SDBA eNews: September 1, 2016

In This Issue

CRA Partner's Bankers Compliance Conference To Be Held Oct. 6-7

Register now for CRA Partners Doing Well by Doing Good Bankers Conference powered by the Senior Housing Crime Prevention Foundation on Oct. 6-7, 2016, at the Gaylord Opryland Resort & Conference Center in Nashville, Tenn.

Participating bank partners will network with prospective bank partners to learn more about earning guaranteed CRA credit while transforming and protecting the lives of senior housing residents through the Senior Crimestoppers program.

CRA Partners, an SDBA endorsed vendor, will provide complimentary registration, a travel reimbursement of up to $200 and one hotel room for Oct. 6. Conference meals are also covered. Learn more and register.

Agencies Issue Fact Sheet on AML, Sanctions Enforcement

The Treasury Department and the federal banking agencies issued a fact sheet on Tuesday to communicate expectations about anti-money laundering and sanctions enforcement. The document also outlined AML supervision and exam processes, enforcement actions by prudential regulators and the intersecting roles of the regulatory agencies and Treasury entities.

"The vast majority (about 95 percent) of [Bank Secrecy Act]/[Office of Foreign Assets Control] compliance deficiencies identified by the FBAs, FinCEN and OFAC are corrected by the institution’s management without the need for any enforcement action or penalty," the agencies noted. Read more.

Question of the Week

I noticed the CFPB’s website lists only three types of covered loans under the Military Lending Act. Are there any others that are not referenced? Or do they actually list all scenarios in which MLA would be applicable?

Answer: As the law stands currently, this is accurate--but that won't be the case for long. Beginning Oct. 3, 2016, the MLA will expand to cover all types of consumer credit covered by Regulation Z, with just a few notable exceptions, including: residential mortgages (loans secured by a dwelling), credit to finance the purchase of personal property including car purchases, and car lease loans.

Not a Compliance Alliance member? Learn more about membership with Compliance Alliance by attending one of our live demos:

Compliance rules and regulations change quickly. For timely compliance updates, subscribe to Compliance Alliance’s email newsletters.

Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call 888.353.3933 or email.

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Contact Alisa DeMers, SDBA, at 800. 726.7322 or via email.

Three SDBA Members Named to 'Best Banks to Work For' List

Two SDBA member banks and one associate member were named to American Banker Magazine’s fourth annual list of the 60 best banks to work for.

Topping the list were Live Oak Bank, Wilmington, N.C.; HomeBanc, Lake Mary, Fla.; and Bell State Bank and Trust, Fargo, N.D. (recently renamed to Ball Bank), which is an SDBA associate member. First Bank & Trust in Brookings and Sioux Falls was number 17, and First PREMIER Bank in Sioux was number 60.

These and other banks were celebrated for being employee-centric, offering programs and amenities like catered weekly lunches, wellness programs, an onsite gym and dog park, anniversary celebrations and a “pay it forward” charitable giving program.

Familiar names--and more than a dozen newbies--can be found in the annual ranking of the nation’s most employee-friendly banks. Find out why these 60 banks are so successful at keeping their employees happy and engaged. View the list and read more about each bank.

Iowa Lawmakers Call Out FCS on Mission Creep

During a recent candidates’ forum in Iowa, many current lawmakers and candidates for office raised concerns about the Farm Credit System’s activities and the Farm Credit Administration’s oversight of the GSE, as Bert Ely reported yesterday in the latest edition of ABA’s Farm Credit Watch. Candidates on both sides of the aisle pointed to recent examples of the FCS extending beyond the scope of its mission, including loans to non-farm related businesses like Verizon or Cracker Barrel.

Many of the candidates said they felt that the FCS needs to be refocused in its mission, which among other things includes providing support to young, beginning and small farmers. “There’s probably still a role for the [FCS], but we need to make sure that they’re not competing in the areas that they’re not supposed to be in,” said Rep. Rod Blum (R), who serves on the House Oversight and Government Reform Committee. “[T]hey’ve made some very big loans to some very large and profitable customers…whether they’re ag-related is very, very questionable.”

