Mortgage Rule Clarification Part 4

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

Time to End TBTF!

Late last week, the IBAT Board of Directors unanimously voted to support S.798, the Brown-Vitter bill designed to end too big to fail. The legislation, one of a number of bills that have been introduced in the 113th Congress to address the widespread sentiment that too big to fail is still alive and well and was not eliminated in the passage of Dodd-Frank, is gaining considerable momentum. Prominent industry leaders, including Dallas Federal Reserve Bank President Richard Fisher and FDIC Board Vice Chairman Tom Hoenig, have been leading the chorus who believe that another financial crisis would put American taxpayer dollars at risk.

In an email to Texas Senators John Cornyn and Ted Cruz, IBAT president and CEO Chris Williston touted the positive elements of the bill.  "Given the fact that [S.798] eliminates future bailouts of large systemically important financial institutions by the American taxpayer, eliminates potential Basel III application for community banks and provides much needed regulatory relief for the industry, it is obvious to us that S.798 is the most logical vehicle to address the future competitiveness of all industry stakeholders and restore consumer confidence in our financial system," Williston said.

The legislation requires that institutions over $50 billion in assets maintain capital levels of 8%, with the requirement increasing to 15% for institutions over $500 billion.  Community banks under $50 billion would not be subject to Basel III capital standards adopted by all federal regulatory agencies.  IBAT acknowledged that certain other components of the Basel III standards, as proposed for community banks in the legislation, needed to be eliminated.  "The IBAT Board instructed staff to work to eliminate any aspects of the Basel III proposal, specifically the inclusion of Accumulated Other Comprehensive Income (AOCI) in any final capital calculation and its applicability to community banks," Williston said.

It is likely that the banking industry will be divided over the legislation.  The big banks and their trade organizations are staunchly opposed and have unleashed a plethora of lobbyists to work on their behalf to defeat the legislation. Community bank groups widely favor the proposal.  Williston concluded, "This legislation acknowledges what IBAT has long advocated and has been working to achieve... recognition that one-size-fits-all regulation makes no sense when you contrast the business models of community banks and the financial conglomerates."

West Relief Update

Thanks to your outpouring of support, IBAT and TBA will travel to West on Friday, May 31, to present a check totaling more than $140,000 to help our local community bankers following the aftermath of the April fertilizer plant explosion.  Several members of our IBAT family suffered devastating losses and this money will help them with expenses.  After the needs of our IBAT family members have been met, PointWest Bank and The State National Bank will direct the remaining funds to help the community in their rebuilding efforts.  Be assured that 100% of the funds you contributed will go to this effort.  Thank you for your generosity to assist your fellow community bankers and the community of West.

Bank Director Assembly

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.

IBAT's Newest Endorsement

IBAT's newest endorsement brings DELL to the doorstep of IBAT members, their employees and customers with discounted pricing and significant benefits.  Bank and associate members with up to 100 employees can now access:

  • Exclusive Member Discounts (2-35%) on Workstations, Servers, Printers, Desktops, Laptops, Ultrabooks, Tablets, Electronics and Accessories, Services and Software;
  • DELL dedicated Territory Account Executive to provide support and bridge IBAT Members with appropriate DELL teams;
  • IBAT Members’ call queue with inside sales reps to provide sales support to Territory Account Manager; and
  • Access to technical experts from all brands and product lines within DELL (SecureWorks, Boomi, KACE, Quest, Gale Technologies, Wyse, Perot Systems, etc...).

To begin accessing discounted products and services from Dell, call or email Denney James (denney_james@DELL.com), DELL's IBAT Territory Manager at 512-728-8763.  Denney is the key to register your bank with DELL's IBAT Customer Link Number: GS126658178.

FHFA Limits on Mortgage Loans

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.

Support HB 3068

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.

Mortgage Rule Clarification Part 3

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 third part of the series, focused on the Ability to Repay (ATR) and Qualified Mortgage (QM) rules, is now available on the IBAT website. 

Previous documents in the series can be found here:
Escrow requirements for HPMLs
Regulation Z - Prohibited Acts or Practices

The Brown-Vitter Battlefield

Too big to fail (TBTF), and the need to end it once and for all received an additional boost from two Federal regulatory opinion leaders last week. Federal reserve Chairman Ben Bernanke and OCC Comptroller Tom Curry, while not formally endorsing the Brown-Vitter concept, came out swinging last week calling for the need for higher capital requirements for the nation's largest banks.  The Brown-Vitter bill, S. 798, would mandate capital levels of 8% or greater for banks $50 billion and greater and 15% for banks with assets exceeding $500 billion. The legislation also eliminates Basel III requirements on community banks, which IBAT has advocated.

