Regulatory Changes - 2018 - In With the New
Significant changes created by Dodd-Frank continue to be implemented with the most critical changes in 2018 impacting Regulation C – Home Mortgage Disclosure Act. Other significant changes will be impacting the Bank Secrecy Act program with the addition of the Fifth Pillar for Risk Based Customer Due Diligence.
The regulation changes and effective dates in 2018 include:
- Regulation Z – Truth in Lending Act, effective January 1, 2018: The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended TILA require that the dollar threshold for exempt consumer credit transactions be adjusted annually by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Based on the annual percentage increase in the CPI-W as of June 1, 2017, the exemption threshold will increase from $54,600 to $55,800.
- Regulation Z – Truth in Lending Act, effective January 1, 2018: The Bureau is required to calculate annually the dollar amounts for several provisions in Regulation Z; this final rule revises, as applicable, the dollar amounts for provisions implementing TILA and amendments to TILA, including under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), the Home Ownership and Equity Protection Act of 1994 (HOEPA), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The Bureau is adjusting these amounts, where appropriate, based on the annual percentage change reflected in the Consumer Price Index (CPI) in effect on June 1, 2017.
- Regulation C – Home Mortgage Disclosure Act, effective January 1, 2018: First phase of implementation of the final rule with the Bureau adding several new reporting requirements and clarifying several existing requirements. The Bureau is also modifying the institutional and transactional coverage of Regulation C. The final rule also provides extensive guidance regarding compliance with both the existing and new requirements. In addition, the Bureau is amending Regulation C to increase the threshold for collecting and reporting data about open-end lines of credit for a period of two years so that financial institutions originating fewer than 500 open-end lines of credit in either of the preceding two years would not be required to begin collecting such data until January 1, 2020. The Bureau also is adopting a new reporting exclusion.
- Regulation B – Equal Credit Opportunity Act, effective January 1, 2018: The final rule amends Regulation B to permit creditors additional flexibility in complying with Regulation B in order to facilitate compliance with Regulation C, adds certain model forms and removes others from Regulation B, and makes various other amendments to Regulation B and its commentary to facilitate the collection and retention of information about the ethnicity, sex, and race of certain mortgage applicants.
- Community Reinvestment Act, effective January 1, 2018: The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Board), and the Federal Deposit Insurance
- Corporation (FDIC) (collectively, the Agencies) are amending their regulations implementing the Community Reinvestment Act (CRA). The Agencies are modifying the existing definitions of “home mortgage loan” and “consumer loan,” related cross references, and the public file content requirements to conform to recent revisions made by the Bureau to Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). This final rule also removes obsolete references to the Neighborhood Stabilization Program (NSP).
- Bank Secrecy Act, effective May 11, 2018: The final rule established a fifth pillar for banks’ BSA/AML programs for Customer Due Diligence (CDD) and imposes a new requirement on banks to identify and verify the identity of the natural persons behind the legal entity customers – the beneficial owners.
- Regulation CC – Expedited Funds Availability Act, effective July 1, 2018: The final amendments update Regulation CC to reflect the evolution of the nation's check collection system from one that is largely paper-based to one that is virtually all electronic. The amendments create a framework for electronic check collection and return as well as create new warranties for electronic checks, which will result in a consistent warranty chain regardless of the check's form. The final amendments also modify the expeditious-return and notice of nonpayment requirements to create incentives for electronic presentment and return.
- Regulation E – Electronic Fund Transfer Act and Regulation Z – Truth in Lending Act, effective October 1, 2018: The Bureau issued this final rule to create comprehensive consumer protections for prepaid accounts. The final rule modifies general Regulation E requirements to create tailored provisions governing disclosures, limited liability and error resolution, and periodic statements, and adds new requirements regarding the posting of account agreements. Additionally, the final rule regulates overdraft credit features that may be offered in conjunction with prepaid accounts.
- Regulation Z – Truth in Lending Act and Regulation X – Real Estate Settlement Procedures Act – Integrated Disclosure Rule, effective October 1, 2018: The amendments included, although were not limited to, increased the scope of coverage for loans on cooperative units, whether or not the cooperative is considered real property under state law, set tolerances for the Total of Payments disclosure based on the existing finance charge tolerances, and provided clarification on purchase transactions for providing Closing Disclosures.
To ensure compliance, we recommend that the amended regulations are reviewed by the Compliance Officer and BSA Officer along with enhancements to your bank’s compliance and training programs, where applicable, to ensure all requirements are met.
*Source information obtained from CFPB, FRB and FDIC.