Consumer Compliance Handbook
November 2013 Update
The November 2013 update to the handbook reflects updated interagency examination procedures for Regulation E - Electronic Funds Transfer; Fair Credit Reporting; Real Estate Settlement Procedures Act; and Regulation Z - Truth in Lending. This transmittal also includes an executive summary of a newly adopted Community Bank Risk-Focused Consumer Compliance Supervision Program. In addition, a new section on Garnishment of Accounts Containing Federal Benefit Payments is added.
Community Bank Risk-Focused Consumer Compliance Supervision Program Executive Summary
Effective January 1, 2014, the Federal Reserve has adopted a Community Bank Risk-Focused Consumer Compliance Supervision Program for state member banks with consolidated assets of $10 billion or less and their subsidiaries (community banking organizations). Under the updated program, consumer compliance examiners will base the examination intensity more explicitly on the individual financial institution's risk profile, including its consumer compliance culture and how effectively it identifies and manages consumer compliance risk. The executive summary included provides an overview of the program. Conforming edits have been made to the "About this Handbook" and "Contents" sections of the Consumer Compliance Handbook.
Garnishment of Accounts Containing Federal Benefit Payments
A new section, Garnishment of Accounts Containing Federal Benefit Payments, has been added.
Earlier in 2013, the Department of the Treasury, the Social Security Administration, the
Department of Veteran Affairs, the Railroad Retirement Board, and the Office of Personnel
Management issued a rule to implement statutory restrictions on garnishment of certain exempt federal benefit payments. The rule establishes procedures that a financial institution must follow when it receives a garnishment order against an account holder who receives certain federal benefit payments by direct deposit. The new section includes procedures for examiners to follow in evaluating an institution's compliance with the rule.
The revised Regulation E procedures incorporate the Consumer Financial Protection Bureau's (CFPB's) addition of remittance transfer provisions into a new Subpart B of Regulation E pursuant to Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Additionally, these procedures have been updated to reflect elimination of the requirement that a fee notice be posted on or at automated teller machines in section 12 CFR 1005.16, leaving in place the requirement for a specific fee disclosure to appear on the screen of that machine or on paper issued from the machine.
FCRA Examination Module 3
The revised FCRA examination module reflects amendments to the FCRA pursuant to the Dodd-Frank Act. The Dodd-Frank Act revised sections 615(a) and 615(h) of the FCRA to require disclosure of credit scores and information relating to credit scores in: (1) adverse action notices if a consumer's credit score is used in taking adverse action; and (2) risk-based pricing notices if a consumer's credit score is used in setting the material terms of credit. These amendments to the FCRA were effective July 21, 2011. The revised examination module also reflects amendments to Regulation V that are consistent with the risk-based pricing amendments to the FCRA. Effective August 15, 2011, these amendments revised the content requirements for risk-based pricing notices and added model forms H-6 and H-7 that reflect the credit score disclosure requirements.
Regulations X and Z
The revised Regulation X and Regulation Z procedures incorporate a series of mortgage-related rulemakings issued by the CFPB to implement the Dodd-Frank Act that generally go into effect on January 10, 2014.
The revised Regulation X procedures incorporate amendments to Regulation X regarding servicing and homeownership counseling requirements finalized through October 1, 2013, and an interim final rule issued on October 15, 2013. The procedures also incorporate an advisory opinion contained in guidance issued by the CFPB on October 15, 2013, clarifying how certain provisions of the servicing rules interact with the "cease communications" requirement of the Fair Debt Collection Practices Act.
The revised Regulation Z procedures incorporate amendments to Regulation Z regarding ability-to-repay and qualified mortgage standards, loan originator compensation and qualification, servicing, loans subject to Home Ownership and Equity Protection Act of 1994 (HOEPA), and escrows. The procedures incorporate these amendments to Regulation Z finalized through October 1, 2013, as well as an interim final rule issued on October 15, 2013. The procedures also incorporate interagency amendments to Regulation Z regarding appraisals finalized in January 2013 and generally effective on January 18, 2014. However, the procedures do not reflect revisions to the appraisals rules issued on December 12, 2013.
The revised Regulation Z procedures also reflect two rulemakings by the CFPB under Regulation Z concerning requirements for credit card accounts. First, Regulation Z limits certain credit card fees to 25 percent of an account's initial credit limit. The CFPB revised Regulation Z to provide that the rule's limitation applies only during the first year after account opening and not to fees the consumer is required to pay prior to account opening. This amendment was effective on March 28, 2013. Second, the CFPB revised Regulation Z to remove a requirement that credit card issuers consider the "independent" ability of an applicant who is 21 or older to make minimum payments and to permit issuers to consider income and assets to which such a consumer has a reasonable expectation of access. The rule also makes other clarifications regarding the ability to pay analysis for consumers who are not yet 21. This amendment was effective on May 3, 2013.
To maintain an updated print version of the handbook, use the following instructions:
|Behind the title page|
|About, Contents • pp. iii-vi (dated 6/12)||About, Contents • pp. iii-vi (dated 11/13)|
|I. Risk-Focused Superv. Framework tab|
|I. Comm. Bk. Risk-Focused Comp. Superv.|
|Behind the "Comm. Bk. Risk-Focused Comp. Superv. Prgm." tab:|
|Overview • p. 1 (dated 1/06)||ESUM • pp. 1-5 (dated 11/13)|
|Behind the "Regulation E" tab:|
|Reg. E • pp. 1-41 (dated 6/11)||Reg. E • pp. 1-72 (dated 11/13)|
|Behind the "Regulation DD" tab:|
| "Garnishment of Accounts" tab|
|Behind the "Garnishment of Accounts" tab:|
|Garnishment • pp. 1-10 (dated 11/13)|
|Behind the "Fair Credit Reporting" tab:|
|FCRA • pp. 23-63 (dated 6/11)||FCRA • pp. 23-65 (dated 11/13)|
|Behind the "Regulation Z" tab|
|Reg. Z • pp. 1-94 (dated 6/12)||Reg. Z • pp. 1-137 (dated 11/13)|
|Behind the "RESPA" tab:|
|Reg. X • pp. 1-20 (dated 6/10)||RESPA • pp. 1-52 (dated 11/13)|
Consumer Compliance Handbook
Previous Update: June 2012