Major Regulatory Developments At-a-Glance
2017 Regulatory Developments Comment Due Date Final Effective Date To Do
April 13, 2017 Consumer Financial Protection Bureau (Bureau) technical corrections and
clarifying amendments to the Home Mortgage Disclosure (Regulation C) October 2015
May 25, 2017
March 23, 2017 The Bureau amendments to Equal Credit Opportunity Act (Regulation B)
Ethnicity and Race Information Collection.
May 4, 2017
an account balance.” (Emphasis added.) Credits for using direct deposit,
agreeing to e-statements, or using a debit card are not credits for “opening,
maintaining, renewing, [an account] or increasing an account balance.”
In addition, a refund of ATM fees is not a bonus because the term “bo-
nus” does not include “value that consumers receive through the waiver or
reduction of fees,)” (See §1030.2(f).) of the regulation and related official
staff commentary. (Response provided June 2017.)
QFor purposes of determining covered borrower status under the Military Lending Act (MLA), if a bank did not check the covered
borrower status prior to or at the time of application, is the bank
prohibited from checking the applicant’s status during its post-closing
under the historic lookback provision?
ANo. The bank may check the status at this time, but may not enjoy the safe harbor.
There has been a lot of confusion about the safe harbor and the “
historic lookback provision,” given the drafting and inconsistencies with
§232.5(b)( 2)(i)(B, provides that creditors may not, “at any time after a
consumer has …established an account…directly or indirectly, obtain any
information from any database maintained by the Department to ascertain whether a consumer had been a covered borrower as of the date…
that account was established.” (Emphasis added.)
This means that the bank is prohibited from “obtaining” status information from the DoD MLA database about the customer’s status “at the time
the account was established.” The DoD MLA database only provides current
information, i.e., people’s current status. It does not provide historical status.
Thus, when the creditor verifies status after the account is established, it re-
ceives current status, not the status “at the time the account was established.”
Accordingly, the creditor would not be violating the regulation if it checks
status after the account is opened as it is not obtaining information about
the status at the time of account opening, but rather current status.
However, the bank will not enjoy the safe harbor if it checks status after
the account is opened. §232.5(b)( 3) provides that the safe harbor only
applies if the creditor makes a determination “solely” at the time the consumer “applies to establish the account or 30 days prior to that time.” Thus,
the safe harbor appears to apply only if the status is verified at the time of
application or before. There would seem to be no harm in checking after
application and making appropriate adjustments if necessary. The risk of
violation would be limited to applicants who are covered at the time of application, but no longer covered when the bank later checks the status.
As noted, the regulation is confusing, but the history of the regulation
and MLA DoD database and regulation’s reference to “assignees” suggest
that this provision was included because the DoD feared being overwhelmed with inquiries. However, it has since built up its MLA database.
(Response provided June 2017.) ■
ABOUT THE AUTHORS
LESLIE CALLAWAY, CRCM,
CAMS, CAFP, and Director of
Compliance Outreach and
Development, along with
managers MARK KRUHM,
CRCM, CAFP, and RHONDA CASTANEDA, CRCM serve as a compliance
resource for ABA member banks. Among other managerial duties, the team is
responsible for manning ABA’s Compliance Hotline, serving on compliance
committees, and providing content and guidance for ABA courses.
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Answers do not provide, nor are they substitutes for, professional legal advice.