Regulatory Relief – Finally!
By Ruth Razook, Founder & CEO
RLR Management Consulting, Inc.
On May 24, 2018, President Trump enacted a regulatory relief bill that will make the most significant changes to the Dodd-Frank Act since it passed in 2010. Most of the bill is aimed at helping banks and credit unions with less than $10 billion in assets! Some of the provisions of the bill include:
For all Banks:
TRID Relief – Removes the 3 day waiting period required under TILA-RESPA mortgage disclosure when a credit extends a second offer with a lower APR.
Appraisal Requirement Exemption – Exemption for rural mortgage portfolio loans of less than $400,000 if FI is unable to find a state-certified/licensed appraiser to perform the appraisal in a timely manner.
Reciprocal Deposits – Certain reciprocal deposits will not be considered brokered deposits.
HMDA Exemption – Exemptions from collecting the new Dodd-Frank Act data fields for banks with “satisfactory” CRA ratings that originate fewer than 500 closed-end mortgage loans of fewer then 500 open-end lines of credit.
Banks under $10 Billion:
Qualified Mortgages – Certain mortgages originated and retained in portfolio by institutions with less than $10 billion of assets will be deemed QMs. The law has some restrictions but is does mean that most mortgages made by the smaller institutions would face less legal liability.
Escrow Requirement Exemption – Exemption from TILA escrow requirement for banks that make 1,000 or fewer first lien mortgages on principal dwellings.
Capital Simplification – The law allows banks with less than $10 billion of assets to face a simpler capital regime. Agencies will create a community bank leverage ratio of tangible assets between 8% and 10%. Banks that maintain a higher ratio would be automatically deemed to be in compliance with capital and leverage requirements.
Volker Rule Exemption – Banks with total trading assets and trade liabilities of 5% of less of total assets are exempt from the Volker Rule.
Bank under $5 Billion:
Short-Form Call Report – Reduced reporting requirements for the first and third quarters for banks that meet appropriate criteria.
Banks under $3 Billion:
Fed’s Small BHC Policy – The law raises the Federal Reserve’s Small Bank Holding Company Policy Statement asset threshold from $1 billion to $3 billion.
Exam Cycle – The law extends the examination cycle to 18 months for well-managed, well-capitalized banks.
Check out S.2155-Bipartisan Regulatory Relief Bill and make sure you understand the new changes!