As you cross names off your holiday shopping list remember to also make sure you cross your t’s and dot your i’s when marketing your credit union. Consistency and accuracy should be a priority when marketing your credit union, therefore when you advertise a product on your webpage it should be advertised with the same accuracy as any print product you publish.
As the end of the year approaches, look at your webpages for deposit and loan products to make sure the terms used on the credit unions webpage match the terms used in published advertisements.
Some deposit topics to double check include:
(1) Dividend versus interest rate – are you using the correct term for what your credit union offers and is the correct term used both on the webpage and in all your print material?
(2) Annual Percentage Yield and Dividend rates should be rounded to the nearest one-hundredth of one percentage point (.01%) and expressed to two decimals.
(3) APR versus dividend or interest rate – APR should not be stated as the “rate” for a deposit product, dividend or interest rates apply only.
Happy holidays and list making!
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This time of the year gets so busy. November and December are always busy because of the holidays, and for most credit unions, it is year end. With all those things going, I wanted to take the time to send out a reminder about the SAFE Act requirements for renewal.
You currently have 22 days left to renew your Mortgage Loan Originators (MLO) registration with the Nationwide Mortgage Licensing System (NMLS). You will need to ensure that registrations are renewed by the December 31st deadline. If an MLO does not have their registration renewed by the deadline, their registration becomes inactive and they cannot act as an MLO until they are registered with the NMLS System.
This is also a good time to refresh all MLOs on their requirements to use to the use of the unique identifier. The SAFE Act states that a registered MLO shall provide their unique identifier to a consumer:
- Upon request;
- Before acting as a mortgage loan originator; and
- Through the originator’s initial written communication with a consumer, if any, whether on paper or electronically.
Enjoy a wonderful holiday season!
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You probably don’t think of financial institution regulators as movie stars. Well, they aren’t exactly movie stars, but they are making YouTube videos.
Last month the NCUA released a three-part consumer protection update series on its YouTube channel. The NCUA has also released supervisory committee training videos that you may find helpful. The CFPB, not to be outdone by the NCUA, issued videos related to the new mortgage rules. So, if you are tired of reading and you want a different way to obtain compliance information, check out these You Tube videos.
But don’t expect to find the regulators on the red carpet anytime soon….although other players in financial reform have been spotted there (most notably Chris Dodd of the Dodd-Frank Act).
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The new loan originator rule prohibits compensation based on a term of the transaction or anything that is a proxy to a term of the transaction. Terms of the transaction includes factors such as the rate or collateral type. Proxies to a term of the transaction are factors that vary consistently over a significant number of transactions and which the loan originator has the ability to add, drop, or change. For example, if a LO is compensated more for loans held in portfolio than loans sold to the secondary market it would be a proxy if all 30 year fixed mortgages are sold – the term of the transaction varies consistently by whether or not it is sold and the LO has the ability to advise the borrower to choose one loan type over the other.
With this as the backdrop, is compensating LO’s differently for purchases vs. refis prohibited? This issue is not directly addressed in the regulation or commentary. The CFPB’s small business compliance guide states the following: ”varying compensation to a loan originator based on the ‘product type’ often will violate the rule because many ‘products’ (which is not a defined term) in the market refer to different bundles of specific terms.”
That language, which is in guidance and not the regulation or commentary, is not abundantly clear. Is a refi a different ‘product type’ (its not defined after all)? What does ‘often’ mean? The lack of direct regulatory language combined with unclear guidance leaves this question unanswered. Based on what we know now, the conservative approach would be to assume that LO’s cannot be compensated differently for purchases and refis. Purchases and refis definitely have different transaction terms.
That conclusion does not make much logical sense, however. Prohibiting different compensation for different product types is consistent with the purpose of the rule in scenarios where the LO could steer a consumer to one product over another. Refis and purchase transactions are completely different product lines, however, with no real risk of LOs steering consumers to one or the other. When would a LO with a consumer seeking a refi ever be able to steer them into purchasing a home instead?
Logic doesn’t always always mesh with the law, however,so we are left with divining the meaning from a short excerpt out of a compliance guide. As stated above, based on that language, the conservative approach is to not compensate differently for purchases vs. refis.
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In case you missed the big announcement last week…the CFPB has issued the long awaited TILA-RESPA final rule.
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FinCEN released an update to promote financial institutions utilizing sharing through Section 314(b) of the PATRIOT Act. The update contained a fact sheet that provides information on what Section 314(b) is and some of the benefits for completing the required form in order to share information with other financial institutions with respect to money laundering and terrorist financing.
Some of the benefits indicated by FinCEN include:
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As the holiday season quickly approaches, thieves may also be looking for a way to finance their holiday spending. Financial fraud is an ever present problem and seniors account for almost 30% of all fraud victims.
Employees are often hesitant to report suspected abuse because they do not want to infringe on the member’s privacy and subject themselves and/or the credit union to legal action. The NCUA recently issued a Letter to Credit Unions (Letter No.: 13-CU-08) with guidance clarifying that action can be taken if you believe an account holder may be a victim of elder abuse or financial exploitation.
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