IRS Issues 2013 Cost of Living Adjustments

The Gold Book has been updated to reflect the cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2013. In general, many of the pension plan limitations will change for 2013 because the cost-of-living index met the statutory thresholds that trigger their adjustments. Several sections within the Pension chapter are updated accordingly.

Foreign Remittances

The remittance rule published by the CFPB (subpart B of Regulation E), which goes into effect on February 7, 2013, generally requires remittance transfer providers to give certain specified disclosures to consumers sending remittance transfers. Among other requirements, a provider generally must disclose to a sender the total amount the recipient will receive, as well as the applicable exchange rate, fees, and taxes. In certain circumstances, the rule permits providers to estimate these amounts. Click here to read more about foreign remittances and the safe harbor list.

Bank management may declare legal holiday

The Comptroller of the Currency issued supervisory guidance on declaring a legal holiday for banks because of an emergency or natural disaster. Read more.

What's New? NYS Preauthorized EFT Law

On August 17, 2012, Governor Cuomo signed S.219-A / A978, which became Chapter 403 of the laws of 2012.  The new law amends Banking Law section 9-s regarding stop payments of electronic funds transfers (the New York version of the Electronic Funds Transfer Act.)

Text in The Gold Book addressing New York rules for stopping payment on preauthorized electronic transfers have been updated in the Compliance and Electronic Banking chapters.

What's New? NYS Social Security Law Amended

A person may not be required to disclose or furnish his or her Social Security Number (SSN) for any purpose under a new law signed by New York Governor Andrew Cuomo.  The new law safeguarding SSNs (A.8992-A/S.6608-A) applies to employers and certain other entities in the state.   It adds new section 399-ddd to the General Business Law and becomes effective December 12, 2012. Businesses must review their practices with employees, customers and other individuals in situations where all or a part of the Social Security Number is involved.

Read more in The Gold Book. Click Here.

FDIC Issues Two New Deposit Insurance Resources

The FDIC has developed two new resources to help bank employees and depositors understand FDIC deposit insurance coverage: (1) a large-print version of the brochure Your Insured Deposits and (2) a computer-based, interactive training module called FDIC Deposit Insurance Coverage for Bankers.

Insured institutions may access and order the FDIC's two new deposit insurance resources on the FDIC's Web site at www.fdic.gov/deposit/deposits/.

Announcing New Website

Banking Spectrum is proud to announce

the launch of our new website!

To better serve our clients, our new website is even easier to learn more about the services we provide.

Registered users of The Gold Book may access the online manual through the website or directly at http://goldbook.bankingspectrum.com.

And be sure to visit the What's New page with each visit for the latest banking news and updates to The Gold Book.

Don't have access to The Gold Book? Click here to Register and a representative will be in touch.

We hope you like the new site. Let us know what you think.

NYS Law Abolishes Yield Spread Premiums

Effective August 17, 2012, Governor Cuomo signed A.7329/S.886, which became Chapter 404 of the Laws of 2012.  The law adds Banking law Section 3-a, which states that a person who makes or brokers a home loan may not receive compensation based on, or varies with, any of the loan terms.  Compensation based on the loan amount (principal) is permitted.

The amendment also bans yield spread premiums - compensation paid by a lender to a mortgage loan broker based on the difference between a stated interest rate or loan yield preferred by the lender.

Brokers being paid on the basis of a yield spread premium, as opposed to a percentage of the loan amount or points, may be inclined to steer applicants to lenders offering loans at higher rates, thus acting in their own or the lender’s interests and not the interest of their applicant-client.

CFPB Proposal Requires Free Appraisal Reports

The CFPB issued a proposed rule that would require creditors to inform consumers of their right to receive a free copy of appraisal reports and home-value estimates within three days of applying for a mortgage loan. Creditors then would be required to provide the reports to consumers as promptly as possible, but no later than three days before closing -- regardless of whether credit is extended, denied, incomplete or withdrawn.

New Appraisal Requirements Proposed

The regulatory agencies issued a proposed rule under Dodd-Frank that would establish new appraisal requirements for “higher-risk mortgage loans.”

The proposal would require creditors to use a licensed or certified appraiser to prepare a written report based on a physical inspection of the property’s interior. The proposal also would mandate that creditors disclose information about the appraisal’s purpose and provide consumers with a free copy of the appraisal report.

CFPB Proposes Mortgage Servicing Rules

The Consumer Financial Protection Bureau proposed two sets of rules aimed at mortgage servicers. The first set, issued under the Truth in Lending Act, would require servicers to provide monthly mortgage statements that include a breakdown of payments by principal, interest, fees, and escrow; the amount of and due date of the next payment; recent transaction activity; and notices about fees. It also would require more advanced warning about interest rate adjustments on most adjustable-rate mortgages; advanced notice and pricing information before charging customers for “force-placed” insurance; and earlier information and alternatives for avoiding foreclosure. The second set of rules, issued under the Real Estate Settlement Procedures Act, would govern the handling of consumer accounts, correcting errors, and evaluating borrowers for alternatives to avoid foreclosure.  Comments are due October 9, with final rules expected in January 2013.

NYS Law on Out of State and Interstate Branching Activities

On July 18, 2012, Governor Cuomo signed S.677-B / A.10567A, which became Chapter 180 of the Laws of 2012.  The Chapter amends various provisions of the state banking laws that address in state and out of state branching activities of out of state banks, national banks and thrifts seeking to do business in New York.  The law updates and conforms state law branching rules to the branching activity sections of the Dodd-Frank Act.

