SDBA eNews

August 27, 2020

FHFA Delays GSE Refinance Fee to Dec. 1

The Federal Housing Finance Agency (FHFA) on Tuesday delayed a 50-basis-point fee it had planned to start imposing on Fannie Mae and Freddie Mac refinanced mortgages. Instead of taking effect Sept. 1, the fee will be imposed Dec. 1, and it will exempt refinance loans with balances of less than $125,000 to preserve refi accessibility for low-income borrowers.

ABA SVP Joseph Pigg described the delay as “an important step in the right direction,” adding that “we will continue to urge FHFA to carefully assess whether this fee, even delayed until December, could unnecessarily harm struggling homeowners and the broader economy.”

A broad coalition including ABA, the state bankers associations, other national financial trade groups and consumer organizations have expressed concern the fee, citing the cost of $1,400 it would add to a typical refinance at a time when many consumers are attempting to reduce household expenses, and warned that its Sept. 1 effective date would raise costs for loans already in the application pipeline. Read more. Take grassroots action.‌

Agencies Finalize Three Rules Issued as Part of Pandemic Response

The federal banking agencies yesterday finalized several rules originally issued as interim final rules during the spring weeks of the emergency coronavirus response. The final rules:

  • Set the community bank leverage ratio at 8% through 2020 and increase it to 8.5% for 2021 before it returns to 9% on Jan. 1, 2022, as required in the CARES Act (unchanged from interim final rule).
  • Revise the definition of eligible retained income for all institutions subject to the agencies’ capital rule to make any applicable automatic limitations on capital distributions more gradual (unchanged from interim final rule).
  • Give banks implementing the current expected credit loss standard this year the option to delay for two years the phase-in of the standard’s regulatory capital effects (finalized with clarifications and adjustments in response to public comments).

In its comment letter on the latter rule, ABA warned of potential unintended consequences that could arise from the 25% add-back applied across the board without regard to lending product, as CECL credit loss provisions are likely to adversely impact consumer lending significantly more than commercial lending. The agencies noted the comments but did not change the final rule in response.

CFPB Launches Latest CARD Act Review; Seeks Feedback on Regulations

The Consumer Financial Protection Bureau is beginning its biennial review of the consumer credit card market, as mandated by the Credit CARD Act. The next report is due in 2021.

This year, the Bureau is also reviewing the economic impact of the CARD Act rules on small entities in order to “determine whether the rules should be continued without change, or should be amended or rescinded, consistent with the stated objectives of applicable statutes, to minimize any significant economic impact of the rules upon a substantial number of such small entities.”

Specifically, the Bureau sought feedback on the scale of the rules’ economic impact; whether and how those impacts on small entities can be reduced; and other factors. Regarding the market review, the CFPB sought public feedback on credit card market structure and participants; card pricing structure; credit availability; and innovation in the card market. Comments are due 60 days after the request for information is published in the Federal Register. Read the RFI. For more information, contact ABA’s Nessa Feddis or Brian Murphy.

U.S. Government Issues Warning on North Korea-Affiliated Hacker Group

Hackers associated with North Korea have resumed targeting banks worldwide to initiate fraudulent money transfers and ATM cashout schemes, according to an advisory yesterday from the Cybersecurity and Infrastructure Security Agency, Treasury Department, Federal Bureau of Investigation and U.S. Cyber Command. “The recent resurgence follows a lull in bank targeting since late 2019,” the advisory said.

The hacking team under control of North Korean intelligence, referred to as BeagleBoyz by the U.S. government, poses severe operational risk for individual banks beyond reputational harm and financial losses, the advisory said. BeagleBoyz perpetrated the notorious 2016 SWIFT compromise, and fraudulent ATM cashouts perpetrated by BeagleBoyz have affected more than 30 countries in a single incident.

The hackers were responsible for cyber-enabled ATM cashout campaigns called “FASTCash” from 2016 to 2018. Since this scheme was identified publicly in 2018, the advisory said, FASTCash can now be perpetrated against banks hosting switch applications on Windows servers and now targets interbank payment processors. Read the advisory

FDIC Proposes Significant Changes to Supervisory Appeals Process

The FDIC late last Friday proposed to establish a new Office of Supervisory Appeals that would replace the current Supervision Appeals Review Committee. The office would be independent from the divisions within the FDIC that have the authority to issue material supervisory determinations. The FDIC noted that it anticipates recruiting externally for the new office and employing reviewing officials on a part-time or intermittent, time-limited basis to ensure its independence.

