In This Issue

• SDBA Offers Security Training Next Week in Sioux Falls
• CFPB Finalizes Relief for Small, Rural Mortgage Lenders
• ABA Hosts Meeting to Address Rural Appraiser Shortage
• ABA: Legislation Needed to Address FHLB Membership Plan
• Fed Action Allows Same-Day ACH to Move Forward
• Heitkamp Introduces Refinancing Plan for Private Student Loans

SDBA Offers Security Training Next Week in Sioux Falls

The SDBA is offering the 2015 Security Workshop Thursday, Oct. 1, in Sioux Falls at the Clubhouse Hotel & Suites.

Topics include internal fraud: spotting the tell-tale signs of a bad apple; Bitcoin and virtual currencies: the security function’s role; back office responsibilities: the robbery perspective; and a money laundering simulation.

Security officers or directors, operations managers, auditors, HR directors, legal staff, loan officers, disaster recovery managers, collection staff and fraud investigators are all encouraged to attend.

CFPB Finalizes Relief for Small, Rural Mortgage Lenders

The Consumer Financial Protection Bureau on Monday finalized several changes -- many advocated by ABA -- that will increase the number of banks able to benefit from the bureau’s small creditor and rural or underserved area exemptions in its mortgage rules. “This welcome rule is a result of hometown bankers engaging with the CFPB and the CFPB listening,” said ABA EVP Bob Davis. “These changes are sensible measures that will make it easier for community banks to serve their customers, and for many bankers to meet mortgage credit needs in rural and underserved communities.”

As ABA has urged in formal comments, as well as in frequent, informal advocacy with CFPB officials, the rule lifts the origination limit to qualify for “small creditor” status from 500 loans annually to 2,000 loans annually -- a limit that also excludes loans retained in portfolio, further increasing the relief provided. Under the mortgage rules, small creditors’ portfolio loans have lower burdens in obtaining qualified mortgage status. Small creditors operating in rural and underserved areas may also originate QMs with balloon payments, which is not otherwise permitted.

The final rule, which takes effect Jan. 1, 2016, also clarifies and expands the definition of rural areas to include any county or census block not designated as “urban” by the U.S. Census Bureau and provides a safe harbor for lenders who use the Census Bureau or CFPB websites to validate a locale’s rural or underserved status. As ABA had requested, the CFPB said it would have an automated tool to determine rural or underserved status by the time the rule takes effect.

The rule includes additional provisions making it easier for lenders whose small creditor or rural or underserved status changes to obtain the benefits of the exemption. It also provides a brief extension for the transition period in which small creditors can make QMs with balloon payments regardless of location. Read the final rule. For more information, contact ABA’s Rod Alba.

ABA Hosts Meeting to Address Rural Appraiser Shortage

To help address the pending shortage of rural property appraisers -- and the implications for agricultural and commercial credit in rural communities -- ABA’s Center for Agricultural and Rural Banking and ABA’s Commercial Real Estate Committee convened a meeting last week of key stakeholders from the banking industry, federal government, appraisal industry and others.

“With many appraisers retiring and too few new appraisers entering the profession, the risk of a shortage would hinder credit in rural communities everywhere,” said ABA SVP Steve Apodaca, a former ag banker. “ABA is pleased to take the lead on this issue of critical concern for our members.”

The meeting was moderated by Nate Franzen, chairman of ABA’s Agricultural and Rural Banking Committee and head of ag lending at First Dakota National Bank, Yankton, S.D. He was joined by Robert Fouberg, EVP of Dacotah Bank, Aberdeen, S.D., and Brian Gatzke, owner of Northern Plains Appraisal. Other participants at the meeting included representatives from the U.S. Department of Agriculture, the Appraisal Institute, the American Society of Farm Managers and Rural Appraisers, the American Society of Appraisers, TIAA-CREF, Farmer Mac and others.

The group discussed how an appraiser shortage would affect their institutions and whether and how changing the requirements to become an appraiser would ease the shortage. ABA will lead the group in submitting comments and testimony before the Appraisal Qualification Board’s Oct. 16 meeting. For more information, contact Apodaca.

ABA: Legislation Needed to Address FHLB Membership Plan

 
Arguing that the proposal runs against congressional intent and sound public policy, ABA on Friday called on Congress to pass legislation requiring the Federal Housing Finance Agency to withdraw its proposal on Federal Home Loan Bank membership.

The proposal “will create regulatory burden and drive up costs of membership in the system and ultimately the costs of those communities and individuals served by FHLB members,” ABA said. “It will also lead to far less stability in the system, making membership and access to liquidity less certain.”

The FHFA’s proposed changes would require FHLB members to hold 1 percent of assets in home mortgage loans and require those subject to a 10 percent residential mortgage asset base to maintain that ratio on an ongoing basis. They would also revise insurer eligibility to exclude captive insurers. ABA, its American Bankers Insurance Association affiliate and the state bankers associations have strongly opposed the proposal. Read the letter.

Fed Action Allows Same-Day ACH to Move Forward

As ABA had advocated, the Federal Reserve yesterday finalized changes aligning the regional Federal Reserve Banks’ FedACH system with NACHA’s same-day ACH rule, helping to ensure the ubiquity of same-day ACH for financial institution customers. NACHA’s rule requires financial institutions to have same-day ACH capability and requires sending institutions to pay a 5.2 cent per-transaction fee to offset the costs of participating in same-day ACH.

ABA applauded the Fed’s action. “Same-day ACH gives customers more flexibility in managing their finances and can improve the efficiency of the payments system,” said ABA VP Steve Kenneally. “This forward-thinking step demonstrates the continued leadership of the banking industry in payments innovation.”

In reviewing the pros and cons of mandatory participation and the 5.2 cent per-transaction fee paid to receiving institutions, the Fed noted “widespread industry support” for NACHA’s rule change and determined that “costs incurred to implement such a service are outweighed by the enhanced efficiency of the ACH network and the broader U.S. payment system.”

The Fed contrasted the NACHA approach with the current FedACH same-day payment service, which is not mandatory and has only a handful of participants. “[T]he limited adoption of the Reserve Banks’ current FedACH SameDay Service demonstrates an optional service cannot achieve the ubiquity necessary to establish a successful same-day ACH service,” it noted. Read more.

Heitkamp Introduces Refinancing Plan for Private Student Loans

Sen. Heidi Heitkamp (D-N.D.) yesterday introduced a bill that she said would make it easier for borrowers to refinance private student loan debt, which accounts for 7 percent of outstanding student debt.

According to Heitkamp's office, the bill would authorize the Treasury Department to find "creative solutions" to inefficiencies in the private student loan market, provide "refinancing options" to borrowers whose debt represents "a disproportionate share of their income," spur competition among private lenders and require a report on refinancing best practices. Read more.