SDBA eNews

January 31, 2019

Annual Convention Room Block Open, Business Partner Info Available

Focus Forward: 2019 SDBA/NDBA Annual ConventionThe SDBA invites you to FOCUS FORWARD at the 2019 SDBA/NDBA Annual Convention on June 2-4 at the Sioux Falls Convention Center & Sheraton Sioux Falls. Rooms have been reserved at four Sioux Falls hotels: Sheraton Sioux Falls, Ramada, Best Western Plus Ramkota Hotel and Holiday Inn Express. When making a reservation, ask for a room from the SDBA block. See accommodation details

Business partners can participate in the 2019 Annual Convention by sponsoring, exhibiting or advertising. A business partner packet including information on signing up is now available online

Be watching for the full convention agenda and registration in March. Questions, call the SDBA at 605.224.1653.

Rep. Dusty Johnson to Serve on House Ag Committee

Photo of Rep. Dusty JohnsonRep. Dusty Johnson (R-S.D.) has been appointed to serve on the U.S. House Committee on Agriculture.

“Serving on the Agriculture Committee is a true honor, and I am proud to give South Dakota a voice at this table,” said Johnson. “I relentlessly advocated for a seat on this committee since being elected to Congress.”

“My placement on this committee will have a direct impact on South Dakota’s largest and most significant industry, and I am thankful to have the opportunity to advance sound agriculture policy that serves farmers, ranchers and consumers in our state. My colleagues passed a strong Farm Bill last year, and I look forward to seeing it through to implementation.”

“I’m excited to welcome Dusty to the House Agriculture Committee. On the heels of the 2018 Farm Bill, it is critical that strong members like Dusty are involved in overseeing the implementation of all areas of the bill—from the farm safety net to conservation to rural broadband,” said House Agriculture Committee Ranking Member Mike Conaway. “There is much work to be done in the 116th Congress, and I look forward to working alongside Dusty on behalf of rural America.”

“South Dakota Farm Bureau is proud to have Dusty selected as one of the few new Republicans appointed to the House Agriculture Committee,” said Scott VanderWal, president of the South Dakota Farm Bureau. “The Agriculture Committee gives Dusty the chance to advocate for not only farm risk management tools, but also conservation, rural development, research and much more. We look forward to working with Dusty to advance policies that help South Dakota farmers and ranchers continue to feed the world.”

Agencies Issue Long-Awaited Final Rule on Private Flood Insurance Acceptance

The financial regulatory agencies last Friday released a final rule governing the acceptance of private flood insurance. The rule, which will be effective on July 1, 2019, is the long-awaited implementation of the 2012 Biggert Waters Act provision that requires federally-regulated lending institutions to accept private flood insurance policies that meet certain statutory criteria. Implementation of the statutory requirements without impeding the development of a market for private flood insurance--as advocated by ABA--was such a challenge that the banking agencies issued an initial proposal in 2013, and after reviewing the comments published a revised proposal in 2016.

As recommended by ABA, the final rule contains a "compliance aid" to facilitate lenders' acceptance of such private policies. As strongly urged by ABA, the rule also permits lenders to accept private policies that do not meet the statutory criteria but in the judgment of the lender offer sufficient protection for a designated loan consistent with general safety and soundness principles. Finally, the final rule permits lenders to exercise discretion to accept certain plans providing flood coverage issued by “mutual aid societies” such as agreements by Amish communities to cover flood losses to members’ property. Read the rule. Read ABA's previous comments. For more information, contact ABA's Diana Banks

ABA Invests in Emerging Core Banking Provider

ABA last Friday announced that it has made a direct investment in Finxact, an emerging technology company that offers an innovative, open core banking platform for financial institutions. The investment--which was recommended by ABA’s Venture Investment Committee -comes as part of ABA’s ongoing effort to ensure that member banks are prepared to make the transition to banking’s digital future, and after the association last year took several steps to address the challenges banks currently face with respect to their core providers.

Finxact offers a unique Core as a Service platform that banks of all sizes can use to quickly add new customer experiences and services to their core banking operations. The platform’s SaaS, cloud-native model allows banks to make proprietary enhancements and custom configurations, while also giving them full access to their data.

“We believe the team at Finxact is bringing to market not just a new core product but a new model for banks to deliver enhanced customer experiences,” said ABA President and CEO Rob Nichols. “ABA is pleased to take part in this historic opportunity to chart a new path for core banking services.”

