September 30, 2013

Board of Directors
c/o Mr. Chuck Painter
Senior Vice President
Raccoon Valley Bank
1202 2nd Street
P.O. Box 129
Perry, Iowa  50220-0129
Dear Board Members:
Thank you for allowing McGladrey LLP to provide regulatory compliance review services to Raccoon Valley Bank.  We began our compliance review on Wednesday, September 4, 2013, which entailed a review of selected consumer laws and regulations with a primary focus on lending compliance.  We held an exit meeting with Bank management to present our findings on September 5, 2013.  The enclosed report outlines our observations and recommendations (where appropriate) resulting from our review.  It has been prepared in accordance with the agreed-upon scope of work as specified in our engagement letter dated February 13, 2013, and the Assumptions and Limiting Conditions contained in Exhibit A.
This report contains the following:
	Executive Summary—an overall summary of observations to give the board and/or Audit Committee a frame of reference for the significance of the finding
	Observations and Recommendations—a detailed listing of specific findings noted during the testing
	Review Procedures—a summary of our scope and procedures
	New and Revised Consumer Regulatory Compliance Requirements—a summary of final rules by mandatory compliance date and of pertinent regulatory guidance effective within the past year and beyond
The results of our review are based on materials provided by Bank staff at our request, as well as statements and representations made by Bank personnel.  The Executive Summary is designed to give a brief summary of our results while the remainder of the report is written in a technical nature so that staff can effectively implement corrective action measures and revise policies and procedures as needed.
We appreciate the courtesies and cooperation extended to us during this project and appreciate the opportunity to be of service to Raccoon Valley Bank.  Please contact Ryan Charlton at 515.558.6651 or Jenn Weiland at 515.558.6614 if you have any questions regarding this report.

Sincerely,


I.	EXECUTIVE SUMMARY	1
II.	OBSERVATIONS AND RECOMMENDATIONS	2
A.	TRUTH IN LENDING—REGULATION Z	2
B.	REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)—REGULATION X	3
C.	EQUAL CREDIT OPPORTUNITY—REGULATION B	4
D.	HOME MORTGAGE DISCLOSURE ACT	4
E.	LOANS IN AREAS HAVING SPECIAL FLOOD HAZARDS	4
F.	FAIR CREDIT REPORTING ACT	5
G.	HOMEOWNER’S PROTECTION ACT—PRIVATE MORTGAGE INSURANCE (PMI)	5
H.	SECURE AND FAIR ENFORCEMENT FOR MORTGAGE LICENSING ACT (S.A.F.E. ACT)—
REGULATION G	6
III.	REVIEW PROCEDURES FOR LENDING COMPLIANCE	7
A.	TRUTH IN LENDING—REGULATION Z	7
B.	REAL ESTATE SETTLEMENT PROCEDURES ACT—REGULATION X	8
C.	EQUAL CREDIT OPPORTUNITY—REGULATION B	8
D.	HOME MORTGAGE DISCLOSURE LOAN APPLICATION REGISTER REVIEW—REGULATION C	9
E.	CREDIT PRACTICES RULE—REGULATION AA	9
F.	LOANS IN AREAS HAVING SPECIAL FLOOD HAZARDS	9
G.	FAIR CREDIT REPORTING ACT/FAIR AND ACCURATE CREDIT TRANSACTIONS—REGULATION V	9
H.	HOMEOWNERS PROTECTION ACT—PMI	10
I.	HOMEOWNERSHIP COUNSELING	10
J.	SERVICEMEMBERS’ CIVIL RELIEF ACT	10
K.	CONSUMER PROTECTION IN SALES OF INSURANCE	10
L.	S.A.F.E. ACT	11
M.	PROTECTING TENANTS AT FORECLOSURE ACT	11
N.	UNFAIR, DECEPTIVE OR ABUSIVE ACTS OR PRACTICES	11
IV.	EXHIBIT A—ASSUMPTIONS AND LIMITING CONDITIONS	12
V.	EXHIBIT B—NEW AND REVISED CONSUMER REGULATORY COMPLIANCE REQUIREMENTS	13

I.	EXECUTIVE SUMMARY
The scope of our regulatory compliance review focused on lending compliance.
Please see the Review Procedures sections of the report for a detailed listing of the agreed-upon scope of the review.
The purpose of the review was to evaluate Raccoon Valley Bank’s (the Bank) level of compliance with respect to the agreed-upon scope using a testing process designed to identify regulatory exceptions and compliance weaknesses.  The results of our review can be effectively used by management to make corrections, revise policies and procedures, where appropriate, and determine if new or revised internal controls are necessary.


