Last Month's Q&A Answered

The following question appeared in the Q&A section of Banking Spectrum's Report Bulletin last month. Compare your answer to the correct answer below:

Q:  We have a potential depositor who wants to establish a revocable living trust.  She only will give us some of the pages of the document, not the entire document.  What do we need to open this account under the trust?

A: Ideally the bank should get the entire trust document.  However, at a minimum it needs the pages that name the trust, the grantors and the trustees. It needs to know the trustee powers, if the trustees may act alone, together or by majority decision, the names and addresses and relationship of the successor trustees and the execution pages signed by the grantors, trustees and either witnessed or notarized.

Force-Placed Insurance

The Department of Financial Services published a proposed revised regulation for the rate for and placement of force-placed insurance. The proposed rules would set minimum notification requirements, set maximum amounts of force-placed insurance coverage that an insurer may issue on a New York property, and prohibit (i) the payment of commissions to servicer-affiliated insurance producers; (ii) the sharing of force-placed insurance premiums or risk with a servicer affiliate; and (iii) issuing force-placed insurance on property serviced by a servicer affiliated with the insurer.  Comments on the revised proposal will be received until November 14, 2014.

What's New? Residential Mortgage Foreclosure Actions

New rules clarifying the settlement conferences in residential mortgage foreclosure actions in New York State have been approved. See new material under Practices During Foreclosure.

Adjustment to Subprime Threshold

The New York State Department of Financial Services recently determined that a new Federal Housing Administration (FHA) rule will decrease the threshold on certain loans and concluded that the existing subprime threshold was having an "unduly negative effect on the availablitiy of mortgage financing in New York State." As a result, the Superintendent adjusted the subprime threshold by 75 basis points for FHA-insured loans, with certain exclusions. 

What's New? Mortgage Loan Servicers Conduct

New rules have been implemented regarding the conduct of mortgage loan services in New York State. Please see the new section under the Lending Compliance chapter. 

What's New? Gifts, Giveaways, Premiums and Savings Promotions

Financial institutions are permitted to offer gifts, giveaways, premiums and savings promotions subject to IRS and rules and other limitations. See the new section of The Gold Book for federal and NYS requirements. 

What's New? ATM Safety Act Compliance Reporting

A permanent rule effective October 1, 2014 requires ATM Safety Act electronic compliance reporting by financial institutions on a semi-annual basis. See The Gold Book, ATM Safety Act and Annual Report of Compliance. 

What's New? Handbook for Third Party Risk Management

The OCC updated the Comptroller's Handbook on supervision of federal branches and agencies to replace 1999 guidance. The new handbook incorporates recent OCC guidance on third party risk management and Dodd-Frank Act-mandated enhanced standards for foreign banks. The Gold Book Federal Decisions and Opinions sub-chapter on Country Risk has been updated to include this reference. 

Last Month's Q&A Answered

The following question appeared in the Q&A section of Banking Spectrum's Report Bulletin last month. Compare your answer to the correct answer below:

Q: A realtor has approached us and is interested in making our bank the preferred lender for his clients.  He advertises on the web through a site that he pays for.  We would be willing to pay for our name being placed on the site and our payment would be used by the site to reduce the realtor’s fee for being listed as a realtor in his community.  Do we have a possible RESPA issue here?

A: Yes. This could be deemed an indirect payment to the realtor for the referral of business.  Not permitted under Section 8 of RESPA or Regulation X Section 1024.14.  A co-marketing exception might not apply since the bank would not be offering or providing reciprocal services alone or with the realty agent for the agent’s services.

What's New? 2015 inflation adjusted amounts for Health Savings Accounts (HSAs)

For 2015 the annual contribution limits for Health Savings Accounts has been increased (see The Gold Book) and the definition of a high deductible health plan has been changed (see The Gold Book).

What's New? Reg Z & M Threshold Exemptions for Consumer Credit and Lease Transactions

The Federal Reserve Board and the Consumer Financial Protection Bureau (CFPB) announced increases to the dollar thresholds in Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) for exempt consumer credit and lease transactions. Transactions at or below the thresholds are subject to the protections of the regulations.

See The Gold Book for more information.

