2010: A Compliance Odyssey

Chris Collver
November 24, 2009 | COMMENTS

Question: The compliance challenges our credit union has dealt with in 2009 have been tough. Is there relief in sight for 2010?

I regret to inform you, my compliance brothers and sisters, that as things currently stand, 2010 is not shaping up to be a kick-back compliance year. Let's take a look at the major landmarks you're likely to encounter as you journey over next year's compliance landscape:

January 1, 2010

The long-planned changes to the Real Estate Settlement Procedures Act (RESPA—HUD's Regulation X) go into effect, which include significant changes to the Good Faith Estimate (GFE) form. The GFE provided by a lender must be a three-page standardized form. These RESPA changes also include various permissible tolerances (zero, 10 percent, and unlimited) regarding fees charged by a lender at settlement as compared to the fee amount stated on the GFE. Here's to hoping you're not reading about this requirement for the first time on December 31, 2009!

If your credit union has a courtesy pay program for members, January 1of next year also marks the effective date of a Truth in Savings rule change which requires you to disclose on your members' statements the dollar amounts charged for courtesy pay fees and returned-item fees, both for the month and the year-to-date—whether or not you advertise your courtesy pay program. Also, keep an eye out for the Federal Reserve to issue final rules under Regulation E, which will require opt-in or opt-out from consumers (we're not sure which method the Fed will require) to participate in courtesy pay programs.

February 22, 2010

If you have a lot of leave time saved up, this might be the time of year to take it. (Then again, you may want to stick around to make sure you keep up with the craziness.) On this date, 26 different provisions of many, if any, credit unions, but there are some potential compliance headaches in there. You may want to pay particular attention to the following provisions which currently apply to all open-end credit accounts, not just credit cards:

• Minimum payment warning disclosures
• Disclosure of interest rate increase for late payments
• Extensions of credit to consumers under age 21
• Prohibition from offering inducements to college students to apply for credit

Spring 2010—Maybe

Mortgage staff registration as required under the SAFE Act may begin by spring 2010. It all depends on when the Federal banking agencies (i.e., NCUA and the rest) have the registration system up and ready to receive registrations. Stay tuned.

July 1, 2010

On this date, significant revisions regarding open-end credit under Regulation Z are scheduled to go into effect. Most of these rule changes, which were originally issued in December 2008, remain standing even after passage of the CARD Act. All five major types of required disclosures are affected by these revisions:

• Applications and solicitations
• Account-opening disclosures (initial disclosures)
• Periodic statement notices of changes in terms
• Advertisements

While most of us have, understandably, been focused on the most pressing CARD Act provisions, don't put off preparing for this rule change. It's a big one. Oh, not to mention, this rule will also affect the way you are able to conduct multi-featured open-end lending.

August 22, 2010

This is the effective date for the remaining CARD Act requirements: provisions requiring assessment every six months after an APR is increased to determine if the rate should then be decreased, provisions that penalty fees be “reasonable and proportional,” and provisions on gift cards. Until next time, remember: it's cool to know the rules!

This article was reprinted with permission from Credit Union Digest, the publication of the California and Nevada Credit Union Leagues.