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Compliance Update with Amy K By Amy Kleinschmit, Chief Compliance Officer IRS Notice – SBA Loans. The IRS issued Announcement 2021-2 relating to the correction of forms 1099-MISC for certain CARES Act subsidized loan payments. This announcement notifies lenders who have filed with the IRS, or furnished to a borrower, a Form 1099-MISC, Miscellaneous Information, reporting certain payments on loans subsidized by the Administrator of the U.S. Small Business Administration as income of the borrower that the lenders must file and furnish corrected Forms 1099-MISC that exclude these subsidized loan payments. As noted in the announcement, if a lender has already furnished to borrowers Forms 1099-MISC that report these loan payments, whether before, on, or after December 27, 2020, the lender must furnish to the borrowers corrected Forms 1099-MISC that exclude these loan payments. In addition, if a lender has already filed with the IRS Forms 1099-MISC that report these loan payments, whether before, on, or after December 27, 2020, the lender must file with the IRS corrected Forms 1099-MISC that exclude these loan payments. NCUA Regulatory Alert 21-RA-03 The National Credit Union Administration (NCUA) recently issued a risk alert regarding submission of 2020 Home Mortgage Disclosure Act (HMDA) data. This data must be submitted to the Consumer Financial Protection Bureau (CFPB) by March 1, 2021. The risk alert includes helpful links to the 2020 HMDA institutional coverage chart along with data submission tools and resources. This risk alert and the included resources can be found here. Message from CFPB Acting Director The Acting Director of the CFPB, Dave Uejio, has issued a number of policy statements since being appointed by President Biden. It is helpful to review these policy statements to understand what direction the CFPB might take in certain areas. Initially, the Acting Director issued this policy statement regarding supervision and enforcement priorities. The statement notes, “One thing we can do immediately is focus our supervision and enforcement tools on overseeing the companies responsible for COVID relief.” The Acting Director cites findings from prior examinations including mortgage servicers giving incomplete and inaccurate information about CARES act to consumers; misreported accounts to credit bureaus which violated CARES Act protections under the Fair Credit Reporting Act; and findings that some banks set off stimulus payments and unemployment insurance benefits in order to cover bank fees and other debts. This statement directs that the CFPB will be reversing policies of the last administration that weakened enforcement and supervision. “As of today, it is the official policy of the CFPB to supervise lenders with regard to the Military Lending Act. And we are planning to rescind public statements conveying a relaxed approach to enforcement of the laws in our care.” The Acting Director also emphasized that fair lending enforcement is a top priority. Last week, the Acting Director Uejio, released his vision for the Division of Research, Markets and Regulations (RMR), which can be found here. Among the work he is asking the RMR to do is to “resume data collections paused at the beginning of the pandemic, including HMDA quarterly reporting and the CARD Act data collection, as well as the previously completed 1071 data collection and the ongoing PACE data collection.” The Acting Director has also directed the RMR to focus rulemaking on the pandemic response and to preserve, where possible, maximum policy flexibility for the president’s nominee once confirmed. Specifically, directing the RMR to: Focus the mortgage servicing rulemaking on pandemic response to avert, to the extent possible, a foreclosure crisis when the COVID-19 forbearances end in March and April; and explore options for preserving the status quo with respect to QM and debt collection rules. This week the Acting Director issued a statement of his vision for the Division of Consumer Education and External (CEEA), which can be found here. In it he stated that, “One of my top priorities is making sure that consumers who submit complaints to us get the response and the relief they deserve. Consumer complaints are our lifeblood; our direct connection to consumers in distress, and they are at an all-time high right now.” The CEEA is being directed to: Target Bureau resources to reach and help struggling homeowners in delinquency or at risk of foreclosure and renters at risk of eviction to ensure they know their rights. Ramp up our coordination efforts with other agencies to provide help and information to at-risk homeowners and renters. Collaborate with coalitions of stakeholders, including consumer advocates, civil rights groups, grassroots, community-based organizations, and individual consumers to get these messages to homeowners in languages and terminology they understand. Help ensure homeowners and renters can access HUD-approved housing counseling organizations to help them manage the challenges they face due to financial hardships brought on by COVID. Featured Compliance Solution The CU PolicyPro service allows members to select from more than 230 detailed model policies to help manage today's ongoing compliance and operational challenges. Your credit union has at its disposal a comprehensive suite of policies and regulatory compliance guidance written especially for credit unions by legal and financial experts. Because your credit union is unique, CU PolicyPro not only includes the model policy content, but a full policy management system that lets you customize any model policy to fit your credit union’s individual operations. The policy management tools are robust yet easy to use, allowing easy maintenance of policies all in one place. Your existing polices can also be added to and maintained within the system. A comprehensive, on-demand suite of New User Training videos are available to easily learn how to use the system. A Resources area includes an archived history of changes made to the model policies, newsletters and other tools to help make managing policies a little easier. Stay on top of regulatory changes with CU PolicyPro. Model policies are updated quarterly to keep current with changing laws and regulations. Existing credit union policies can also be added to and maintained within the system. The secure, web-based platform allows authorized staff to securely access, view, print and update policies from any internet connection at any time. A robust policy management tool allows easy maintenance of policies all in one place. Every DakCU affiliated member has FREE access to this dues-supported service. Contact Amy Kleinschmit with any questions.
