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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.

ABIA Opposes New York Finalizes Lender-Placed Insurance Rules

The New York Department of Financial Services last week finalized several restrictions on lender-placed insurance. These restrictions will prevent insurers from issuing policies on mortgaged properties serviced by banks affiliated with the insurer and paying commissions contingent on underwriting profitability or loss ratios.

The American Bankers Insurance Association (ABIA) opposed the new rules, noting that they fail to recognize the cost to servicers of using licensed insurance agencies. “It is important here to distinguish between valid insurance commissions and the pejorative term ‘kickback,’ which consumer advocates often use to refer to commissions paid in connection with the force placement of insurance,” ABIA said in its comment letter.

ABIA also warned that the rules will shift the costs of LPI from defaulting borrowers to all the borrowers in a servicer’s portfolio.

Read the final rules.

For more information, please join the ABIA Lender-Placed Insurance Task Force. The purpose of this Task Force is to work with regulators and government entities, such as the CFPB and FHFA, on the regulation of lender-placed insurance to either maintain the current regime or influence reform proposals to accommodate our members’ interests. For more information or to join this task force, please contact Sarah Ferman.

Friday, October 17, 2014

Summary of CFPB No-Action Letter Proposal

By ABIA Outside Counsel, Barnett, Sivon & Natter, P.C.

On Friday, October 10, 2014, the CFPB issued a proposed Policy on No-Action Letters (Policy) with a request for comments.
The focus of the Policy is on new financial products or services where there may be uncertainty about how existing statutes and regulations apply. These new products or services must promise substantial consumer benefit. A No-Action Letter (NAL) would state that, subject to certain conditions at the CFPB staff’s discretion, the staff has "no present intention to recommend initiation of an enforcement or supervisory action against the requester with respect to particular aspects of its product, under specified identified provisions of statutes or regulations."
The Policy outlines the process for NALs including the factors the CFPB staff will consider in determining whether to issue a NAL.

Submitting Requests for NALs
An entity must submit several pieces of information in requesting a NAL, including the following:
  1. The name of the entity requesting the NAL, as anonymous requests will not be accepted;
  2. A description of the product, the timetable on which the product is expected to be offered, and whether the request is limited to a particular time period, volume of transactions or other limitations;
  3. How the product is likely to provide substantial benefit to consumers and metrics for evaluating such benefit;
  4. Explanation of potential consumer risks, ways the requester will address and minimize such risks, and the consumer safeguards the requester will employ, although those safeguards may not be required by law;
  5. A showing of why the NAL is necessary and appropriate to remove substantial regulatory uncertainty, including showing: how the application of specific statutes or regulations is substantially uncertain, the product’s compliance with other relevant regulatory requirements, and why the uncertainty cannot be addressed through other means;
  6. A description of data that the requester possesses and intends to develop and share with the CFPB; and
  7. Certain disclosures related to any supervisory or enforcement actions and ongoing, imminent or threatened governmental investigations.
The proposed Policy expressly states that NALs "are not intended for either well-established products or purely hypothetical products that are not close to being able to be offered."
To learn more about the CFPB's NAL proposal, including UDAAP, read the full summary. 

Indicates ABIA members-only material. Not an ABIA member? Contact Jennifer Hatten to learn about the benefits of membership and ways to join here. Visit our membership page to learn more.

Are you an ABIA member but not yet on our ABIA Network? Contact Deanne Marino for an invitation.

ABIA will comment. Comments are due to the CFPB on December 15, 2014.