IBAT News

As reported in several issues of Bottom Line, IBAT has communicated with the CFPB, in writing and in person, to attempt to get some relief from the CFPB’s defined delineation of "rural" before the Escrow Requirements under the Truth in Lending Act rule (Escrows Rule) go into effect on June 1, 2013 and require certain creditors to create escrow accounts for a minimum of 5 years for HPMLs. The rule exempts HPMLs made by certain small creditors that operate predominantly in rural or underserved counties from this requirement. On March 12, 2013, the CFPB posted a preliminary list of counties that are rural or underserved (or both).

The CFPB's blog reports that the final rule based on the proposed rule that the CFPB used to compile the preliminary list is being issued. Because the methods for determining rural and underserved status have not changed from the proposed rule, this final list is identical to the preliminary list the CFPB posted on March 12. According to the blog, "for purposes of applying the exemption in the Escrows Rule, creditors may rely on this list as a safe harbor to determine whether a county is 'rural' or 'underserved' for loans made from June 1, 2013, through December 31, 2013."

Several CFPB rules have provisions related to mortgage loans made in rural or underserved counties: Ability-to-Repay/QM rule, HOEPA homeownership counseling rule, and appraisals for HPMLs. IBAT’s map of rural and underserved counties designated by the CFPB is available on the IBAT website. 

H.B. 3068, the IBAT-initiated bill prohibiting retailers from assessing a surcharge on debit card transactions at the point of sale, was passed by the Texas Senate on Friday by a vote of 25-5.  Throughout the legislative process, the bill faced opposition and was targeted by retail groups as well as a conservative organization.  Engagement and numerous contacts with elected officials by IBAT members, however, helped drive support for the bill among lawmakers.

"As the Durbin Amendment to Dodd-Frank Act removed long-standing prohibitions on steering of transactions, IBAT felt that it was essential to protect consumer choice at the point of sale and ensure that community bank debit cards are not discriminated against due to arrangements between retailers and the big banks," said IBAT Executive Vice President Steve Scurlock.  "We're pleased that Texas will be among the first states to offer such protection."

The bill will head to the governor's desk following a brief technical stop back in the Texas House of Representatives later this week.

H.B. 3068 is just one of the many issues IBAT has addressed in the 83rd Regular Session of the Texas Legislature.  As is customary, IBAT will provide a thorough review of the Texas Legislative Session via a webinar conducted by Karen Neeley and Steve Scurlock on June 25, from 3:00 PM until 4:30 PM.  There is no charge, and the program will be recorded for future reference. Additionally, our post-session White Paper should be ready for distribution electronically prior to the program date.  

We hope you plan to join us for an informative discussion on issues impacting the community banking industry. Click here to register for the webinar.

In order to provide additional clarification on the recently issued CFPB mortgage reforms, IBAT Regulatory Compliance Manager Kelly Goulart is releasing a series of white papers addressing each change contained in the seven major mortgage lending initiatives, six of which have been finalized by the CFPB (more or less).  

The fourth part of the series, focused on the Equal Credit Opportunity Act (ECOA) and Higher Priced Mortgage Loan (HPML) rules and notices, is now available on the IBAT website.

Previous documents in the series can be found here:
Ability to Repay (ATR) and Qualified Mortgage Rules
Escrow requirements for HPMLs
Regulation Z - Prohibited Acts or Practices

In order to avoid the use of any terminology that could trigger unwanted scrutiny from the nation's tax enforcement authorities, [Friday's] Week-in-Review will be regrettably bland. Also regrettably bland was Monday's announcement of a mere .1% rise in April Retail Sales. Blander still was the .1% decline that measure experienced if one strips out auto sales. Despite that, the National Federation of Independent Business (NFIB) Optimism Index improved from 89.5 to 92.1. In a similar measure of wishful thinking, the University of Michigan's Index of Consumer Sentiment rose unexpectedly to 83.7 from last month's 76.4 against a market expectation of only 77.9... Read more in the Baker Market Update.

Join your peers for SWGSB's 137th Assembly for Bank Directors, an important conference on board duties and responsibilities. With the community banking industry facing unprecedented changes and challenges, we've invited top banking insiders to discuss in depth Superior Community Banking: Reaching for Success. On the agenda are critical issues bank boards nationwide are addressing, such as:

• economic outlook;
• compliance risks;
• regulatory issues;
• strategic issues;
• brand communication; and
• key survival strategies.

Workshops will give you the opportunity to "drill down" further to gain a complete understanding of regulator expectations and stress testing. For more details about the program, and to register, please click here.

Last week, the FHFA directed Fannie Mae and Freddie Mac to limit their future mortgage acquisitions to loans that meet the requirements for a qualified mortgage, including those that meet the special or temporary qualified mortgage definition, and loans that are exempt from the "ability to repay" requirements under the Dodd-Frank Act. Beginning January 10, 2014, Fannie Mae and Freddie Mac will no longer purchase a loan that is subject to the "ability to repay" rule, if the loan:

• is not fully amortizing,
• has a term of longer than 30 years, or
• includes points and fees in excess of three percent of the total loan amount, or such other limits for low balance loans as set forth in the rule.

According to the press release, this means Fannie Mae and Freddie Mac will not purchase interest-only loans, loans with 40-year terms, or those with points and fees exceeding the thresholds established by the rule.

The debit card surcharge prohibition bill, HB 3068 (Jose Menendez), is scheduled for Senate floor action as early as tomorrow. Business and Commerce Committee Chairman John Carona is the Senate Sponsor.

Please take a moment to call and/or email your member of the Texas Senate - right now - and let them know that this is an extremely important issue for your bank, that you strongly support this bill and you urge their support.

The various retailer/merchant interests are opposed, and will be attempting to defeat this bill. Additionally, one of the conservative groups opposed this bill in the House (interference with the free market), and may do so again as it goes to the Senate. Your grassroots communications with the House clearly made the difference.  We need your involvement in this process to succeed!  

This consumer-friendly bill will protect consumer choice at the point of sale and ensure that community bank debit cards are not discriminated against due to arrangements between retailers and the big banks. Full talking points for the bill are available to download here.  When calling your Senator's office, please offer to forward this link or the downloaded document if they’d like further information.

Again, you may look up and access your  Senator's phone number here.