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National Credit Union Administration (NCUA)
Federal Regulators Issue Final Automated Valuation Models (AVMs) Rule
The NCUA, along with the other federal financial institution regulators, issued the final rule to implement the Dodd-Frank Act requirement for mortgage originators and secondary market issuers to implement quality control standards when using AVMs in determining the collateral worth of a mortgage secured by a consumer’s principal dwelling. Under the final rule, institutions that engage in certain credit decisions or securitization determinations must adopt policies, practices, procedures, and control systems to ensure that AVMs used in these transactions to determine the value of mortgage collateral adhere to quality control standards designed to ensure a high level of confidence in the estimates produced by AVMs; protect against the manipulation of data; seek to avoid conflicts of
interest; require random sample testing and reviews; and comply with applicable nondiscrimination laws.
The final rule will be effective on the first day of the calendar quarter following 12 months after the date the final rule is published in the federal register.
NCUA Releases Annual Cybersecurity and Credit Union System Resilience Report
The NCUA released its annual Cybersecurity and Credit Union Resilience Report. The report summarizes the current cybersecurity threat landscape, highlights the agency’s key cybersecurity initiatives, and outlines the agency’s ongoing efforts to enhance cybersecurity preparedness and resilience within the credit union industry.
The Cybersecurity and Credit Union Resilience Report provides information on:
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Consumer Financial Protection Bureau (CFPB)
CFPB Interim Final Rule to Extend the Compliance Deadlines for the Small Business Lending Data Collection Rule
The Consumer Financial Protection Bureau (CFPB) issued an interim final rule to extend the compliance deadlines for the small business lending data collection rule.
Credit unions will also have the option of using their small business loan originations from 2022 and 2023 date or 2023 and 2024 data to determine their compliance tier for the compliance deadline.
The updates to the compliance dates are as follows:
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Fair Lending Report of CFPB 2023
The CFPB released its Fair Lending Report to Congress which describes the actions the Bureau took to advance access to fair credit in calendar year 2023.
As a result of its annual risk-based prioritization process, in 2023 the CFPB focused much of its fair lending supervision efforts on: mortgage origination (including redlining, property valuation bias, and HMDA and Regulation C compliance); credit card marketing and the use of alternative data in digital marketing; and on the use of automated systems and models, sometimes marketed as artificial intelligence (AI) and machine learning models, in credit card originations.
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Financial Crimes Enforcement Network (FinCEN)
FinCEN Finalizes Financial Measure Against Iraq-based Al-Huda Bank to Combat Terrorist Financing
FinCEN issued a final rule section 311 of the USA PATRIOT Act (section 311) that severs Al-Huda Bank from the United States financial system by prohibiting domestic financial institutions and agencies from opening or maintaining a correspondent account for or on behalf of Al-Huda Bank, an Iraqi bank that serves as a conduit for terrorist financing.
The rule further requires covered U.S. financial institutions to take reasonable steps not to process transactions for the correspondent account of a foreign banking institution in the United States if such a transaction involves Al-Huda Bank. It also requires covered institutions to apply special due diligence to their foreign correspondent accounts that is reasonably designed to guard against their use to process transactions involving Al-Huda Bank.
Proposed Rule to Strength and Modernize Financial Institution AML/CFT Programs
FinCEN issued a proposed rule proposed rule to strengthen and modernize financial institutions’ anti-money laundering and countering the financing of terrorism (AML/CFT) programs. The proposed amendments are based on changes to the Bank Secrecy Act (BSA) as enacted by the Anti-Money Laundering Act of 2020.
This proposed rule would:
amend the existing program rules to explicitly require financial institutions to establish, implement, and maintain effective, risk-based, and reasonably designed AML/CFT programs with certain minimum components, including a mandatory risk assessment process;
require financial institutions to review government-wide AML/CFT priorities and incorporate them, as appropriate, into risk-based programs, as well as provide for certain technical changes to program requirements; and
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League InfoSight Highlight |
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League InfoSight Highlight: Quality Control Standards for AVMs
In June 2023, the NCUA (along with other agencies) invited comments on a proposed rule related to quality control standards for the use of automated valuation models (AVMs) by mortgage originators and secondary market issuers when determining the collateral worth of a mortgage secured by a consumer’s principal dwelling. Almost a year later, the final rule has been issued and will become effective 12 months after publication in the Federal Register. The final rule is largely unchanged from the proposed rule.
