COVID-19 regulatory compliance updates

In response to the COVID-19 pandemic, the Consumer Financial Protection Bureau (CFPB) and other regulatory agencies have issued various guidance to assist financial institutions with operational and consumer service challenges that have arisen during this national health crisis while still maintaining compliance with regulatory requirements. RSM has been tracking these issuances. Following is a list of guidance related to consumer protection regulations.

We’re sharing this summary so you have a convenient place to find information on these various issuances. We encourage you to read the guidance and share it with applicable departments in your institution to:

1. Review and update policies or operational procedures
2. Provide training to applicable personnel
3. Review and update compliance monitoring or audit programs  

Regulation B: Compliance with Paycheck Protection Plan loans 

• 30-day clock for notification starts when the creditor receives a loan number from the Small Business Administration or a response about the availability of funds 
• Adverse action is required if a creditor receives a PPP loan application and refuses to grant the credit request without submitting to the SBA for incomplete or denied applications
• Source: The Bureau’s Equal Credit Opportunity Act and Regulation B FAQs related to the COVID-19 Emergency

Regulation B: Appraisal waiting period

• Noted in the Sept. 14, 2018, Statement on Supervisory Practices Regarding Financial Institutions and Consumers Affected by a Major Disaster or Emergency, the Equal Credit Opportunity Act valuations rule permits an applicant to waive the timing requirement through an affirmative oral or written statement and agree to receive any copy at or before consummation or account opening, except where otherwise prohibited by law. This regulatory flexibility available under the ECOA valuations rule can expedite access to credit secured by a first lien on a dwelling for consumers affected by the COVID-19 pandemic.
• Source: Federal banking agencies to defer appraisals and evaluations for real estate transactions affected by COVID-19

Regulation C: CFPB reporting

• Institutions are not expected to submit quarterly information reporting as required by Regulation C (Home Mortgage Disclosure Act),  Regulation Z (Truth in Lending Act), and/or Regulation E (Electronic Funds Transfer Act) until further notice. 
• Source: CFPB Provides Flexibility During COVID-19 Pandemic

Regulation C: HMDA Getting It Right Guide

• Effective July 1, 2020, the threshold for reporting data about closed-end mortgage loans will increase from 25 to 100 closed-end mortgage loans.
• Effective Jan. 1, 2022, when the current temporary threshold of 500 open-end lines of credit expires, the threshold for reporting data about open-end lines of credit will be permanently set at 200 open-end lines of credit.
• Source: Consumer Financial Protection Bureau Issues Final Rule Raising Data Reporting Thresholds Under the Home Mortgage Disclosure Act

Regulation D: Reserve requirements  

• Effective April 24, 2020, customers are no longer limited to six withdraws from savings/money market accounts. The limit has been removed. This is an interim final rule open to comments until June 29, 2020.
• Source: Regulation D: Reserve Requirements of Depository Institutions

Regulation E: Remittance transfer funds 

• Failure to deliver remittance transfer funds to recipient by disclosed availability date due to government mandated closure of commercial activity is not considered an error if the provider could not have reasonably anticipated the closure. 
• Source: Remittance Rule FAQs related to the COVID-19 Pandemic (Regulation E)

Regulation E: Remittance transfer final rule

• Effective July 21, 2020, the threshold for identifying which banks are subject to the remittance rule’s requirements is increased. Under the final rule, institutions submitting 500 or fewer remittance transfers annually will not be considered remittance providers for the purposes of the rule, up from a previous threshold of 100 remittances or fewer.
• Replaces temporary exception that has been granted to allow institutions to estimate costs rather than quote exact third-party fees and exchange rates if they met certain conditions.
• Source: Remittance Transfers under the Electronic Fund Transfer Act (Regulation E)

Mandatory purchase of flood insurance: Policy renewal waiting period

• Grace period to renew flood insurance policies has been extended from 30 days to 120 days for all policies with an expiration date of Feb. 12, 2020–June 15, 2020. 
• Source: FEMA extends grace period for flood insurance renewal premiums

Regulation X: CFPB mortgage servicing Q&A—COVID 

• A mortgage servicer can offer a CARES Act forbearance to a borrower to comply with CFPB loss mitigation rules. 
• A mortgage servicer can offer a short-term forbearance program/short-term repayment plan to help borrowers affected by COVID-19 as allowable by Regulation X, 12 CFR 1024.41(c)(2)(iii). In general, all required communications to borrowers remain applicable during COVID. 
• Source: The Bureau’s Mortgage Servicing Rules FAQs related to the COVID-19 Emergency

Regulation X: Incomplete loss mitigation applications

• A mortgage servicer can offer COVID-19-related loss mitigation options even if the loss mitigation application is incomplete. 
• A mortgage servicer can offer relief for COVID-19-affected borrowers based on an evaluation of limited application information. Normally, Regulation X requires a complete loss mitigation application before making an offer and requires additional due diligence and consumer notifications for incomplete applications. The interim final rule eases these additional requirements for incomplete loss mitigation applications. 
• Source: Treatment of Certain COVID-19 Related Loss Mitigation Options Under the Real Estate Settlement Procedures Act (RESPA), Regulation X; Interim Final Rule

Regulation Z: TRID and rescission waiting periods

• Borrowers who affirm, via a brief signed statement, that their financial situation due to the coronavirus pandemic necessitates a faster closing before the end of the TILA-RESPA Integrated Disclosure rule (TRID) or Regulation Z rescission waiting periods would be permitted to waive those waiting periods, the CFPB said. The rule also states that the pandemic is a “changed circumstance” for purposes of TRID’s fee disclosure tolerance provisions, which allows creditors to use revised estimates reflecting changes in settlement charges when determining good faith compliance.
• Source: CFPB Announces Relief From TRID, Reg Z Waiting Periods