Senate Agriculture Committee member Charles Grassley (R) said he brought up the FCS’ “very questionable loans” during a recent visit with FCS officials. “I got the feeling that they were very embarrassed by the issues that I brought up with them,” he said. Democratic challengers echoed the sentiments, with Democratic Senate candidate Patty Judge stating “there are probably reforms that need to be made.”

The candidates’ comments were similar to those expressed by lawmakers in both the House and Senate Agriculture committees during oversight hearings of the Farm Credit Administration last year, suggesting that FCS reform may be on the table when Congress begins drafting the next farm bill. Read Farm Credit Watch.

Trades Raise Concerns About MLA Compliance Timeline

ABA and several financial trade associations yesterday wrote to the heads of the federal regulatory agencies raising concerns about the fast-approaching compliance deadline for changes to the Department of Defense’s Military Lending Act rule. The amendments--which extend MLA restrictions to cover credit cards, lines of credit, installment loans and deposit advances offered to service members and their dependents--take effect Oct. 3.

ABA aggressively lobbied the Pentagon for clarification on several elements of the changes, which resulted in an interpretive rule being published Aug. 26. Given the short time frame between this clarification and the implementation deadline (and the severe penalties for lack of full compliance), the groups urged regulators to provide banks with a six-month window to ensure that systems are properly implemented and tested before they are subject to transactional testing for compliance during exams.

They added that the DoD has also experienced significant delays in creating a system for providing lenders with military status information, which will leave banks unable to finalize and test their compliance programs until mid-September.

ABA continues to work with the DoD and regulators to ensure that the changes to the rule are implemented with minimal imposition on customer service. To help bankers comply with the changes, ABA has updated its staff analysis on the MLA to reflect last week’s interpretive rule. Read the letter.  View the updated staff analysis. For more information, contact ABA’s Nessa Feddis.

OCC Stresses Third-Party Risk Management in Military Banking

In remarks at the Association of Military Bankers’ annual workshop on Monday, OCC Senior Deputy Comptroller Grovetta Gardineer stressed the importance of ensuring that all military service members and their families receive the consumer protections they are entitled to under the Servicemembers Civil Relief Act. While there has been a significant reduction in SCRA compliance issues since the agency made it a point of regulatory focus, she said, there are still remaining challenges in certain areas, such as collections.

Gardineer reminded bankers of the importance of due diligence with third-party vendors that deliver products and services to servicemembers on behalf of the institution.

“At the end of the day, banks are responsible and will be held accountable for failures and abuse in the products and services they offer--even those delivered by third-party vendors,” she cautioned. She added that banks have room to improve their processes for identifying military borrowers that are eligible for expanded protections, particularly as more financial products and services begin to fall under the scope of the Military Lending Act in October.

The AMBA annual workshop brings government officials, federal regulators, banking trades and other stakeholders together each year to discuss the latest banking issues affecting servicemembers. ABA President and CEO Rob Nichols delivered a Washington update. Read Gardineer’s remarks.

USDA to Cut Lender Fees for Single-Family Mortgage Guarantees

The U.S. Department of Agriculture's Rural Housing Service will cut fees for lenders who use its Single-Family Housing Loan Guarantee Program, according to news reports. Starting Oct. 1, USDA will cut its upfront guarantee fee from 2.75 percent to 1 percent and its annual fee from 0.45 percent of the unpaid principal balance to 0.35 percent.

As reported by the news site HousingWire, USDA said it could cut the fees because delinquencies and foreclosures in the program are at "historic lows." USDA also said that it will update its guaranteed underwriting system on Aug. 31, which will allow lenders to use either the previous fee structure or the revised one, dependent on processing timelines in particular states. Read more.

CFPB Proposes Amendments on Disclosure of Records, Information

The Consumer Financial Protection Bureau last week proposed amendments to the procedures used by the public to obtain information under the Freedom of Information Act, the Privacy Act of 1974 and in legal proceedings. The proposed amendments also address the confidential treatment of information obtained by the bureau in the course of its rulemaking, research and examination activities.

ABA is seeking input from banks concerned about the confidentiality provisions of this rule, particularly with respect to the protection and dissemination of information provided by banks to the bureau. Feedback will help ABA develop its comment letter and advocacy in response to the proposal. Read the proposed rule. For more information or to provide feedback, contact ABA's Anjali Phillips.