An automated valuation model (AVM) is defined within the rule to mean any computerized model used by mortgage originators and secondary market issuers to determine the value of a consumer’s principal dwelling collateralizing a mortgage. The final rule will require credit unions engaged in credit decisions to adopt and maintain policies, practices, procedures, and control systems to ensure that AVMs used in these transactions adhere to quality control standards which will be designed to:
Ensure a high level of confidence in the estimates produced;
Protect against the manipulation of data;
Seek to avoid conflicts of interest;
Require random sample testing and reviews; and
Comply with applicable nondiscrimination laws.
These policies, procedures, practices, and control systems will be based on the size, complexity, and risk profile of the credit union, along with the types of transactions the credit union utilizes AVMs. The commentary in the final rule indicates that the Agencies took a non-prescription approach to this requirement which they believed necessary as modeling technology continues to evolve. They believe this will allow the credit union to refine their implementation of the rule, as appropriate, based on the quickly evolving nature of this tool.
Stay tuned for more updates to InfoSight and CU PolicyPro resources regarding these changes!
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InfoSight Update: Discussion Board Email Opps!
On June 26th and 27th, 2024, some of you may have received an email from info@leagueinfosight.com, with a subject line that indicated: “Discussion Board Thread Added – Master InfoSight.”
We appreciate everyone who reached out to us and/or their League/Association to clarify the authenticity of the email. We wanted to take some space in this newsletter to clarify that although this message was sent in error as a result of our internal testing, it was a legitimate email coming from the InfoSight platform and was not a phishing attempt or virus! Our apologies for the confusion this may have caused! We have since taken down the discussion board on our “master” site, since posts in response to the original post would also generate additional email notifications.
As we prepare for the combination of all of our products, we are testing all the features and functionality we will have at our fingertips! Exciting things are on the way, pardon the construction during the process!
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Whether you are a federal or state-chartered credit union, there are state laws that impact your operations. The most efficient and quickest way to find those laws is through InfoSight. This member benefit provides you with access to applicable state content for all 50 states, without you needing to search through tons of random online sources. Stop wasting time trying to research when InfoSight has aggregated all the information your credit union needs to stay compliant in an ever-changing and evolving federal and state environment.
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ARTICLES OF INTEREST |
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Treasury Secretary Janet L. Yellen to Announce New Housing Efforts as Part of Push to Lower Housing Costs
MDI Credit Union Growth Expands Financial Security and Creates Opportunities
What Issues do Renters Face?
A Reflection on the Past and Future Marks Federal Credit Union Act 90th Anniversary
FHFA Announces Conditional Approval of Freddie Mac Pilot to Purchase Second Mortgages
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Q&A OF THE WEEK |
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How should members consent and/or confirm their consent electronically under ESIGN?
Non-electronic consents aren’t valid under ESIGN, §101(c)(1). The member can’t sign up for home banking or e-statements by printing a Web page, signing it, and mailing it back to the credit union. ESIGN requires consumers to express their consent electronically, or confirm their consent electronically, in a manner that "reasonably demonstrates” that they’ll be able to access information in an electronic format.
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For your individualized login, select your state below.
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If you have questions about this communication, contact us at 800.546.4465, or via our shared email inbox at compliance@gowest.org.
Have a great week!
Your GoWest Compliance Team,
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David Curtis
CUCE
Director, Compliance Services
P: 206.340.4785
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Copyright © 2023 GoWest Credit Union Association. All Rights Reserved.
Mailing Address:
GoWest Credit Union Association, 18000 International Blvd, Ste. 1102, SeaTac, WA 98188, United States
1.800.995.9064
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