In Sunday's Washington Post, columnist Barry Ritholtz opines why the Brown-Vitter legislation has gone farther than any other legislative attempts to end too big to fail. "Simplicity. The most common message heard during the debate over Dodd-Frank was its complexity. The beauty of the TBTF act is its simplicity - hard numbers for capital reserves."  Ritholtz also observes that the bill has broad ideological support among a broad cross-section of parties whose interests align with this legislation. A copy of the full Washington Post story can be found here.

ICBA has come out strongly in favor of Brown-Vitter.  ICBA President Cam Fine observed "it's time to put the word 'free' back in 'free market.'  Let's get the taxpayer subsidy out and level the playing field among TBTF banks and community banks."

The IBAT Board will consider endorsement of the bill in a special called telephone board meeting later today.  IBAT President and CEO Chris Williston was recently quoted in several industry trade publications as saying, "the too big to fail debate is critical in our quest to obtain comprehensive regulatory relief for community banks. It highlights the disparity of bank business models and why we should not be subjected to the same regulatory overkill as the systemically important banks."

Week in Review 05.10.13

Compared with many of the recent headline-grabbing news stories, [last] week's spate of economic statistics seem like cause for elation. No murder, no mayhem, just a slow-leak in Ten Year prices to [Friday] morning's yield of 1.90%. A monster 10.5% year-over-year jump in home prices nationwide is at least partly responsible for the slow motion sell-off. According to CoreLogic's Home Price Index Report, the largest gains happened in the places that needed it the most; Nevada, California, and Arizona. Yipee-Ki-Yay! For the country as a whole this represents the biggest annual gain since March 2006 and the 13th consecutive monthly rise... Read more in the Baker Market Update.


As a result of our recent website migration, portions of IBAT2GO, the official mobile application of IBAT, are temporarily suspended.  A new version of the app has been submitted to the Apple app store and we will notify you when Apple has approved it for download. Until then, the Legal Ease archive in the current version of IBAT2GO remains accessible. 

Thanks for your patience as we make the necessary updates and please let us know if you have any questions.

Texas Bankers Hall of Fame

In a ceremony on April 25, Robert A. Hulsey (American National Bank of Texas), Walter Johnson (Amegy Bank), Kenneth T. Murphy (First Financial Bank, N.A.) and the late Walter G. Lacy, Jr. (Citizens National Bank, Waco) were inducted to the Texas Bankers Hall of Fame at Sam Houston State University.  

The banking program at Sam Houston State University established the Texas Bankers Hall of Fame in order to provide positive recognition to Texas Bankers. Through this medium, the university recognizes bankers who have made valuable contributions to the banking profession and are pioneers in shaping their respective banking institutions.

IBAT congratulates all the recipients and especially Robert Hulsey, a past Chairman of both IBAT and the IBAT Education Foundation. 

And the Winner Is...

Thanks to all who conducted bank PAC drives during the month of March.  Thanks to your generosity and support, the IBAT PAC and IBAT FedPAC received more than $105,000 during the month!

Jefferson Bank in San Antonio was the lucky recipient of the PAC drawing and IBAT staff will travel to San Antonio in the near future to host a barbecue dinner with all the "fixins" for their guests.  

Some of our members prefer to conduct their PAC Drives during other months of the year.  For those of you who haven't had your PAC drive yet, you can still do so and be entered in next year's drawing.  Better yet, if you host one before next March and then host one during March 2014, your bank will have two entries in the drawing in April 2014.  

IBAT continues to be on the legislative and regulatory frontline with the Texas community banking industry as our only focus. We value and appreciate your support of our industry through contributions to the IBAT PAC and IBAT FedPAC.

CFPB Final Rule


Last week, the Consumer Financial Protection Bureau (CFPB) released its final remittances transfer rule, an amendment to Regulation E. This latest final rule makes two significant changes: 

  • First, it is now optional that providers disclose foreign taxes or fees imposed by a recipient institution for receiving transfers into an account if the provider includes a disclaimer that these fees and taxes may apply. 
  • Second, when funds are deposited into the wrong account because the sender provides an incorrect account number or routing number, the provider must attempt to recover the funds. However, the provider would not be responsible for the cost of funds that cannot be recovered.

A effective date for the final rule is October 28 of this year. The final rule is available on the CFPB website.