Federal Deposit Insurance Corporation (FDIC)  

Final Rule Issued on Quality Control Standards for Automated Valuation Models 

The FDIC along with other agencies such as the OCC, NCUA, CFPB, and FHFA are adopting a final rule to implement the quality control standards mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act for the use of automated valuation models (AVMs) by mortgage originators and secondary market issuers in determining the collateral worth of a mortgage secured by a consumer’s principal dwelling. This rule will require financial institutions that engage in certain credit decisions or securitization determinations to adopt policies, practices, and procedures to ensure that AVMs used in these transactions 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 comply with applicable nondiscrimination laws.  

The final rule will go into effect October 1, 2025. 

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Consumer Financial Protection Bureau (CFPB) 

CFPB Joins Federal Regulators to Propose Rule for Financial Data Transparency Act Joint Data Standards 

The CFPB has joined several other federal financial regulatory agencies to propose a rule to establish data standards for information collected and submitted to federal regulatory agencies. This proposal would promote interoperability of financial regulatory data across the agencies through the establishment of data standards for identifiers of legal entities and other common identifiers. 

This proposal comes from a requirement of the Financial Data Transparency Act of 2022. The federal financial agencies are currently inviting public comment on the rule.  

CFPB Report Finds Lenders Cramming Markup Fees and Confusing Terms into Solar Energy Loans 

The CFPB has found that some residential solar lenders have been misleading homeowners about the terms and cost associated with their loans, misrepresenting the energy savings they will provide, and cramming markup fees into loan balances. This report also underscores how lenders have been misrepresenting the impact of the federal tax credit for solar installations. These loans are often facilitated by lenders that partner directly with solar installers and door-to-door sales companies. 

“The CFPB is closely scrutinizing solar lenders to make sure that Americans don’t get burned.” 

The CFPB has identified four areas of significant risks: 

• Hidden markup fees: Lenders are building hidden fees into their loan by marking up the principal cost of the loans. These fees often increase the loan cost by 30% or more. 

• Misleading claims about what consumers will pay: The 30% federal tax credit is being pitched as a promotion for residential solar installations despite it not being guaranteed. Lenders are presenting loan principals as a “net cost” that assume that the tax credit will be received.  

• Ballooning monthly payments: Loan terms require a substantial prepayment by a certain date that is equal to the expected tax credit. If the homeowner does not qualify for the tax credit, they will end up paying the prepayment or face substantially higher monthly payments.  

• Exaggerated savings claims: Many homeowners are being told that solar panels will cover financing costs in addition to eliminating future energy bills. This may hold true to some; however, the financial benefits of solar projects are uncertain and can vary significantly. 

In addition to this report, the CFPB released a consumer advisory warning homeowners of the risky practices in the solar lending market and sharing advice for borrowers who encounter illegal activity.  

League InfoSight Highlight: How Important is Complaint Management?

The second issue of the Consumer Compliance Outlook was published last week and is dedicated entirely to complaint management.  This is an important read for credit unions, especially those without a formal process in place to aggregate and analyze complaints. 

An effective Complaint Management Program should include the following components:

1. Board-Approved Policy and Procedure: There is no formal definition of what constitutes a “complaint”, so it is critical for the credit union’s policy and procedure to include its own definition to be used for consistency.
2. Comprehensive Collection and Tracking: Complains should be collected and tracked across various channels, such as social media, mail, email, and phone. Aggregating and maintaining this information in one location is important to ensure effective analysis and a consistent response.
3. Risk Rating: Implement a risk-rate system to help prioritize complaints based on their severity and potential impact.
4. Root Cause Analysis: Conduct a root cause analysis to determine if a complaint is part of a systemic issue that has impacted multiple members. This may help address unfair, deceptive, or abusive acts or practices (UDAAP) risk before it escalates into a violation or enforcement action.

Here are a few other key takeaways:

• Effect on Exams – A complaint management program is an integral part of an overall compliance management system and is one of the rating factors in the Uniform Interagency Consumer Compliance Rating System (used by examiners for the consumer compliance exams).
• Member Loyalty – Complaints can be helpful in identifying products, services, or practices that violate consumer protection laws or cause pain points for members! Addressing and responding to these issues can help the credit union build member loyalty.
• Proactive Action Mitigates Risk – Addressing complaints quickly and completely can minimize reputation risk. Catching an issue early, doing a root cause analysis to determine other potentially impacted members, and taking corrective action is critical.
• Prioritizing Audits – Complaint management programs help to drive priority for the internal audit program.

Also interesting were the top 10 complaints received! They included, in order: funds availability, fraud, error resolution, restricted/blocked accounts, credit reporting, fees/terms/rates, account closures, other (privacy issues, bankruptcy, deceased customers), applications/account openings, and deposits. History has shown that areas receiving complaints often receive regulatory oversight and examiner focus.

Having an effective complaint management program is critical. Make sure you know what resources are out there and available for your credit union to take advantage of:

• InfoSight (Complaint Management Topic under Board Responsibilities Channel)
• CU PolicyPro (Policy 1230: Regulatory Compliance, 1230.10: Complaint Process for Federally Chartered Credit Unions, 1230.11: Complaint Process for State-Chartered Credit Unions)
• ComplySight (Complaint Management Module for tracking, assigning, resolving, aggregating and reporting complaints)

Need additional information about how League InfoSight can help? Contact info@leagueinfosight.com for assistance!

Glory LeDu

CEO, League InfoSight and CU Risk Intelligence

Junk Fees that Harm Competition 

Whistleblowers & Confidentiality Agreements 

Department of Treasury and IRS release Inflation Reduction Act clean enery statistics  

Credit Card Liability Limits, How Card Issuers Are the Big Loser  

Avoid long lost friend scam 

Only scammers advertise that they can “remove all” negative information from your credit report 

How to avoid getting burned by solar or clean energy scams 

Aug. 12, 2024: Comments Due CFPB Proposed Rule Concerning Medical Debt and Credit Reports

Aug. 14-15, 2024: Fraud Symposium

Sept. 3, 2024: Comments Due – FinCEN AML/CFT Program Amendments 

Sept. 9, 2024: Comments Due – CFPB Proposed Mortgage Servicing Amendments 

Sept. 23, 2024: NCUA Proposed Rule on Succession Planning 

Sept. 24, 2024: NCUA Proposed Changes to Agency Information Collection Activities 

The credit union just received a notice asking for a member's financial records. It looks legitimate so can we just release the records? 

No financial institution, or officer, employees, or agent of a financial institution, may provide to any Government authority access to or copies of, or the information contained in, the financial records of any customer except in accordance with the provisions of this chapter. 

For your individualized login, select your state below. 

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 weekend!

Your GoWest Compliance Team, 

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Mailing Address:
GoWest Credit Union Association, 18000 International Blvd Ste. 1102, SeaTac, WA 98188, United States
1.800.995.9064

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