II.	OBSERVATIONS AND RECOMMENDATIONS
A.	TRUTH IN LENDING—REGULATION Z
1.	Home Equity Line of Credit (HELOC)
1026.6(a) of Regulation Z (Home Equity Plan) requires banks to furnish an initial disclosure statement with the following disclosures as applicable:  possible actions by the creditor, payment terms, statement on negative amortization, transaction requirements, tax implications, statement on annual percentage rate, and certain variable-rate disclosures unless provided with the application, in a form the consumer could keep, and included a payment example for the payment option chosen by the consumer.  We noted that the Final Payment section in the HELOC agreements does not disclose whether there was a balloon payment at maturity.
2.	Credit Card Application Disclosures
1025.5a(b)(11) of Regulation Z requires a card issuer to disclose the amount of any balance transfer fee.  We noted that the Bank does not make this disclosure on its credit card application disclosure form.
3.	Credit Card Application Disclosures
1026.5a(b)(15) of Regulation Z requires a card issuer to make reference to the website established by the Consumer Financial Protection Bureau, and to include a statement that consumers may obtain information from the website.  The model form applicable to this part provides the Web address of www.consumerfinance.gov/learnmore.  We noted that the Bank refers to the Federal Reserve Board instead of the Consumer Financial Protection Bureau (CFPB).
4.	Credit Cards/Ability to Repay
1026.51(a) of Regulation Z states a card issuer must not open a credit card account for a consumer under an open-end (not home-secured) consumer credit plan, or increase any credit limit applicable to such account, unless the card issuer considers the consumer’s independent ability to make the required minimum periodic payments under the terms of the account based on the consumer’s income or assets and current obligations.  We noted one instance where the Bank did not consider the consumer’s ability to repay when approving the customer for the credit card.
5.	Credit Card Account Opening Disclosures
1026.6 of Regulation Z requires a card issuer to provide certain disclosures at the time of account opening or before the first transaction on an account.  For one credit card account reviewed, there was no evidence in the file that these disclosures had been provided.
B.	REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)—REGULATION X
1.	Settlement Statement
1024.8(b) of Regulation X states that the settlement agent shall complete the Housing and Urban Development- (HUD-) 1 or HUD-1A, in accordance with the instructions set forth in Appendix A to this part.  We noted the following:
•	One instance was noted where a construction loan, subject to RESPA, did not include a HUD settlement statement.
•	One instance was noted where the government recording charge in the good faith estimate (GFE) column on Page 3 of the settlement statement did not accurately reflect the charge disclosed on the GFE.  The GFE disclosed this charge as $37; the GFE column of the settlement statement disclosed $27.
•	Four instances were noted where the credit report fee was listed outside the columns as paid outside of closing (POC) on Line 809.  In addition, we noted that a credit was not included on Line 802 of the HUD-1A, as the Bank did not charge the borrowers for credit report fees.  We recommend providing a credit in Line 802 of the HUD-1A for settlement fees paid by the Bank.  Additionally, these fees should not be listed as POC in Line 809 and should be listed in the column of the HUD-1A in Line 805.
•	One instance was noted where a government recording fee was recorded in the 800 series instead of the proper 1200 series.  The fee was for the recording of a vehicle lien.
•	Two instances were noted where the abstracting fee was listed in the “Charges That Can Change” section of the comparison chart when it should have been listed in the “Charges That in Total Cannot Increase More Than 10%” section, as the abstracting company was selected by the Bank.  Additionally, in one of these instances, the title fees listed in Line 1102 were not included in the “Charges That in Total Cannot Increase More Than 10%” section of the comparison chart.
2.	GFE/Changed Circumstances
1024.7(f) of RESPA allows lenders to provide a revised GFE only to the extent that the changed circumstances actually resulted in higher charges.  If changed circumstances result in increased costs for any settlement services, such that the charges at settlement would exceed the tolerances for those charges, the loan originator may provide a revised GFE to the borrower.  If a revised GFE is to be provided, the loan originator must do so within three business days of receiving information sufficient to establish changed circumstances.  The revised GFE may increase charges for services listed on the GFE only to the extent that the changed circumstances actually resulted in higher charges.  We noted one instance where the date of the GFE was not updated to reflect redisclosure within three days of the changed circumstance.  The Bank dated the revised GFE with the same date as the initial GFE.
