SDBA eNews

March 8, 2018

Senate Takes Key Procedural Step on Reg Reform Bill, Call Senators Now on S. 2155

The U.S. Senate on Tuesday voted to open debate on S. 2155, the bipartisan regulatory reform bill championed by Senate Banking Committee Chairman Mike Crapo (R-Idaho) and four of his Democratic colleagues. Sen. Crapo last night released a revised version of the bill, which is thought to reflect bipartisan negotiations, includes several clarifications and a number of additional provisions. 

One clarification appears to respond to a talking point of S. 2155 opponents related to the Federal Reserve’s enhanced prudential standards and authority for foreign banking organizations with total assets over $100 billion. Additions to the bill include a set of capital access proposals that have passed the House with bipartisan majorities and new provisions related to student loan borrowers. The revised bill also includes a new provision creating a database to help financial institutions fight synthetic identity fraud and a bipartisan measure introduced in both houses of Congress that would clarify the regulatory treatment of high-volatility commercial real estate loans.

ABA staff will closely review the revised bill text as debate continues. The Senate is expected to begin voting today on amendments to the bill, which includes numerous provisions long advocated by ABA as part of its Blueprint for Growth. Read the revised version of S. 2155

South Dakota's Sen. Mike Rounds is an original co-sponsor of the bill, and Sen. John Thune has also spoke in support of the bill. Watch Sen. Rounds Senate floor speech. Watch an interview with Sen. Thune

With S. 2155 on the verge of passing the Senate, ABA is urging bankers to make a continued push to get it across the finish line. As debate continues, opposition groups are increasing pressure on lawmakers to oppose it--making it important for bankers to call their senators and express strong support for passing this common-sense regulatory bill. Call your senators now

Ag Lenders Asked to Complete SD Farm Real Estate Market Survey

Ag lenders are invited to participate in SDSU Extension's 2018 South Dakota Farm Real Estate Market Survey. The principal purpose of the survey is to obtain market value and cash rental rate information, by type of agricultural land, in different regions of South Dakota. SDSU Extension is requesting that appraisers, assessors, realtors, agricultural lenders and extension field specialists complete this survey. 

The results from the survey serve as an invaluable tool for the people of South Dakota to gain knowledge of the current agricultural land trends throughout the state. Farmers, landowners, investors, lenders, real estate professionals and public officials are the majority users of the data provided by the survey. 2018 marks the 28th annual South Dakota Farm Real Estate Market Survey.

The survey takes approximately 15 minutes. Questions, contact Shannon Sand, livestock business management field specialist, via email or 605.626.2870 or Jack Davis, crops business management field specialist, via email or 605.995.7378. Access the survey.

CFPB Releases 2018 Lists of Rural, Underserved Counties

The Consumer Financial Protection Bureau on Wednesday released the lists of rural counties and rural or underserved counties that entities can use in 2018 to determine whether they are exempt from certain regulatory requirements under the bureau’s Ability-to-Repay, escrow, HOEPA and appraisal rules. Lists are available for download as Excel, CSV or PDF files. In addition to the lists, the CFPB also provided a tool that can help bankers determine whether a property is located in a rural or underserved area. Access the lists and the tool

FCC Signals Move Toward Reassigned Number Database

The Federal Communications Commission announced last week that it would vote at its March 22 meeting on a proposal to establish a database of phone numbers that have been relinquished by one individual and reassigned to another individual. Under the FCC’s existing Telephone Consumer Protection Act regulations, a bank or other company is liable for a call made in good faith to a party who has consented to receive the call but whose telephone number has been reassigned to another consumer--unbeknownst to the caller.

The FCC’s proposal seeks comment on how such a database should be constructed, used and funded. In its proposal, the FCC expressed tentative support for the establishment of a single database of reassigned numbers, noting that a single database would be “more efficient and cost-effective” than an approach that reports reassigned number information to multiple commercial data aggregators.

In an earlier comment letter, ABA urged the FCC to create a centrally administered database of reassigned numbers.

ABA Outlines Principles for Federal Data Protection, Breach Notification Standards

In a statement for the record of a House Financial Services subcommittee hearing on data security yesterday, ABA outlined several guiding principles for protecting consumer data from data breaches and online cyberattacks. The association emphasized the importance of having robust data protection and breach notification standards--similar to those already adhered to by regulated financial institutions--that would apply to businesses across all industries and ensure that the costs of breaches are borne by the entities that incur them.

