In today’s banking environment as soon as one big new regulation is implemented another pops up. Our compliance resources help your community bank stay one step ahead of the regulators.Regulations and Guidance
(1) In general if a servicer determines that a mortgage did not meet the requirements for termination or cancellation of private mortgage insurance under subsection (a) or (b) of section 4902 of this title, the servicer shall provide written notice to the mortgagor of the grounds relied on to make the determination (including the results of any appraisal used to make the determination).
(2) Timing Notice required by paragraph (1) above shall be provided -
(A) With respect to cancellation of private mortgage insurance under section 4902(a) of this title, not later than 30 days after the later of—
(i) the date on which a request is received under section 4902(a)(1) of this title; or
(ii) the date on which the mortgagor satisfies any evidence and certification requirements under section 4902(a)(3)  of this title; and
(B) with respect to termination of private mortgage insurance under section 4902(b) of this title, not later than 30 days after the scheduled termination date.
Reference: Homeowners Protection Act: 12 USC 4904(b)
Regulation B states the following about immigration status: “A creditor may inquire about the permanent residency and immigration status of an applicant or any other person in connection with a credit transaction.” Further: “A creditor may consider the applicant's immigration status or status as a permanent resident of the United States, and any additional information that may be necessary to ascertain the creditor's rights and remedies regarding repayment.” As race, color, and national origin are all protected consideration must be made regarding any policies based solely on immigration status. In addition, when developing, revising policies, the bank should consider how federal, state and civil rights laws address discrimination against someone based on immigration status.
Reference: Regulation B: 12 CFR 1002.1(b); 1002.5, 1002.7
Internet gambling business means the business of placing, receiving or otherwise knowingly transmitting a bet or wager by any means which involves the use, at least in part, of the Internet, but does not include the performance of the customary activities of a financial transaction provider, or any interactive computer service or telecommunications service.
For additional information see the definition of Unlawful Internet Gambling under 12 CFR 233.2(bb)
Reference: Regulation GG: 12 CFR 233.2(r) and (bb) Definitions
The CIP rule provides that a “customer” generally is “a person that opens a new account.” 31 C.F.R. § 103.121(a)(3)(i)(A). When an account is opened by an individual who has power-of-attorney for a competent person, the individual with a power-of-attorney is merely an agent acting on behalf of the person that opens the account. Therefore, the “customer” will be the named owner of the account rather than the individual with a power-of-attorney over the account. By contrast, an individual with power-of-attorney will be the “customer” if the account is opened for a person who lacks legal capacity. 31 C.F.R. § 103.121(a)(3)(i)(B)(1).
Reference: Financial Institution Letters, FAQs: Final CIP Rule (January 2004).
Regulation U states that good faith means:
(2) Making a determination or accepting a statement concerning a borrower means that the lender or its duly authorized representative is alert to the circumstances surrounding the credit, and if in possession of information that would cause a prudent person not to make the determination or accept the notice or certification without inquiry, investigates and is satisfied that it is correct;
The interpretation to Regulation U, under 221.106 provides additional guidance on relying on good faith statement.
Reference: Regulation U: 12 CFR 221.2 and Interpretation 221.106
Covered transaction with respect to an affiliate means:
(1) An extension of credit to the affiliate;
(2) A purchase of, or an investment in, a security issued by the affiliate;
(3) A purchase of an asset from the affiliate, including an asset subject to recourse or an agreement to repurchase, except such purchases of real and personal property as may be specifically exempted by the Board by order or regulation;
(4) The acceptance of a security issued by the affiliate as collateral for an extension of credit to any person or company; and
(5) The issuance of a guarantee, acceptance, or letter of credit, including an endorsement or standby letter of credit, on behalf of the affiliate, a confirmation of a letter of credit issued by the affiliate, and a cross-affiliate netting arrangement.
Reference: Regulation W: 12 CRF 223.3(h)
Yes. Regulation J was amended to include the remotely created check warranties.
Reference: Regulation J 12 CFR 210.6(b); See also: Regulation CC: 12 CFR 229.34
When working with a third party, in this case indirect lending, the bank needs to work to minimize risk and this includes implementing controls and procedures to help manage the expectations of the third party. For example:
The bank should have these items at a minimum outlined in the contract. See agency guidance on third party relationships for additional information.
Reference: https://www.minneapolisfed.org/publications/banking-in-the-ninth/indirect-lending; FDIC, Examination Guidance for Third party lending, July 2016.
With that in mind, it should be noted that many banks choose to include “member FDIC” on all advertisements for FDIC insured products/services (this does not include nondeposit investment products). Keep in mind that use of the official advertising statement should follow the restrictions as presented in the regulations.
Reference: 12 CFR 328.3(e)
We want to hear your pressing questions about compliance at your bank. Please fill in the form below. Not all questions will be featured. Your questions will be kept anonymous.