As year-end approaches, your IBAT compliance team has once again prepared an alert to help you steer clear of violations of Regulation Z when computing bonuses for mortgage originators.
You’ll recall that, if your bank’s year-end bonus takes into consideration earnings on mortgage loans, it may violate the anti-steering rules found in Regulation Z. The CFPB maintains a very broad interpretation with regard to Section 1026.36 of Reg Z. That section prohibits mortgage loan originators and brokers from receiving compensation based on the terms of the loans they originate.
Click here to download this featured resource from the IBAT website
Did you know? IBAT, in conjunction with Financial Education, Inc., hosts close to 150 webinars a year. Webinars are a very economical way to train your staff for one low price. Everyone can sit in on the program with the use of a speakerphone and a computer, or access archived webinars on-demand.
Topics are broken up by category or by date and include:
You can access a complete listing of upcoming webinars and archived webinars here.
The Consumer Financial Protection Bureau (CFPB) finalized a limited “cure” provision for lenders originating a qualified mortgage under the Bureau’s rules but later found that points and fees exceeded the 3% cap. Under the final rule, lenders will have 210 days to issue the excess plus and still maintain the legal protections afforded to QMs.
The 210 day cure period was extended from the proposed 120 day period, following pressure from community banking associations. Industry pressure also resulted in the removal of a subjective requirement that the loans be made in good faith.
“We are pleased with the final rule issued by the CFPB and appreciate the Bureau’s efforts to help community banks keep loans in compliance with QM when a miscalculation occurs,” said IBAT President and CEO Chris Williston.
Last week federal regulators jointly approved the qualified residential mortgage (QRM) rule, generally requiring sponsors of asset backed securities to retain five percent of the credit risk of the collateralizing assets and exempting securitized QRMs from the risk retention requirement.
The final rule aligned the requirements for loans to be considered QRMs with the earlier-approved definition of Qualified Mortgages (QMs), adopted by the Consumer Financial Protection Bureau. It also granted QRM status to mortgages backed by Fannie and Freddie. All loans underwritten to GSEs qualify for QM status.
Scrapped from the final rule was a provision which would have required a 20 percent down payment from the homeowner for the loan to attain QRM status.
Several Leadership Division regions are hosting events that will cover a variety of important industry topics in the coming weeks. We encourage you to register for an event in your region, or join your peers in other regions for learning and networking opportunities.
Upcoming events include:
- LD Region 5: 10 Absolute Must-Have Strategies for Community Banks (Mount Pleasant)
- LD Region 5: 10 Absolute Must-Have Strategies for Community Banks (Longview)
- LD Region 2: Trailblazer Award Luncheon (Lubbock)
- LD Regions 3 & 4 - DFW Golf Tournament (Irving)
- LD Region 8: 10 Absolute Must-Have Strategies for Community Banks (Austin)
- LD Region 9: Legislative Update at St. Arnold's Brewery (Houston)
In a letter recently sent to the Consumer Financial Protection Bureau (CFPB), ICBA staff outlined a number of concerns facing lenders as a result of the current qualified mortgage and ability to repay rules, enacted in January of this year.
The letter cited the National Community Bank Survey conducted by the Federal Reserve and Conference of Community Bank Supervisors which indicated that, as a result of the rules, 59 percent of the respondents would no longer originate non-QM loans at all or will only do so on an exception basis.
“As a result, consumers, particularly those in rural and underserved locations where many community banks serve, are receiving limited access to mortgage credit,” the letter said.
The letter went on to identify a number of potential solutions to the problems created by the CFPB rules, including the exclusion of all community bank loans held in portfolio for the life of the loan to receive automatic QM safe harbor legal status and exemption for higher-priced mortgage loans.
IBAT members are encouraged to vote this week before the end of early voting on Friday, October 31.
You can easily access early voting and election day polling locations, as well as sample ballots, by going to your County Clerk's website, or find information here for a number of counties in Texas.
The IBAT PAC and IBAT FedPAC have been active this election cycle, thanks to the generous support of you and your community banking colleagues. We have historically followed the "friendly incumbent rule," and have supported candidates with whom we've worked and established relationships. We have compiled a complete list of those candidates to whom our PACs have contributed.
We also frequently get questions regarding judicial races from our members. We have a longstanding relationship with The Texas Civil Justice League (TCJL), one of the leading tort reform groups in Texas. TCJL endorses judicial candidates, and we encourage you to take a look at their recommendations in these races.
Please feel free to call or email if you have any questions or comments, and please vote and encourage those in your circle of influence to do the same.
TexasBank (Brownwood, Texas) received a Seeing Business Differently Award at CSI Customer Conference 2014. Each year, CSI’s Seeing Business Differently Awards highlight the ongoing efforts of those customers that are taking a unique, meaningful approach to maintaining success through a variety of strategies and tactics. Specifically, nominees are evaluated on a series of key areas, including:
- Adding new products to improve profitability
- Incorporating new approaches that result in efficiency gains
- Growing customer base as a result of new techniques
“As the financial industry continues to shift based on growing competition and changing customer demands, CSI has chosen to showcase what makes us different in order to set our company apart from other technology providers,” said Steve Powless, CSI’s chief executive officer. “Just as we have introduced new products and services to better align with our customers’ needs, the recipients of our second annual Seeing Business Differently Awards have done the same by investing in new strategies and technology offerings, all designed to enhance their overall businesses.”