Recognizing that banks are already leaders in protecting customer data, ABA called on lawmakers to ensure that any federal data breach bill does not duplicate or undermine banks’ current efforts. ABA noted that a recent bipartisan draft bill released by Reps. Blaine Luetkemeyer (R-Mo.) and Carolyn Maloney (D-N.Y.), would not create duplicative standards for banks, but rather would extend similar expectations to other sectors that handle consumer data.

While ABA agreed that customers should be notified quickly after a data breach is identified, it cautioned that “it would be a mistake to put in place a time-certain for notification such as a certain number of hours or days,” given that each breach is different and some may require more in-depth investigation to determine the size and scope. ABA also urged lawmakers not to mandate a technology solution or specific security requirement, but rather take a risk- and governance-based approach to data security.

In addition, any federal data breach law should have preemption over the patchwork of state laws, ABA said, noting that “although some of these laws are similar, many have inconsistent and conflicting standards.” Read ABA's statement

Keynote Speakers Announced for ABA Emerging Leaders Forum

ABA has announced three new keynote speakers for its Emerging Leaders Forum, to be held April 23 in Washington, D.C., in conjunction with the ABA 2018 Government Relations Summit. Joining the speaker lineup are ESPN personality and Paralympian Victoria Arlen, author and executive coach Sarah Levitt and LinkedIn Chief Political Strategist Katherine Terhune.

The Summit is the largest annual gathering of banking leaders in the nation’s capital. With bank regulatory reform expected to move through Congress in the coming weeks, and with new regulatory officials taking office, bankers have a unique opportunity to advocate for meaningful changes that grow the economy and give bank customers more choices. Registration for both the Summit and the Emerging Leaders Forum is free for bankers, bank directors, bank trustees and ABA service members. The SDBA offers a $500 stipend to help with the travel expenses of one individual from each SDBA member bank to attend the Summit. Register now

Dakota School of Lending Principles To Be Held in April

The Dakota School of Lending Principles, hosted by the SDBA and co-sponsored by the NDBA on April 24-27 in Aberdeen, is a learning event with one foot grounded in the classroom and one foot in the bank. This school allows students to learn the theory and process of basic lending and then put this knowledge to work in actual nuts and bolts sessions. 

This school provides basic instruction appropriate for loan officer trainees, loan support personnel and personal bankers. To ensure exposure to bank structure and terminology, it is recommended that applicants have a minimum of six months lending experience or one year of loan department experience. Applicants not meeting the suggested prerequisites will be contacted to discuss admission qualifications.

The school will focus on four loan modules: consumer lending, real estate lending, analyzing small business loans and loan documentation, and agricultural lending. In the four loan modules, learn the lending process by studying elements applicable to each loan type: terminology, the application process, interviewing, investigation, credit analysis, loan structure, decision communication and selling. Case studies and exercises provide a hands-on learning experience. Learn more and register

Learn Important New Account Opening Procedures, Compliance Requirements

Managing risk is the number one priority for all financial institutions, and it all starts at the new account desk. If a criminal cannot get in, they cannot steal from your organization. Well-trained new account personnel and universal bankers who recognize and stop attempted dishonest activity are the first line of defense in protecting a financial institution from fraudsters.

Unfortunately, too often, new account personnel are trained "on the job," which results in an environment of potential vulnerability and unnecessary losses for the financial institution. Additionally, with constant new regulations, the need for ongoing training is paramount in order to maintain diligence as well as update processes and procedures.

The SDBA's New Account Documentation & Compliance Seminar on April 4 in Sioux Falls teaches important new account opening procedures and compliance requirements focusing on vital information for every type of new account. The seminar manual is customized to South Dakota state law and has become known as the "technical reference handbook" for new account departments. Learn more and register.

Compliance AllianceQuestion of the Week

Question: If you have a purchase of land with a single family residence and the residence is uninhabitable, is it HMDA reportable? Also, if they plan to renovate or replace the structure within the next year and that is stated in file documentation this would make it HMDA reportable. Correct?

Answer: Yes. It is still, although uninhabitable, a "dwelling" for purposes of Reg. C because it is a residential structure. Therefore, it would be reportable.

For reference, see: 12 CFR § 1003.2(j): "Home purchase loan means a closed-end mortgage loan or an open-end line of credit that is for the purpose, in whole or in part, of purchasing a dwelling."

12 CFR § 1003.2(f): "Dwelling means a residential structure, whether or not attached to real property. The term includes but is not limited to a detached home, an individual condominium or cooperative unit, a manufactured home or other factory-built home, or a multifamily residential structure or community."

And, in response to the second part of the question - Because it is already reportable, the habitability really has no bearing. The loan is technically a home purchase loan when the loan was made.

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Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call 888.353.3933 or email.

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Contact Alisa DeMers, SDBA, at 800.726.7322 or via email.