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National Credit Union Administration (NCUA)
NCUA Final Rule Amendment to the Charitable Donation Accounts
The NCUA Board approved a final rule which amends the charitable donation accounts (CDAs) section of the NCUA’s incidental powers rule. The Board is adding a post or organization of past or present members of the Armed Forces of the United States, or an auxiliary unit or society of, or a trust or foundation for, any such post or organization recognized as exempt from taxation under section 501(c)(19) of the Internal Revenue Code (veterans’ organizations) to the definition of a “qualified charity” that a federal credit union may contribute to using a CDA.
The qualified charities will be defined as: Qualified charity is a charitable organization or other nonprofit entity recognized as exempt from taxation under sections 501(c)(3) or 501(c)(19) of the Internal Revenue Code.
The rule will be effective 30 days after it is published in the federal register.
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Consumer Financial Protection Bureau (CFPB)
CFPB Announces Annual Threshold Adjustment for Appraisals for Higher-Priced Mortgage Loans Exemption
The CFPB announced the 2024 threshold for small loan exemption from appraisal requirements for higher-priced mortgage loans. Effective January 1, 2024, the threshold for whether higher-priced mortgage loans are subject to special appraisal requirements will increase from $31,000 to $32,400.
CFPB Announces Annual Adjustment for the Applicability of Regulation Z
Based on the annual percentage increase in the CPI-W as of June 1, 2023, Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) generally will apply to consumer credit transactions and consumer leases of $69,500 or less in 2024. However, private education loans and loans secured by real property, such as mortgages, are subject to Regulation Z (Truth in Lending) regardless of the amount of the loan.
CFPB Annual Report on FDCPA Highlights Issues with Medical Debt Collection
The CFPB released an annual report to Congress on the Fair Debt Collection Practices Act (FDCPA) and how the CFPB and states have worked to stop the collections of medical bills that are inaccurate or not even owed at all. The report also provides updates on the debt collection market more broadly and summarizes activities by the CFPB and other federal agencies relating to debt collection, including the Federal Trade Commission (FTC) and its actions under the FTC Act to protect small businesses from unfair and deceptive debt collection practices.
The insights from the report include:
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Medical debt collectors may violate federal law when they attempt to collect bills that are not actually owed or are the wrong amount: Collecting debts that are actually not owed or collecting wrong amounts may violate the Fair Debt Collection Practices Act or the Consumer Financial Protection Act’s prohibition on unfair, deceptive, or abusive acts or practices. This includes instances in which a collector is collecting charges for services the patients never received, collecting for more expensive versions of services than what were actually provided – often called “upcoding” – or collecting amounts based on rates that are inconsistent with applicable state law.
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States can generally enforce their own debt collection laws to protect consumers: Many states have proposed or enacted laws in recent years providing significant consumer protections with respect to the collection and reporting of medical bills. Preemption of state law is narrow under both the Fair Debt Collection Practices Act and Fair Credit Reporting Act, and preemption would generally not apply to state restrictions on the collection, furnishing and reporting of medical bills. Additionally, inaccuracies in the collection, furnishing, and reporting of medical bills are common, so state restrictions on these practices are unlikely to result in less accurate or robust collections or credit reporting.
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Financial Crimes Enforcement Network (FinCEN)
Where are we with FinCEN’s Beneficial Ownership Rulemaking, and what do I need to know at this point?
We are hearing from several credit unions with questions about the Financial Crimes Enforcement Network (FinCEN) rulemaking on Beneficial Ownership Information Reporting.
Credit unions need to be aware that the rulemaking is in three parts, and currently there are no actions required of credit unions.
Part 1 is the final rule that will require reporting companies to report information about their beneficial owners to FinCEN. The definition of a beneficial owner has not changed, and per the requirement a beneficial owner is:
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Any person with 25% or more equity ownership interest in the business, and
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One person with significant responsibility to control, manage, or direct the reporting company.
The final rule includes 23 exemptions for certain entities which do not have to report their information to FinCEN. Some of these include:
Businesses that are formed after January 1, 2024, will have 30 days (90 days if FinCEN’s amendment to extend the timeframe is finalized) to report their information on the portal. Businesses that are in existence before January 1, 2024, will have until January 1, 2025, to provide their information.
FinCEN will start taking reports on January 1, 2024.
FinCEN has developed several resources that will be helpful for reporting companies which can be found at - https://www.fincen.gov/boi
Part 2 is the rulemaking that will allow financial institutions and government entities to access the information on the FinCEN database. FinCEN has only issued a proposed rule at the time this article was written. Until a final rule is issued and effective, there are no actions for credit unions to take.
In order to pull the records from FinCEN a credit union would need to certify:
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It is only making the request for information in order to facilitate compliance with the Customer Due Diligence requirements;
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It has obtained written consent of the reporting company in order to obtain the information from FinCEN; and
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It has fulfilled the security and confidentiality requirements.
The security and confidentiality requirements are:
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The credit union restricts access to the information to directors, officers, employees, contractors, or agents who are within the United States;
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Implement certain safeguards to protect the security, confidentiality, and integrity of the information (similar to existing privacy requirements such as the GLBA);
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Obtain written consent to request the information from the reporting company before making the request to FinCEN; and
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Provide FinCEN with the afore-mentioned certification when making a request.
Part 3 is yet to come. FinCEN has in its rulemaking agenda a third part to the changes to the BOI requirements. This would be the changes to the credit unions’ policies and procedures for the verification of beneficial owners for legal entity members that were adopted back in 2018. At the time of this article, FinCEN had yet to publish a proposed rule. Until a final rule has been published and is effective, the credit union’s current policies, procedures, and practices remain unchanged.
Even though no actions are currently required of credit unions, it may be helpful to review the FinCEN resources for reporting companies to be a valued resource for your business account members. Credit unions may also wish to consider informing their business account members of the new government reporting requirement.
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Semi-Annual Oregon Escrow Rate Adjustment
The rate financial institutions in Oregon must pay on real estate loan escrow accounts is established in ORS 86.245. The rate on these accounts must be adjusted on Jan. 1 and July 1 of each year.
For each change period, January and July, the rate is based on the most recent auction date information for the 91-Day Treasury Bill (AKA 13-week Treasury Bill) prior to Nov. 15 and May 15, respectively. The rate is calculated by subtracting 100 basis points from the discount rate that corresponds to the applicable auction date.
Interest shall be computed on the average monthly balance in the account and shall be paid not less than quarterly to the borrower by crediting to the escrow account the amount of the interest due.
The discount rate for the 91-Day/13-week Treasury Bill as of auction date November 14, 2023, was 5.26%*. Because the discount rate is greater than 1%, subtracting 100 basis points will result in a rate of 4.26%. Credit unions with escrow accounts for real estate in Oregon will be required to pay interest of 4.26% on escrow accounts for the period Jan. 1– Jun. 30, 2024.
*Source: Treasury Direct
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