Assessments: Final Rule

The FDIC Board of Directors recently adopted the Assessments Final Rule. The Final Rule revises the FDIC's risk-based deposit insurance assessment system to reflect changes in the regulatory capital rules that go into effect in 2015 and 2018. For deposit insurance assessment purposes, the Final Rule will: (1) revise the ratios and ratio thresholds relating to capital evaluations, (2) revise the assessment base calculation for custodial banks, and (3) require that all highly complex institutions measure counterparty exposure for assessment purposes using the Basel III standardized approach in the regulatory capital rules. There are two effective dates for item (1): January 1, 2015, and January 1, 2018. The effective date for items (2) and (3) is January 1, 2015.

Additional information may be found on the FDIC website at: http://www.fdic.gov/news/news/financial/2014/fil14057.html

Revised BSA/AML Exam Manual Available

The Federal Financial Institutions Examination Council (FFIEC) recently released the revised Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual.

The revised manual reflects the FFIEC's ongoing commitment to incorporate guidance issued since 2010 into one manual for the FFIEC agencies' examination staff. The manual benefits depository institutions by providing information to help ensure compliance with the BSA and safeguard operations from money laundering and terrorist financing.

The revised manual may be found on the FFIEC BSA/AML Infobase at http://www.ffiec.gov/bsa_aml_infobase/default.htm.

FDIC Documentation Procedures for State Chartered Banks

The FDIC issued a set of documentation procedures for state-chartered banks that engage in activities permissible for national banks. To do so, a state bank must maintain documentation in its own files that the OCC allows the activity for national banks and that the state bank is satisfying any restrictions the OCC has placed on that activity.

Fair Lending Caution

The CFPB issued a bulletin warning that probing for details on a potential borrower’s Social Security disability benefits violates the Equal Credit Opportunity Act and Regulation B. Pressing too far on the details of a disability raises fair lending risks, the bureau reported. 

FDIC Videos Address Mortgage Compliance

The FDIC has released of the first of three new technical assistance videos developed to assist bank employees in meeting regulatory requirements. The videos will address compliance with certain mortgage rules issued by the CFPB. The first video covers the Ability to Repay and Qualified Mortgage rule, and is intended for compliance officers and staff involved in ensuring the bank’s mortgage lending operations comply with CFPB rules.

Americans with Disabilities Court Action

The Justice Department recently entered into a Settlement Agreement with Ahold U.S.A., Inc. and Peapod, LLC (Peapod), the owners and operators of www.peapod.com, to remedy alleged violations of the Americans with Disabilities Act (ADA). The agreement resolves the Department’s allegations that www.peapod.com is not accessible to some individuals with disabilities, including individuals who are blind or have low vision, are deaf or hard of hearing, and individuals who have disabilities affecting manual dexterity. Under the agreement, Peapod will adopt measures to ensure that users with disabilities are able to fully and equally enjoy the various goods, services, facilities, and accommodations provided through www.peapod.com, including: conforming the website and mobile applications to, at minimum, the Web Content Accessibility Guidelines 2.0 Level AA Success Criteria (WCAG 2.0 AA), except for certain third party content; designating a Web Accessibility Coordinator; adopting a Web Accessibility Policy; soliciting customer feedback on how website accessibility can be improved; providing automated and user website and mobile application accessibility testing; and training Peapod’s website content personnel on website accessibility.

We thought this was interesting reading and considerations for banks to identify website accessability and accommodations may be warranted.

What's New? IRS Releases 2015 Pension Plan Limitations

The Internal Revenue Service announced cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment. 

For a summary of limitations from 2008 through 2015 see Cost of Living Adjustments for Pension Plans. 

Each of the following chapters in The Gold Book have been updated throughout for annual limitation adjustments:

• Traditional IRAs
• Roth IRAs
• SEP-IRAs
• SIMPLE-IRAs
• Keogh Plans
• Corporate Pension Plans

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.