In order to remain competitive with today’s larger financial institutions, TexasBank leveraged an innovative advertising strategy to position itself as having all the products offered by larger financial institutions, while still offering personal, individualized service. Core products, including its mobile banking services, were highlighted in a multi-level advertising campaign to the bank’s customers and surrounding communities by targeting such outlets as social media, radio and in-branch promotions to gain customer buy-in. By educating consumers on the availability of these products, in conjunction with an aggressive marketing offer, TexasBank acquired more than 3,000 new accounts and nearly $30 million in new deposits in a four-month time period.
“At TexasBank, we recognize that people are on the go and convenience is no longer considered a luxury—it is a must,” says Janet Ogden, vice president of retail services for TexasBank. “We are a competitive player in our market, so we have to meet the demands of our customers. And mobile banking is one of those demands.”
Watch TexasBank receive their award in this YouTube video.
Photo (L to R): Stan Eckenberg (CSI president/COO), Tamara Massey (TexasBank) and Janet Ogden (TexasBank)
Here we are a week away from Halloween and many are still searching for just the right costume idea. Something novel. Something unusual. Something that’s scary and at the same time scarce. Like, say, inflation for instance. For the generation who trick-or-treated in the era prior to necessitating hermetically sealed treats, inflation is scary. For more recent generations, inflation is scarce. That point was reinforced this week as we learned that the Consumer Price Index on a year-over-year basis was unchanged last month and still stands at 1.7%. At the core level (ex-food & energy) that measure also stands at an unchanged 1.7%. Not very scary. In fact, some ‘fraidy cats in Europe are more fearful of deflation, but that’s another story.
Speaking on cybercrime trends at IBAT’s 40th Annual Convention, Jeff Multz, vice president of Dell SecureWorks, cautioned Texas bankers of new, more sophisticated tactics cybercriminals have employed to target bank employees and customers, particularly small business customers. They hack into bank accounts and target comptrollers, bookkeepers or other individuals within organizations with a goal of infecting their computers with malware to intercept online banking sessions. The next step is grabbing customers’ credentials and wiring money out of their accounts before the customer knows what has happened.
“You find that the smaller the business, the more you’ll be targeted because they’re attached to another network,” Multz said. The approach allows access to more potential victims. Multz recommends banks establish a layered security approach, using several tools instead of just one, in protecting data.
“Hackers have gotten really smart in the past several years,” said Elizabeth Clarke, a Dell SecureWorks spokesperson. “These hackers are not breaking into a bank’s network; they’re actually going to your laptop, your desktop and your account. It’s a different world out there.”
Multz’s full comments can be found online via an article published by The Fort Worth Business Press earlier this month. Additionally, IBAT along with TBA and SWACHA will be holding a seminar entitled “Executive Leadership of Cybersecurity” on December 3 in Austin. Click here to learn more about this upcoming educational opportunity.
Do you have lenders in your community bank who are in need of expanding their knowledge base? Are you seeking to expand your talent pool to provide well-rounded lenders who can make sound decisions on credit risk, lender relationships with customers that will lead to growth both with your customers and the bank? Then you don’t want to miss IBAT's Bank Lending Institute (BLI), taking place November 16-21 in Austin.
Who Should Attend? Lending officers who need to develop and perfect lending and management competencies and techniques. This includes loan officers, branch managers, future chief financial officers and supervisory/management personnel. The core group of attendees will have two to five years of experience in the lending function of a community bank.
Over 100 business and financial executives gathered at the Adolphus Hotel in Dallas last week to address the effects of Fed monetary policy and the current regulatory environment on the Texas economy. Speakers included a host of Texas community bankers and presenters from the Federal Reserve and academia. IBAT President and CEO Chris Williston moderated an afternoon panel of community bankers.
"The Lyceum has long established itself as a thought leader on public policy," said Williston. "It was a pleasure to participate in this conference and provide perspective that overbearing government regulation restricts capital and chokes credit availability."
This year's conference was co-chaired by two IBAT Leadership Division members, Tee Dippel of Brenham National Bank and William Ware of Amarillo National Bank.
The program featured a luncheon keynote address by FDIC Vice Chairman Tom Hoenig, and a fireside chat with House Financial Services Chairman Jeb Hensarling at the Dallas Fed.
IBAT’s 34th Annual Bank Operations Institute (BOI) was held October 12-17 on the SMU campus in conjunction with SWGSB and the Cox School of Business. The school’s focus on community bank operations leadership draws community bankers from across the country. This year’s honor students, based on classroom participation and case studies covering all facets of bank performance, are:
- Jason McCrary, Texas Bank and Trust, Longview, TX
- Cody Leatherman, First Interstate Bank, Billings, MT
- Grant Lankford, PointWest Bank, West, TX
For information about BOI or the upcoming Bank Lending Institute (BLI) taking place November 16-21 - two IBAT programs that prepare community bankers to lead operations and the lending functions into the future - please click here.
A new study by ICBA and The Center for Generational Kinetics took an in-depth look at millennials and their banking behavior. This generation is of special importance to the banking industry, especially community banks, as it encompasses 80 million Americans ages 19-37 years old who are currently or will soon make important banking decisions and establish long-term habits. How can you capitalize on this?
Survey findings show that millennials are the most entrepreneurial generation to date with nearly 40 percent planning to start a business in the next two years. And they’re going to need a small business loan. The best part? These millennials want banks that don’t treat them like a number, find it important to have a personal relationship with customers and are locally owned. According to findings, below are recommendations to ensure community banks attract and retain millennial customers:
- Make millennial customers feel like VIPs.
- Adapt to millennials’ communication profile (think visual as in computer/tablet screens and embrace social media).
- Create an entrepreneur advisory board.
Additionally, the survey uncovered that millennials require an online banking option and they’re not as interested in the number of ATMs as many don’t carry more than $5 on them at any given time. More information about millennials’ banking habits can be found in this recent story.