What's New? NYS Electronic Media Storage Permitted

The New York Rules for Vital Records in the Records Retention chapter of The Gold Book has been updated.

What's New? Remittance Rules - Exception Extended

The Consumer Financial Protection Bureau extended a temporary exception in its remittance rule that allows sending institutions to estimate fees charged by the receiving institution. The original provision would have expired in July 2015, but the exception will now last until June 21, 2020, to facilitate industry compliance. Read more in The Gold Book.

Liquidity Coverage Ratio

The Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency finalized a rule to strengthen the liquidity positions of large financial institutions. The rule will for the first time create a standardized minimum liquidity requirement for large and internationally active banking organizations. Read more...

Proposed Repeal of Regulation AA

The Federal Reserve proposed repealing Regulation AA, which includes the credit practices rule, as required by the Dodd-Frank Act. Read more in the Interagency Guidance released on August 22, 2014.

NYS MLO Regulations Adopted on an Emergency Basis

The Department of Financial Services published a notice of Emergency Rulemaking to implement license, financial responsibility, education and test requirements for mortgage loan originators (MLOs) to comply with Banking Law and to conform the regulation of MLOs in New York to federal legislation. 

Click here for the Department of Financial Services notice on the rule.

What's New? NYS ATM Security Rules

On July 1, 2014, institutions were sent a letter from the Department of Financial Services regarding their July and January 15th reporting dates for compliance with the ATM Safety Act.  Superintendent's Regulation Part 301.6 accompanied that letter and contains the form that must be completed by those dates. Please see New York State ATM Safety Act for information on this new reporting requirement.

Youth Savings Pilot Program

FDIC-insured institutions are invited to apply and participate in the FDIC's Youth Savings Pilot Program.

The program seeks to identify and highlight promising approaches to offering financial education tied to the opening of safe, low-cost savings accounts for school-aged children.

The pilot program is open to institutions currently working with schools or nonprofit organizations that help students open savings accounts in conjunction with financial education programs. Phase two is expected to target new programs that begin during the 2015–16 school year. 

For more information, click here:

https://www.fdic.gov/consumers/banking/youthsavingspilot/

OCC Hosts Risk Assessment and Compliance Risk Workshops in Syracuse

he Office of the Comptroller of the Currency will host two workshops in Syracuse, N.Y., at the Sheraton Syracuse University Hotel, Aug. 5-6, for directors of national community banks and federal savings associations.

The Compliance Risk and Risk Assessment workshops are designed exclusively for directors of institutions supervised by the OCC. Both workshops are taught by seasoned OCC supervision staff.   

The compliance risk workshop focuses on major compliance risk and consumer protection regulations, such as the Qualified Mortgage Rule, Bank Secrecy Act, and Community Reinvestment Act, along with key elements of an effective compliance risk management program.  

The risk assessment workshop discusses the OCC’s approach to risk-based supervision, and best practices to identify, measure, monitor and control risk. The interactive sessions also cover industry hot topics such as credit risk, strategic risk, and the regulatory environment.  

The fee is $99 for each workshop. Participants receive a pre-workshop reading package and course materials, and assorted supervisory publications. Each workshop is limited to the first 35 registrants.

The workshops are among 35 offered nationwide to expand the skills of directors of national community banks and federal savings associations. For more information, such as a complete list of available workshops, or to register for a workshop, please visithttps://www.seiservices.com/occ/ or call (240) 485-1700.

Last Month's Q&A Answered

The following question appeared in the Q&A section of Banking Spectrum's Report Bulletin last month. Compare your answer to the correct answer below:

Q: A father opened an “in trust for account” for his minor child to receive direct deposit of social security. The father died last month.  The child is under 18 and the account has $20,000 in it.  The mother came to the bank and she wants to open an account to continue to receive the social security benefits.  How does this get accomplished?

 A: Since the account is an I/T/F account and the child is a minor, with an account balance of over $10,000, she will need a guardianship order from the local supreme or surrogates court to manage the account for her child.  The account may be opened as a custodian account.  If she wishes to bypass these rules she can apply directly to the social security administration for status as a representative payee for the direct deposit of social security benefits for the child.