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Thursday, October 23, 2014

Massachusetts Passes Bill Providing Liability Coverage in FAIR Plan Dwelling Policy

On October 9th, Massachusetts Governor Deval Patrick signed S-465, an Act Relative to Liability Coverage under the Massachusetts Property Insurance Underwriting Association, into law and is now Chapter 346 of the Acts of 2014. This law enables property owners to obtain both property and liability coverage in one policy, rather than paying more for two separate policies.

Once this new law goes into effect on January 8, 2015, the Massachusetts Property Insurance Underwriting Association (MPIUA) — also known as the Massachusetts FAIR Plan — is required to have liability, not just property, coverage included in its Non-Owner Occupied Dwelling policy for one-to-four residential units.

Currently, if a property owner of an investment dwelling with one-to-four residential units could not obtain the Non-Owner Occupied Dwelling policy in the standard voluntary market, they would have to obtain property coverage from the FAIR Plan and purchase separate liability coverage from the surplus lines market.

Now that the FAIR act allows for the combination of the two coverages, underwriting mortgages and validating insurance coverage in force will be significantly easier. However, there is some concern that expansion of MPIUA policy will create greater liability for the state, as liability risks that could not be underwritten in the voluntary market are now underwritten by the taxpayer.

Learn more.

ABIA Applauds Changes to CFPB Points and Fees Cure Provision

The Consumer Financial Protection Bureau yesterday finalized a limited “cure” provision for the Qualified Mortgage rule, allowing a lender that intends to originate a QM but that later finds that points and fees exceeded the 3 percent cap to refund the excess, plus interest, within 210 days and maintain the legal protections afforded to QMs.

The bureau made several ABA-advocated changes to the final rule. It increased the cure period by 90 days and eliminated the “good faith” requirement, which ABA said injected a subjective element that negates a cure provision’s legal protections. However, the bureau limited creditors’ ability to cure after legal action, a 60-day delinquency or when a borrower identifies a points and fees miscalculation.

The cure provision takes effect upon publication in the Federal Register and will last until Jan. 10, 2021, at which point “creditors should become less reliant on points and fees buffers,” the CFPB said. Other changes finalized apply to Section 501(c)(3) nonprofits that originate and service mortgages.

Read the final rule.

For more information, contact ABIA's Kevin McKechnie.

Tuesday, October 21, 2014

FDIC Board Approves Proposed Provisions of the Homeowner's Flood Insurance Affordability Act

At today’s FDIC Board meeting, the Board approved the proposed joint notice of proposed rulemaking to implement certain provisions of the Homeowner’s Flood Insurance Affordability Act. With regard to the scope of the proposal, the notice states,

"[T]he proposal would establish requirements with respect to the escrow of flood insurance payments, consistent with the changes set forth in HFIAA. The proposal also would incorporate an exemption in HFIAA for certain detached structures from the mandatory flood insurance purchase requirement. The Agencies plan to address in a separate rulemaking other provisions of Biggert-Waters over which the Agencies have jurisdiction that have not been affected by HFIAA."

Comments are due 60 days after the notice is published in the Federal Register.

Read the FDIC Board Bulletin.


CFPB Finalizes Conditions for Easing Privacy Notice Requirement

The Consumer Financial Protection Bureau yesterday finalized a rule to ease the annual privacy notice requirement under the Gramm-Leach-Bliley Act. Effective upon publication in the Federal Register, financial institutions may post their privacy notices online rather than delivering them individually in certain circumstances.

Specifically, a bank may forgo mailing the annual GLBA disclosure if the information on it has not changed since the previous notice, if it does not share the customer’s personal information in a way that triggers GLBA opt-out rights, if it has other channels for disclosures or opt-outs required by the Fair Credit Reporting Act and if the bank uses the federal agencies’ model privacy notice form.

Instead, banks would be required to post their privacy notices online in an accessible and conspicuous way and notify customers in other required notices where to find it, that it has not changed, and that it will be promptly mailed upon request. The final rule is largely unchanged from the proposed rule, which ABA and other groups said would have “very little practical value to consumers or financial service providers.”
Read the final rule.

To join the ABIA CFPB Task Force, please contact Sarah Ferman

Monday, October 20, 2014

Senator Crapo Calls for Community Bank Regulatory Relief

Senate Banking Committee Ranking Member Mike Crapo (R-Idaho) on Friday argued for community bank regulatory relief in an American Banker op-ed. “If regulators and Congress miss this opportunity to lift unnecessary regulatory burdens, many more small banks will disappear,” he said.

Crapo specifically called for eliminating the annual privacy notice requirement when nothing has changed and ensuring a more aggressive effort by regulators to pare back unnecessary rules during the ongoing Economic Growth and Regulatory Paperwork Reduction Act process. “We cannot afford another tepid review process,” he explained.

Crapo cited ABA Chairman Jeff Plagge’s September testimony before the Senate panel, in which he warned that excessive regulation “could threaten the model of community banking that is so important to strong communities, strong job growth and a better standard of living.” Added Crapo: “I could not agree more.”
Read the op-ed.

ABIA holds regular Best Practices Panels on Community Banking.  For more information about upcoming Best Practices Panels or to view past webinars, please go to the ABIA network or contact Sarah Ferman.