Nichols added that ABA will continue to look “at every avenue -whether it’s investments in companies like Finxact, working with other core providers or endorsements of new products and services--to help all banks keep pace with the digital revolution underway.” Read more. For more information, contact ABA's Christopher McClinton

State Associations, ICBA File Amicus Brief in Credit Union Field of Membership Case

State bankers associations from all 50 states and Puerto Rico, along with ICBA and 25 of its state-level affiliates, filed an amicus brief last Friday supporting ABA’s legal challenge to the National Credit Union Administration’s field of membership rule, which further expanded the already loose fields of membership from which federal credit unions can draw their customers. ABA last year filed a cross-appeal in the case specifically challenging a portion of a D.C. district court judge’s decision upholding provisions of the rule that permit credit unions to serve core-based statistical areas without serving the urban core that defines the areas.

The associations argued that the final rule is “unreasonable, arbitrary and capricious and exceeds NCUA’s statutory authority,” and called for the district court’s decision on core-based statistical areas to be vacated. “The final rule is simply further effort by NCUA to expand the competitive advantages of community credit unions,” they wrote. “In doing so, NCUA has adopted definitions of ‘well-defined local community' and ‘rural district’ that are certainly not ‘local.’” For more information, contact ABA's Dawn Causey

Congress, Trump Strike Short-Term Deal to Halt Government Shutdown

Congress last Friday night passed--and President Trump signed into law--legislation to fund the federal government until Feb. 15, bringing the historic 35-day shutdown to a temporary halt while budget negotiations continue. During the shutdown, the ABA urged lawmakers and President Trump to bring an end to the impasse, highlighting the significant economic effects of the shutdown on federal workers and their communities.

Meanwhile, banks across the country continue to support their customers who may be facing financial hardship as a result of the shutdown. ABA is documenting these efforts on its dedicated webpage,

Podcast: How U.S. Bank Tackled Human Trafficking Around the Super Bowl

Along with major sporting events like the Super Bowl comes a tragic increase in victims of sexual trafficking in that city. On the latest episode of the ABA Banking Journal Podcast, two top compliance executives at U.S. Bank describe how they partnered with law enforcement and leveraged transaction data to help identify human traffickers during the 2018 Super Bowl, held near U.S. Bank's headquarters in Minneapolis.

On the podcast, Phillip DeLuca and Jim Dinkins discuss how they built their anti-trafficking strategy, how they partnered effectively with local law enforcement and how they train employees at all levels and in every business line to recognize the signs of human trafficking. The result: 94 individuals arrested during the 11 days leading up to Super Bowl LII--and many of the arrests were due in part to reports to law enforcement made by the bank as part of its anti-trafficking initiative. Listen to this episode. Read an ABA Banking Journal article on the anti-trafficking effort

fTLD Announces Auction of Common Reserved .bank Names

fTLD Registry Services--the company created to oversee the .bank domain--is allocating some of the domain names from its reserved names list via an auction occurring in February. Prior to the launch of .bank in May 2015, fTLD reserved numerous domain names that were not available for immediate registration, including those that were designated as “common community names” (for example, Banks wishing to participate in the February auction must submit their bids by 4 p.m. CST, on Thursday, Feb. 21. Learn more and see the available names

Compliance Alliance

Question of the Week

Question: Our bank is acquiring another bank, and once the acquisition is complete, we are going to change our name to the acquired’s name. The only thing changing from a servicing perspective is the name and address of the bank. Based on this information, are we still required to send out a Notice of Servicing Transfer? Also, should the other institution be sending out a Notice of Servicing Transfer as well?

Answer: Yes, the notice would generally be required of both the transferee and transferor servicer as set out here:

(i) In general. Except as provided in paragraphs (b)(3)(ii) and (iii) of this section, the transferor servicer shall provide the notice of transfer to the borrower not less than 15 days before the effective date of the transfer of the servicing of the mortgage loan. The transferee servicer shall provide the notice of transfer to the borrower not more than 15 days after the effective date of the transfer. The transferor and transferee servicers may provide a single notice, in which case the notice shall be provided not less than 15 days before the effective date of the transfer of the servicing of the mortgage loan.

Although a single notice on behalf of both could be provided, it is best practice and would be required of your institution anyway since it is the one acquiring and changing names. It also would not be exempt, unfortunately, since the payee name and address are changing:

(2) Certain transfers excluded.

(i) The following transfers are not assignments, sales, or transfers of mortgage loan servicing for purposes of this section if there is no change in the payee, address to which payment must be delivered, account number, or amount of payment due:

(A) A transfer between affiliates;

(B) A transfer that results from mergers or acquisitions of servicers or subservicers;

(C) A transfer that occurs between master servicers without changing the subservicer;

Not a member? Learn more about membership with Compliance Alliance by attending one of our live demos:

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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 Bousa, SDBA, at 800.726.7322 or via email.