibited information to be able to analyze?


    Regulation B carves out a provision for allowing collection of normally prohibited information to be used in self-testing. The information that is collected must be kept separately from the loan files and must not be used to determine creditworthiness.

    In preparing to conduct a self-test that involves the collection of applicants’ personal characteristics, creditors would be expected to develop a written plan that describes, among other things, the specific purpose of the self-test, the methodology to be used, the geographic area covered by the test, the types of credit transactions involved, the identity of the entity that will conduct the test and analyze the data (such as the creditor’s audit department), and the timing of the test, including the expected start date and end date or the expected duration of the test.  The creditor is generally required to retain records regarding a self-test, including   personal-characteristics data and all other written or recorded information about the self-test for 25 months after a test has been completed.

    In addition, the self-test provision requires that creditors take appropriate and timely corrective action when the self-test shows that it is “more likely than not” that a violation of the ECOA or Regulation B has occurred, even though no violation has been formally adjudicated.  12 CFR 202.15(c)(1) (emphasis added).  Creditors should ensure that corrective action is taken on a timely basis and is “reasonably likely to remedy the cause and effect of a likely violation.”

    Reference: Regulation B 12 CFR 1002.5(b)(1); 1002.15. Regulation B final rule issued 2003, page 14. Note: the Federal Reserve version uses 12 CFR 202.