“The proposal seeks to establish a fair, independent process for a bank to appeal material supervisory decisions,” said FDIC Chairman Jelena McWilliams. “Such an appeals process is key to promoting consistency among examiners across the country, ensuring accountability at the agency, and, ultimately, maintaining stability and public confidence in the nation’s financial system.” She added that she does not expect the proposed changes to result “in an avalanche of appeals” and emphasized that the burden of proof would continue to rest with the bank when making an appeal.

In addition to the new office, the FDIC also proposed to modify the procedures and timeframes for when determinations underlying formal enforcement-related actions may be appealed. The proposal follows a 2019 review conducted by the FDIC of the appeals process.

Comments on the proposal are due on Oct. 20. ABA is currently reviewing the proposal and intends to submit a comment letter. Read the proposal. To provide feedback or join the comment letter working group, contact ABA’s Shaun Kern

Timothy Koch to Retire from GSBC in 2021

Photo of Timothy KochThe Board of Trustees of the Graduate School of Banking at Colorado (GSBC) announced Wednesday that Timothy Koch, president, will retire following the July 2021 annual school session.

"July 2021 will mark the end of an incredible era of community banking education led by Dr. Koch,” said GSBC Chair Mary Kay Bates, president and chief executive officer of Bank Midwest (Iowa). “His extraordinary leadership and vision for banker education has made GSBC what it is today; we are sad to see his time as GSBC’s leader come to an end, but are excited to see what the future holds for the school as well.

A seven-person search committee has been tasked with finding Koch’s replacement, Bates said. It includes current and former trustees and representatives from the GSBC faculty and University of Colorado Boulder. 

The committee is meeting regularly to identify and vet candidates for the position. It plans to hire a replacement by year-end 2020, allowing for a gradual transition of leadership beginning in 2021.

SDSU Real Estate Affinity Group to Hold Virtual Presentation

The SDSU Ness School of Management and Economics will hold the Land Valuation and Rural Real Estate Affinity Group Networking Conference virtually on Friday, Sept. 4, at noon CDT. The presentation is titled "Real Estate Mechanics: Student Success, and Eric Hanson, President of Homestead Holdings, Inc." Those interested can join the presentation via Zoom. For more information, contract Ryan McKnight, an instructor with the Ness School of Management and Economics, via email

SDBA Offering IRA School in Sioux Falls and Virtually

IRA School PhotoThe SDBA will hold the 2020 IRA School on Sept. 29 to Oct. 2 live in Sioux Falls and virtually. Days one to three of the school will cover new and current IRA material, and previous topics covered at the school will be expanded. Day four of the school, which is optional, is for anyone who is involved indirectly or directly in IRA operations, reporting, auditing or compliance and covers how the SECURE Act will affect bank operations. 

In addition to the school being held live in Sioux Falls at the Holiday Inn & Suites Sioux Falls Airport, sessions will also be live-streamed and recorded to be watched at a later date. If you are not comfortable attending in person, simply choose to participate virtually, and you can attend from the comfort of your home or office. Learn more and register

 Compliance Alliance

Question of the Week

Question: Does our ATM have to notify a non-customer of the bank that our bank is going to charge a fee and what the fee amount is?

Answer: Yes, this is an explicit requirement under Regulation E, as provided below:

(b) General. An automated teller machine operator that imposes a fee on a consumer for initiating an electronic fund transfer or a balance inquiry must provide a notice that a fee will be imposed for providing electronic fund transfer services or a balance inquiry that discloses the amount of the fee.

(c) Notice requirement. An automated teller machine operator must provide the notice required by paragraph (b) of this section either by showing it on the screen of the automated teller machine or by providing it on paper, before the consumer is committed to paying a fee.

(d) Imposition of fee. An automated teller machine operator may impose a fee on a consumer for initiating an electronic fund transfer or a balance inquiry only if:

(1) The consumer is provided the notice required under paragraph (c) of this section, and

(2) The consumer elects to continue the transaction or inquiry after receiving such notice.

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 and ask for our Membership Team.

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