2023 Compliance Update Reminders

 By James M. Moore, CRCM
 
One more year has passed, and we are faced with the new challenges of 2023.  Anyone with a compliance background understands there is no such thing as a fresh start for a new year.  The following is a list of reminders and updates to make sure you are heading in the right direction for the New Year. 
 
Deposit Compliance:

• Regulation CC training should have been provided during 2022 and make plans to provide Reg. CC training during 2023.
• Regulation CC hold thresholds remain at $225 (next day) and $5,525 (exception) until July 1, 2025.
• Annual privacy training should have been provided for 2022 to all employees and ensure annual privacy training is scheduled for 2023.  Furthermore, ensure that the Board of Directors has received privacy training.
• Ensure annual privacy disclosures will be mailed during 2023 or verify the institution’s exemption status for 2023.   
• Determine the number of remittance transfers under Regulation E from the previous calendar year to ensure the institution has not exceeded the threshold for “normal course of business” of 500 consumer transfers.
• Ensure the ID Theft Program administrator has reported to the Board annually on the status of the ID Theft Program.

 Loan Compliance:

• The 2022 HMDA LAR and CRA LAR for large institutions must be submitted by March 1, 2023.
• Check the historic examples for HELOC and ARM application disclosures to ensure the most recent 15 years are used in the examples.
• The CRA Public File should be updated by April 1, 2023.
• Check the accuracy of the affiliated business disclosures to ensure all affiliated businesses are disclosed along with the current range of fees and the current ownership interest of each affiliated business.
• The 2023 HOEPA points and fees test will use the following:
  • 5% of loan amounts of $24,866 or more
  • For a loan amount less than $24,866, the lesser of 8% or $1,243
• The 2023 QM points and fees test will use the following:
  • For a loan amount greater than or equal to $124,331: 3% of the total loan amount
  • For a loan amount greater than or equal to $74,599 but less than $124,331: $3,730
  • For a loan amount greater than or equal to $24,866 but less than $74,599: 5% of the total loan amount
  • For a loan amount greater than or equal to $15,541 but less than $24,866: $1,243
  • For a loan amount less than $15,541: 8% of the total loan amount
• The 2023 General QM threshold will use the following:
  • 2.25 or more percentage points for a first lien covered transaction with a loan amount greater than or equal to $124,331
  • 3.5 or more percentage points for a first lien covered transaction with a loan amount greater than or equal to $74,599 but less than $124,331
  • 6.5 or more percentage points for a first lien covered transaction with a loan amount less than $74,599
  • 6.5 or more percentage points for a first lien covered transaction secured by a manufactured home with a loan amount less than $124,331
  • 3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $74,599 and
  • 6.5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $74,599.
• The 2023 Truth in Lending threshold is $66,400 for loans not secured by real property and are not private education loans.
• The 2023 “small creditor” threshold is $2.537 billion as of December 31, 2022.
• The 2023 “small loan” exemption for HPML appraisal rules is $31,000.
• Until further notice, the safe harbor credit card penalty fee is $30 for the first and $41 for subsequent late fees.  This remains unchanged from 2022.  The CFPB has not announced the inflation update for 2023.
• If the creditor allows borrowers to shop for any required services for TRID loans, it should update (as necessary) the written list provided with the Loan Estimate to identify at least one available provider for each settlement service for which the consumer is permitted to shop. 
• Ensure that employees and Directors have received fair lending and CRA training for 2022.  Training should be planned for 2023.
• Review the CRA asset size thresholds for 2023:
  • CRA asset size thresholds for 2022 are under $376 million for small bank (based on both of the last two calendar years), at least $376 million up to $1.503 billion for intermediate small bank (based on either of the two last calendar years), and $1.503 billion and over for large bank (based on both of the last two calendar years).
• The HMDA asset size threshold for depository institutions for 2023 is $54 million.
• Ensure a review of 2021 and 2022 transaction data is conducted for 2023 reporting requirements.  In addition to meeting the above HMDA asset threshold:
  • An institution must have in each of the two preceding calendar years, originated at least 25 or more covered closed-end dwelling secured loans to report closed-end loans.  This reflects a significant change from the previous year’s requirement.  
  • Dwelling secured open-end lines of credit must be reported if a covered institution originated 200 or more covered dwelling secured open-end lines of credit in each of the previous two calendar years. 
• Review HMDA small filer exemption for reduced field reporting criteria for 2023:
  • Originated less than 500 closed-end mortgages in each of the two preceding calendar years and received a “Satisfactory” or better CRA rating.
  • Originated less than 500 open-end mortgages in each of the two preceding calendar years and received a “Satisfactory” or better CRA rating.
• Ensure procedures are in place for performing escrow account analyses and that the financial institution has implemented procedures for providing annual escrow account notices.
• Ensure loan officers completed S.A.F.E. Act license renewal procedures.
• Ensure an annual independent S.A.F.E. Act audit has been performed.
• Ensure lenders who receive compensation based on insurance sales (credit life/disability) complete license renewal procedures.
• Ensure the financial institution has documented whether they meet the definition of a small servicer, and that documentation of the determination is retained for record retention.
• Ensure the financial institution has documented whether they meet the definition of a small creditor, and that documentation of the determination is retained for record retention.
• Review the final list or rural or underserved counties for 2022, calculate rural or underserved status by address on the CFPB’s website for covered loans, and ensure the financial institution has documented whether it qualifies for the rural / underserved TILA exemption by originating at least one covered loan in a rural or underserved area and that documentation of the determination is retained for record retention.

 BSA Compliance:

• Schedule a Board review and approval of current BSA/AML and OFAC program policies.
• Update the BSA/AML and OFAC Risk Assessments.
• Ensure annual training was conducted for all employees during 2022 and is scheduled for 2023.  Furthermore, the Board of Directors should also be receiving annual BSA training, which should be documented in the Board minutes.
• Annual reviews should be conducted of all exempt customers for suspicious activity and continued eligibility.
• Update procedures for monitoring high-risk customers and reevaluate the risk levels of each customer designated as high risk.
• Ensure annual due diligence is completed for MSBs, MRBs, remote deposit capture, private ATM customers, deposit brokers, etc. in accordance with the financial institution’s BSA/AML program.
• Review 314(a) contact information transmitted with the call report for accuracy.
• For institutions that voluntarily share information, ensure 314(b) registration is completed annually.