NYS Reciprocal Public Deposits Bill Signed Into Law

This month, Governor Cuomo signed the reciprocal public deposits bill (Chapter 128 of the Laws of 2012), a measure that authorizes local governments to use reciprocal deposit services to increase the FDIC deposit insurance coverage of municipal deposits. This law, effective immediately, increases deposit insurance coverage from the current level of $250,000 per account to the maximum $50 million. Read more in The Gold Book.

Banking Agencies Issue Host State Loan-to-Deposit Ratios

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency recently issued the host state loan-to-deposit ratios that the banking agencies will use to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. These ratios update data released on June 30, 2011.In general, section 109 prohibits a bank from establishing or acquiring a branch or branches outside of its home state primarily for the purpose of deposit production. Section 109 also prohibits branches of banks controlled by out-of-state bank holding companies from operating primarily for the purpose of deposit production.

Section 109 provides a process to test compliance with the statutory requirements. The first step in the process involves a loan-to-deposit ratio screen that compares a bank's statewide loan-to-deposit ratio to the host state loan-to-deposit ratio for banks in a particular state.

A second step is conducted if a bank's statewide loan-to-deposit ratio is less than one-half of the published ratio for that state or if data are not available at the bank to conduct the first step. The second step requires the appropriate banking agency to determine whether the bank is reasonably helping to meet the credit needs of the communities served by the bank's interstate branches.

A bank that fails both steps is in violation of section 109 and is subject to sanctions by the appropriate banking agency.

The updated host state loan-to-deposit ratios are attached.

Attachment (22 KB PDF)

NYBA Supports Increasing FDIC Insurance Coverage

The New York Bankers Association (NYBA) sent a letter to Governor Cuomo urging that he sign legislation which NYBA strongly supports (A.8971(Magnarelli)/S.5135(Martins)) that would authorize the State of New York, its local governments and public authorities to use reciprocal deposit services to increase the FDIC deposit insurance coverage of municipal deposits.  In the letter, the NYBA  points out that use of such security – which is already allowed in 47 states and the District of Columbia - would increase funds available for local lending, reduce the costs of managing deposits for the State and its constituent depositories, and increase the speed of recovery of any public deposits in a bank failure.  Because all deposits in excess of the FDIC insurance limit need to be fully collateralized in New York, permitting New York banks to participate in a reciprocal deposit service could eliminate the need to collateralize more than 90% of all deposits held by New York local governments.  In addition, increasing deposit insurance coverage from the current level of $250,000 per account to the maximum $50 million level would free up billions of dollars of local government deposits.  These funds could then be available for small business, mortgage, consumer and other loans in the local communities from which the deposits are drawn.

CFPB Issues Proposed Mortgage Regulation

The Consumer Financial Protection Bureau has issued two new proposed rules.  The first consolidates the mortgage disclosures required by the Truth in Lending Act and RESPA. This proposal impacts both application and closing disclosures and seeks to simplify loan terms and cost information.  Comments on this proposal must be submitted by either September 7, 2012 (for certain sections of the proposal) or November 6, 2012.

The second proposal deals with high cost mortgages and homeownership counseling requirements. Its comment period ends on September 7, 2012.

For more information on these proposed rules, visit http://www.consumerfinance.gov/

Caution Passing FDIC Fees to Customers

The FDIC has become aware that certain insured depository institutions are charging customers an "FDIC fee" or similarly described fee, apparently to compensate for some or all of its FDIC deposit insurance assessment costs. This Financial Institution Letter 33-2012 communicates the FDIC’s concerns and expectations when institutions assess these types of fees.

For further information visit www.fdic.gov or the FDIC chapter of The Gold Book.

The FDIC has become aware that certain insured depository institutions (IDIs) are charging customers an "FDIC fee" or similarly described fee, apparently to compensate the IDI for some or all of its FDIC deposit insurance assessment costs. This Financial Institution Letter (FIL) communicates the FDIC’s concerns and expectations when IDIs assess these types of fees.The FDIC has become aware that certain insured depository institutions (IDIs) are charging customers an "FDIC fee" or similarly described fee, apparently to compensate the IDI for some or all of its FDIC deposit insurance assessment costs. This Financial Institution Letter (FIL) communicates the FDIC’s concerns and expectations when IDIs assess these types of fees.The FDIC has become aware that certain insured depository institutions (IDIs) are charging customers an "FDIC fee" or similarly described fee, apparently to compensate the IDI for some or all of its FDIC deposit insurance assessment costs. This Financial Institution Letter (FIL) communicates the FDIC’s concerns and expectations when IDIs assess these types of fees.

OCC Integration of OTS

Pursuant to the Dodd-Frank Reform Act, the OCC took over supervision of federal savings associations on July 21, 2011. In an effort to integrate OTS policy guidance documents into a common set of supervisory policies that apply to both national banks and federal savings associations, the OCC has implemented a process of rescinding OTS documents that are, for example, no longer useful because of the elimination of the OTS or the passage of time or that duplicate existing OCC guidance.

Rescinded OTS Documents and Prevailing OCC Documents can be found at: http://www.occ.gov/news-issuances/bulletins/2012/2012-15a.pdf

International Collections

A new chapter, International Collections, has been added to The Gold Book. The uniform rules, published by the International Chamber of Commerce (ICC) outline interbank collection procedures for foreign deposits. The Gold Book highlights excerpts of the general provisions governing international collections.

Did you know?

Last week, the Federal Reserve Board announced the availability of a new video that explains how borrowers who believe they were financially harmed during the mortgage foreclosure process in 2009 and 2010 can apply for a free, independent foreclosure file review.

Both English and Spanish versions of the video are available for viewing on the Federal Reserve Board's website and on YouTube.