National Credit Union Administration (NCUA) 

Cyber Incident Notification Requirements 

The NCUA released Letter to Credit Unions 23-CU-07 which summarizes the requirements for credit unions to notify the NCUA as soon as possible of experiencing a reportable cyber incident. The reporting requirement begins on September 1, 2023. 

The letter to credit unions provides a summary of the requirements, notification framework and implementation guidelines. 

___________________________________________________________________________________ 

Consumer Financial Protection Bureau (CFPB) 

CFPB Releases Update to Small Business Lending Rule Filing Instruction Guide 

The CFPB released an update to the Guide for Small Business Lending Data. The updates include: 

• Reordering certain demographic information codes to better correlate with Home Mortgage Disclosure Act data, per request from industry, 

• Minor wording clarifications to the pricing information data point, and 

• Minor administrative updates to the validation IDs. 

The changes were also incorporated into the Small Business Lending Rule Data Points Chart. 

CFPB Penalizes Freedom Mortgage and Realty Connection for Illegal Kickbacks 

The CFPB took action against Freedom Mortgage Corporation (Freedom) for providing illegal incentives to real estate brokers and agents in exchange for mortgage loan referrals. Freedom provided real estate agents and brokers with numerous incentives — including cash payments, paid subscription services, and catered parties — with the understanding they would refer prospective homebuyers to Freedom for mortgage loans. 

The CFPB found Freedom and Realty Connect violated the Real Estate Settlement Procedures Act. The specific violations include: 

• Paying for referrals through illegal marketing service arrangements: Freedom entered into marketing services agreements with over 40 real estate brokerages where Freedom made monthly payments totaling approximately $90,000 to brokerages in exchange for the brokerages’ marketing services. However, Freedom used these marketing services agreements as a way to pay for mortgage referrals, rather than compensate the brokerages for marketing services they actually performed. Realty Connect received $6,000 per month from Freedom, but failed to perform many of the marketing tasks required under the agreement. 

• Offering premium subscription services free of charge: Freedom gave real estate brokers and agents free access to valuable industry subscription services, which provided information concerning property reports, comparable sales, and foreclosure data. Freedom paid thousands of dollars per month for one of the subscription services, and Freedom provided access to over 2,000 agents for no cost. Freedom often required real estate agents and brokers to agree to be paired with a Freedom loan officer before Freedom would give them access to its subscription services. Since 2017, the real estate agents who received free access to these subscription services—including agents at both Realty Connect and other brokerages—made more than 1,000 mortgage referrals to Freedom. 

• Hosting and subsidizing company events and providing gifts: Freedom hosted parties and other events for real estate agents and brokers, including events held exclusively for Realty Connect brokers and agents. Freedom paid for the food, beverages, alcohol, and entertainment. Freedom would also sometimes give free tickets to sporting events, charity galas, or other events where the agents and brokers would have otherwise needed to pay their own way. Freedom also denied requests for event sponsorship from real estate brokerages that did not refer mortgage business to Freedom’s loan officers. 

League InfoSight Highlight: Federal Credit Union (FCU) - Member Expulsion 

Federal Credit Unions (FCUs) have often grappled with the inability to expel a member who has become violent, abusive, or has attempted fraud or other illegal activity. Effective on or after August 25, 2023, FCUs will now have the option to amend their bylaws to provide their Board of Directors with the authority to expel a member for cause. 

In order to make this change, the Board of Directors will need to approve the bylaw amendment with a two-thirds vote. This particular bylaw amendment does not need to be submitted to the NCUA for approval as long as the amended bylaw language is identical to the language included in the final rule. FCUs can adopt these bylaw amendments immediately after the effective date of August 25th or at any point in the future. FCUs not amending their bylaws will only have the existing option to expel a member solely through a special meeting of the members or for violation of a nonparticipation policy. 

There are other requirements associated with the final rule and bylaw amendment including providing members with a written copy of Article XIV of their bylaws or providing the optional standard disclosure notice to each member (included in the final rule under “Optional Standard Disclosure of Expulsion Policy.”). Credit unions can send this out electronically to members who have elected to receive electronic communications from the credit union, otherwise they must be sent to the member’s last known contact information. Other provisions apply, including certain notice requirements, record retention, and the ability for the member to be reinstated. Credit unions can find more detail about the requirements in the final rule. Be on the lookout for updates to CU PolicyPro and InfoSight reflecting these changes. 

Glory LeDu, 
CEO, League InfoSight and CU Risk Intelligence 

FinCEN Notice Highlights Concerning Increase in Payroll Tax Evasion, Workers’ Compensation Fraud in the Construction Sector 

FTC Charges Experian with Spamming Consumers 

NCUA Monitoring and Assisting Credit Unions Affected by Wildfires in Maui 

CFPB Director Chopra Remarks on Protecting Americans from Harmful Data Broker Practices 

2023 Global Women’s Leadership Network Empowerment Grant Winners to Increase Financial Access Worldwide 

Aug. 28, 2023: NCUA Comments Due on Policy Statement: Minority Depository Institution Preservation Program 

Sept. 1, 2023: NCUA Cyber Incident Notification Requirements

Sept. 4, 2023: Labor Day - Federal Holiday

Oct. 9, 2023: Columbus Day/Indigenous Peoples' Day - Federal Holiday

Oct 30, 2023: 5300 Call Report Due to NCUA 

A member came in and is disputing an ACH transaction because the payee didn’t apply the payment to his account. Can he dispute this through the credit union? 

Yes. The transaction should be able to be returned through the ACH network as an incomplete transaction. 

For your individualized login, select your state below. 

If you have questions about this communication, contact us at 800.546.4465, or via our shared email inbox at compliance@gowest.org.

Have a great week!

Your GoWest Compliance Team, 

Copyright © 2023 GoWest Credit Union Association. All Rights Reserved.

Mailing Address:
GoWest Credit Union Association, 18000 International Blvd Ste. 1102, SeaTac, WA 98188, United States
1.800.995.9064

View in Browser | Manage Your Preferences | Unsubscribe