Compliance Update with Amy K
By Amy Kleinschmit, Chief Compliance Officer
IRS Notice – SBA Loans.
The IRS issued Announcement 2021-2 relating to the correction of forms 1099-MISC for certain CARES Act subsidized loan payments.
This announcement notifies lenders who have filed with the IRS, or furnished to a borrower, a Form 1099-MISC, Miscellaneous Information, reporting certain payments on loans subsidized by the Administrator of the U.S. Small Business Administration as income of the borrower that the lenders must file and furnish corrected Forms 1099-MISC that exclude these subsidized loan payments.
As noted in the announcement, if a lender has already furnished to borrowers Forms 1099-MISC that report these loan payments, whether before, on, or after December 27, 2020, the lender must furnish to the borrowers corrected Forms 1099-MISC that exclude these loan payments. In addition, if a lender has already filed with the IRS Forms 1099-MISC that report these loan payments, whether before, on, or after December 27, 2020, the lender must file with the IRS corrected Forms 1099-MISC that exclude these loan payments.
NCUA Regulatory Alert 21-RA-03
The National Credit Union Administration (NCUA) recently issued a risk alert regarding submission of 2020 Home Mortgage Disclosure Act (HMDA) data. This data must be submitted to the Consumer Financial Protection Bureau (CFPB) by March 1, 2021. The risk alert includes helpful links to the 2020 HMDA institutional coverage chart along with data submission tools and resources. This risk alert and the included resources can be found here.
Message from CFPB Acting Director
The Acting Director of the CFPB, Dave Uejio, has issued a number of policy statements since being appointed by President Biden. It is helpful to review these policy statements to understand what direction the CFPB might take in certain areas.
Initially, the Acting Director issued this policy statement regarding supervision and enforcement priorities. The statement notes, “One thing we can do immediately is focus our supervision and enforcement tools on overseeing the companies responsible for COVID relief.” The Acting Director cites findings from prior examinations including mortgage servicers giving incomplete and inaccurate information about CARES act to consumers; misreported accounts to credit bureaus which violated CARES Act protections under the Fair Credit Reporting Act; and findings that some banks set off stimulus payments and unemployment insurance benefits in order to cover bank fees and other debts.
This statement directs that the CFPB will be reversing policies of the last administration that weakened enforcement and supervision. “As of today, it is the official policy of the CFPB to supervise lenders with regard to the Military Lending Act. And we are planning to rescind public statements conveying a relaxed approach to enforcement of the laws in our care.”
The Acting Director also emphasized that fair lending enforcement is a top priority.
Last week, the Acting Director Uejio, released his vision for the Division of Research, Markets and Regulations (RMR), which can be found here. Among the work he is asking the RMR to do is to “resume data collections paused at the beginning of the pandemic, including HMDA quarterly reporting and the CARD Act data collection, as well as the previously completed 1071 data collection and the ongoing PACE data collection.”
The Acting Director has also directed the RMR to focus rulemaking on the pandemic response and to preserve, where possible, maximum policy flexibility for the president’s nominee once confirmed. Specifically, directing the RMR to: Focus the mortgage servicing rulemaking on pandemic response to avert, to the extent possible, a foreclosure crisis when the COVID-19 forbearances end in March and April; and explore options for preserving the status quo with respect to QM and debt collection rules.
This week the Acting Director issued a statement of his vision for the Division of Consumer Education and External (CEEA), which can be found here. In it he stated that, “One of my top priorities is making sure that consumers who submit complaints to us get the response and the relief they deserve. Consumer complaints are our lifeblood; our direct connection to consumers in distress, and they are at an all-time high right now.”
The CEEA is being directed to: Target Bureau resources to reach and help struggling homeowners in delinquency or at risk of foreclosure and renters at risk of eviction to ensure they know their rights. Ramp up our coordination efforts with other agencies to provide help and information to at-risk homeowners and renters. Collaborate with coalitions of stakeholders, including consumer advocates, civil rights groups, grassroots, community-based organizations, and individual consumers to get these messages to homeowners in languages and terminology they understand. Help ensure homeowners and renters can access HUD-approved housing counseling organizations to help them manage the challenges they face due to financial hardships brought on by COVID.
Featured Compliance Solution
The CU PolicyPro service allows members to select from more than 230 detailed model policies to help manage today's ongoing compliance and operational challenges. Your credit union has at its disposal a comprehensive suite of policies and regulatory compliance guidance written especially for credit unions by legal and financial experts.
Because your credit union is unique, CU PolicyPro not only includes the model policy content, but a full policy management system that lets you customize any model policy to fit your credit union’s individual operations. The policy management tools are robust yet easy to use, allowing easy maintenance of policies all in one place. Your existing polices can also be added to and maintained within the system.
A comprehensive, on-demand suite of New User Training videos are available to easily learn how to use the system. A Resources area includes an archived history of changes made to the model policies, newsletters and other tools to help make managing policies a little easier.
Stay on top of regulatory changes with CU PolicyPro. Model policies are updated quarterly to keep current with changing laws and regulations.
Existing credit union policies can also be added to and maintained within the system. The secure, web-based platform allows authorized staff to securely access, view, print and update policies from any internet connection at any time. A robust policy management tool allows easy maintenance of policies all in one place.
Every DakCU affiliated member has FREE access to this dues-supported service. Contact Amy Kleinschmit with any questions.