National Credit Union Administration (NCUA) 

NCUA Board Approves Final Rule Amending NCUA Rules on Indirect Lending and Loan Participations 

The NCUA Board approved the final rule which amends the NCUA regulations on the purchase of loan participations and the purchase, sale, and pledge of eligible obligations and other loans (including notes of liquidating credit unions). The final rule clarifies the NCUA’s current regulations and provides additional flexibility for federally insured credit unions (FICUs) to make use of advanced technologies and opportunities offered by the financial technology (fintech) sector. The final rule also amends the NCUA’s rule regarding loans to members and lines of credit to members by adding new provisions about indirect lending arrangements and indirect leasing arrangements. 

 Of note, the final rule: 

• Relocates and clarifies the NCUA’s provisions regarding indirect lending and indirect leasing. 

• Provides credit unions with additional flexibility to participate in loans acquired through indirect lending arrangements, allowing federally insured credit unions to use advanced technologies and opportunities offered by the fintech sector. 

• Removes certain restrictions and other qualifying requirements relating to eligible obligations and provides credit unions with additional flexibility to purchase eligible obligations of their members. 

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Consumer Financial Protection Bureau (CFPB) 

CFPB Announces Threshold Adjustments Under Regulation Z 

The CFPB released the annual Regulation Z threshold adjustments for 2024.  The amendments update both the HOEPA and Qualified Mortgage thresholds. 

• Effective January 1, 2024, the points-and-fees coverage test under HOEPA to which a transaction is subject, the total loan amount threshold figure is $26,092.  If the total loan amount for a transaction is $26,092 or more, and the points-and-fees amount exceeds 5 percent of the total loan amount, the transaction is a high-cost mortgage. If the total loan amount for a transaction is less than $26,092, and the points-and-fees amount exceeds the lesser of the adjusted points-and-fees dollar trigger of $1,305 or 8 percent of the total loan amount, the transaction is a high-cost mortgage. 

• Effective January 1, 2024, under the General QM loan definition, the annual percentage rate may not exceed the average prime offer rate for a comparable transaction as of the date the interest rate is set by the following amounts: 2.25 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $130,461; 3.5 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $78,277 but less than $130,461; 6.5 or more percentage points for a first-lien covered transaction with a loan amount less than $78,277; 6.5 or more percentage points for a first-lien covered transaction secured by a manufactured home with a loan amount less than $130,461; 3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $78,277; or 6.5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $78,277. 

Kentucky Court Halts 1071 Enforcement Until After SCOTUS Decision 

The United States District Court for the Eastern District of Kentucky issued an order which enjoins the CFPB from enforcing the Small Business Lending Data Rule until after the Supreme Court of the United States (SCOTUS) issues an opinion ruling on the funding structure of the CFPB.  The SCOTUS is set to hear arguments for the CFPB funding structure on October 3rd. 

CFPB Issues Guidance on Credit Denials by Lenders Using Artificial Intelligence 

The CFPB issued Consumer Financial Protection Circular 2023-03 to provide insight into the notification requirements and proper use of the CFPB’s sample forms when a creditor has denied a loan based off results from artificial intelligence or complex credit models. 

The guidance describes how lenders must use specific and accurate reasons when taking adverse actions against consumers. This means that creditors cannot simply use CFPB sample adverse action forms and checklists if they do not reflect the actual reason for the denial of credit or a change of credit conditions. This requirement is especially important with the growth of advanced algorithms and personal consumer data in credit underwriting. Explaining the reasons for adverse actions help improve consumers’ chances for future credit, and protect consumers from illegal discrimination. 

League InfoSight Highlight: Automated Cybersecurity Evaluation Toolbox 

Additional information has been added to the Cybersecurity topic in the Security Channel of InfoSight for the Automated Cybersecurity Evaluation Toolbox (ACET). The NCUA Supervisory Priorities continues to highlight Information Security (cybersecurity) as an examination priority because of the significant and ever-evolving threat cybersecurity presents to the financial system. The NCUA encourages credit unions to conduct cybersecurity self-assessments, which also helps to prepare for an Information Security Examination. 

The NCUA's ACET (Automated Cybersecurity Evaluation Toolbox) application provides credit unions the capability to conduct a maturity assessment aligned with the Federal Financial Institutions Examination Council's (FFIEC) Cybersecurity Assessment Tool. Using the assessment within the toolbox allows credit unions of all sizes to easily determine and measure their own cybersecurity preparedness over time. 

The ACET maturity assessment is completely voluntary and does not introduce any new requirements or expectations on credit unions. It is simply a tool that allows credit unions to identify and determine their levels of cybersecurity preparedness. 

Using the Toolbox to conduct assessments on a regular basis may help credit unions to: 

• Identify areas of risk proactively, before there is a problem 

• Determine the depth and breadth of cyber risk the credit union is exposed to 

• Discover the credit union's preparedness to deal with the cyber threats it may face 

• Make decisions about security processes and programs based on the true nature of risk 

• Use a measurable and repeatable process to assess risk preparedness over time 

• Understand, address, and mitigate cybersecurity risk 

The Toolbox also houses the CISA’s Ransomware Readiness Assessment (RRA). 

September is National Preparedness Month: Make a Plan Now 

Consumer Advisory: People Have the Right to Cancel Credit Repair Services 

CFPB Kicks Off Rulemaking to Remove Medical Bills from Credit Reports 

Change of Address Fraud on the Rise 

Children’s Health Insurance Program: Spot the Scam 

Sept 27, 2023: NCUA Webinar – Consumer Compliance 

Sept 28, 2023: NCUA Webinar – Using Technology to Promote Financial Inclusion 

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

Oct 30, 2023: 5300 Call Report Due to NCUA 

Nov 10, 2023: Veterans Day - Federal Holiday (Observed) 

Nov 23, 2023: Thanksgiving Day - Federal Holiday 

Can we open donation or memorial accounts? If so, how do I create one? 

Yes, your credit union can open donation and memorial accounts, but there are many concerns to think about before opening such an account.  The first issue is that there is virtually no way for you to set up the account and have it be tax deductible unless someone creates an organization that meets the IRS requirements.  Someone would have to go through the steps to obtain a tax id number and create a foundation or charity, or something along those lines, before any donations would be tax deductible.  This may confuse a lot of members who assume that a donation would be tax deductible. 

Second, you can open a donation account using the member's SSN who wanted to create the account, but donors need to be aware that any funds donated do belong to the account owner and they are not obligated to spend the funds in any particular way.  Further, if the CU set the account up itself, it would cause further tax and liability issues so you would definitely want to be sure to contact an attorney and tax professional if you decided to do that. 

Lastly, if you decide to open a donation or memorial account for one member, you should consider that you may get additional requests from other members in the future.  It would be difficult to determine what causes you would be willing to open these accounts for, and this may cause problems. 

In summary, you can set up a donation account using anyone’s SSN that wants to create the account.  You can even direct checks to be made out to the John Smith Memorial Fund for example.  However, the risk is that the individual is not required to use the funds for anything in particular, and the donations are not tax deductible unless an actual IRS approved organization is created.  Therefore, if anything fraudulent happened, it may create some negative publicity for the credit union. 

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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

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