Compliance Question of the Week

In today’s banking environment as soon as one big new regulation is implemented another pops up. Our compliance resources help your community bank stay one step ahead of the regulators.

Regulations and Guidance

Question: If a bank denies a loan application and then the applicant comes back and gives the bank new information to "overturn" the denial, does the bank report two loans (one denied and one originated) or just one loan (originated) on the HMDA LAR?

ANSWER:

The bank may choose to do either if the original application and the request to "overturn" the denial occur within the same calendar year. The bank may choose to treat the request as a continuation of the earlier transaction using the same ULI or NULI or as a new transaction with a new ULI or NULI. If the bank treats it as a new transaction it must report the date of the request as the application date. If it is treated as a new transaction, it is reported as the origination date. 

Note: This data field is required for all HMDA reporting institutions.

Reference: HMDA Reporting Getting it Right, Version 4.0 Edition effective for January 1, 2020 (submission due March 2021), page 63 and i-29 reinstated application; Commentary 1003.4(a)(1)(ii)-4; Commentary 1003.4(a)(1)(ii)-3. 

Q&A Archives

ANSWER:

The flood rule provides that to be accepted under the discretionary acceptance provision, the flood insurance policy must cover both the mortgagor(s) and the mortgagee(s) as loss payees, except in the case of a policy that is provided by a condominium association, cooperative, homeowners association, or other applicable group and for which the premium is paid by the condominium association, cooperative, homeowners association or other applicable group as a common expense. This exception is identical to the exception provided for the requirement to escrow flood premiums currently contained in the requirement to escrow flood premiums currently contained in the Agencies’ flood insurance rules.

Reference: Loans in areas having special flood hazards, final rule, Federal Register Wednesday February 20, 2019, page 4962. See also escrow rule: OCC: 12 CFR 22.5(a)(2)(iii) FED: 12 CFR 08.25(e)(1)(ii)(C) FDIC: 12 CFR 339.5(a)(2)(iii)

ANSWER:

No, the E-Sign Act does not apply to all documents. The provisions of the E-Sign Act do not apply to:

  • wills and trusts;
  • domestic relations matters; 
  • court orders or notices, and 
  • foreclosures and evictions.
Reference: 15 U.S.C. 7003.

ANSWER:

If you work for an insured depository regulated by the OCC, FDIC, FRB, CFPB, and NCUA or the Farm Credit Administration you are NOT required to take the continuing education courses required under the SAFE Act. 

You still can and may want to take the relevant Professional Education and Continuing Education courses to keep your knowledge of industry and regulatory information up-to-date in the event that you change employment and work for a state-licensed lender or broker.

Reference: NMLS Resource Center FAQ - http://mortgage.nationwidelicensingsystem.org/profreq/Pages/FAQ.aspx#education

 

ANSWER:

Saturday is automatically considered a business day for purposes of the Right of Rescission delay period, the three days from receipt timing for closing and the Closing Disclosure, and the requirement to delay any closing subject to TRID until at least the seventh business day from receipt of application and delivery of disclosures.

The only instance where lenders have to determine whether they are substantially open is for purposes of determining if they have to count Saturday to meet the requirement to deliver an LE within three days of receipt of an application. If you do not meet this standard, Saturday is automatically disregarded, effectively giving the lender one more day to disclose.

Reference: 12 CFR 1026.2(a)(6), 1026.19(a)(2), 1026.19(b), 1026.19(e)(1)(iii), 1026.19(f)(ii).

ANSWER:

The non-English equivalent of the FDIC's official advertising statement (Member of FDIC, Member FDIC, FDIC Insured) may be used in an advertisement only if the translation has received the prior written approval of the FDIC. 12 CFR 328.6(f)

IDIs can send an email requesting prior written approval to translate the FDIC's advertising statement to DepositinsuranceBank@FDIC.gov.

 Reference: FDIC Q&As Part 328 Final Rule Question III.3.

ANSWER:

Lenders may continue to make loans without flood insurance coverage during this time but must continue to make flood determinations; provide timely, complete, and accurate notices to borrowers; and comply with other applicable parts of the flood insurance regulations. In addition, lenders should evaluate safety and soundness and legal risks and should prudently manage those risks during the lapse period. 

Reference: Interagency Questions and Answers Regarding Flood Insurance Applicability 12

ANSWER:

On April 29, 2025, the “Common Cents Act” (H.R. 3074) was introduced in the House of Representatives. As of September 4, 2025, the bill was placed on Union Calendar No. 192 for further review. This proposed legislation directs the Secretary of the Treasury to discontinue minting the penny and requires that all cash transactions be rounded to the nearest five cents.   For transactions that end in an irregular amount, bank customers are able to adjust their deposits or withdrawals to accommodate cash transactions to the nearest nickel.  

At this time, H.R. 3074 has not been passed by either the House or Senate, nor has it been signed into law by the President. Therefore, no final regulatory guidance has been issued for financial institutions. Banks are not yet required to make any operational changes related to coin handling or transaction rounding. However, banks may look to the Federal Reserve's September 2025 FAQ about Penny Deposits and Orders for early guidance.  

ICBA is actively monitoring legislative and regulatory developments related to this bill. We will provide timely updates and implementation guidance to our members as soon as rulemaking progresses.

Reference: 119th Congress H.R. 3074 Report 119-235

ANSWER:

Yes. The Federal Reserve is committed to accepting deposits of pennies from banks and other financial institutions. As a result of the U.S. Department of the Treasury’s decision to end production of the U.S. penny, coin distribution locations accepting penny deposits will vary over time as localized inventory is depleted at certain coin distribution locations. If a customer’s endpoint is connected to a coin distribution location that is no longer accepting deposits of pennies, they may need to contact their local cash office to coordinate deposits at an alternate location.   


Reference: The Federal Reserve September 2025 FAQ about Penny Deposits and Orders question 2.

ANSWER:

The Federal Reserve is analyzing penny inventory on a weekly basis. When inventory at a specific location is depleted, FedCash Services will cease fulfilling orders of pennies at that specific location. Customers whose endpoints are connected to a location that is no longer fulfilling orders of pennies will see error messages in the FedCash Services application via the FedLine Web® or FedLine Advantage® Solution when attempting to place orders that use the affected endpoint and contain the penny denomination. Federal Reserve Bank customers should regularly check the FedCash Services application for further details and updates about these error messages.

Coin distribution locations accepting deposits will vary over time as localized inventory is depleted. To best meet the needs of commerce, a given endpoint may continue to accept deposits even if it ceases fulfilling orders, while others may cease both orders and deposits simultaneously. The customer may contact their local cash office for an alternate deposit location should their endpoint also cease acceptance of deposits.  Financial Institutions may want to consider separate coin orders to prevent potential penny supply interruptions from delaying any other currency ordered. 

Reference: The Federal Reserve September 2025 FAQ about Penny Deposits and Orders question 3.

ANSWER:

An applicant means any person who requests or who has received an extension of credit from a creditor, and includes any person who is or may become contractually liable regarding an extension of credit.

Guarantors are not "applicants" under Regulation B's definition of applicant.

Reference: 1002.2(e).

ANSWER:

Yes. The Agencies will consider an institution’s past performance in its overall evaluation.

For example, an institution that received a rating of ‘‘needs to improve’’ in the past may receive a rating of ‘‘substantial noncompliance’’ if its performance has not improved.

Reference: CRA: Interagency Q&As Regarding Community Reinvestment; Guidance, 07/25/2016.

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