3.	GFE
1024.7(d) of Regulation X requires the loan originator to prepare the GFE in accordance with the requirements of this section and the instructions in Appendix C to this part.  Appendix C requires that for a purchase money residential mortgage loan, in Block 5, the loan originator must include an estimated cost for owner’s title insurance.  We noted one instance where the Bank listed “NA,” instead of $0.
C.	EQUAL CREDIT OPPORTUNITY—REGULATION B
1.	Adverse Action Notice
1002.9(a)(2) of Regulation B requires the Bank to provide an applicant against whom adverse action is taken a written notice of such action that includes disclosure of the name and address of the Federal Deposit Insurance Corporation’s (FDIC’s) Consumer Response Center.  In all of the adverse action notices reviewed, we noted that the Bank is not providing the correct current address.
2.	Joint Intent
1002.7(d) of Regulation B states that a bank may not require the signature or guarantee of a spouse except in the case of joint credit.  Regulation B’s staff commentary specifically states that a person’s intent to be a joint applicant must be evidenced at the time of application.  We noted one instance where there was no evidence that the Bank documented the applicant’s joint intent at the time of application.
D.	HOME MORTGAGE DISCLOSURE ACT
Application or Loan No.		Comments
9344665544	Loan purpose is listed as 3 (refinance)	File indicates that the loan purpose should be 2 (home improvement).
4250560984	Preapproval listed as 1
(preapproval was requested)	The Bank does not have a preapproval program, so it appears that the preapproval should be listed as 3 (not applicable).
9340764645	Census tract listed as 0504.00	The file indicates that the census tract should be listed as 0505.00.
Adverse Action—310	Occupancy listed as 2	There is no evidence in the file to support occupancy status.
4250664319	Income listed as 38	The file indicates that the income should be listed as 36.
E.	LOANS IN AREAS HAVING SPECIAL FLOOD HAZARDS
1.	Flood Insurance Coverage
339.3(a) of the FDIC’s Flood Hazard Insurance Act states that a bank shall not make, increase, extend or renew any designated loan unless the building or mobile home and any personal property securing the loan is covered by flood insurance for the term of the loan.  The amount of insurance must be at least equal to the lesser of the outstanding principal balance of the designated loan or the maximum limit of coverage available for the particular type of property under the Act.  We noted one instance where the Bank originated a loan secured by property in a Special Flood Hazard Area and flood insurance was not obtained in a sufficient amount.  Per the estimated value of $16,128 from the appraisal, it appears the flood insurance coverage of $16,100 is slightly below the required amount.
F.	FAIR CREDIT REPORTING ACT
1.	Exception Notice
1022.74(e)(3) of the Fair Credit Reporting Act requires the exception notice described in this section to be provided to the consumer as soon as reasonably practicable after the credit score has been obtained, but in any event at or before consummation in the case of closed-end credit.  We noted in instances where the Bank relies on a consumer’s credit score from a credit report pulled for a prior credit transaction, the consumer is not provided with the risk-based exception pricing notice or Notice to Home Loan Applicant, when applicable.  We recommend establishing procedures for providing this information to the consumer in instances where the Bank uses a previous credit report in the underwriting decision.
2.	Adverse Action Notices
615(a)(2)(B) and 609(f)(1)(C) of the Fair Credit Reporting Act requires if any person takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report, the person shall provide to the consumer written or electronic disclosure (a) of the current credit score of the consumer, (b) the range of possible credit scores under the model used, (c) all of the key factors that adversely affected the credit score of the consumer in the model used, the total number of which shall not exceed four, unless the fifth reason consists of the number of enquiries made with respect to a consumer report, (d) the date on which the credit score was created; and (e) the name of the person or entity that provided the credit score or credit file upon which the credit score was created.  We noted the following:
•	The Bank is not consistently listing the key factors adversely affecting the consumer’s credit report as per the instructions noted above.  Instead of listing the key factors, the Bank instructs the applicant to refer to the credit report.
•	One adverse action notice did not include the name, address and phone number of the credit reporting agency that provided the consumer report.
G.	HOMEOWNER’S PROTECTION ACT—PRIVATE MORTGAGE INSURANCE (PMI)
1.	Automatic Cancelation
4902(b) of the Homeowners Protection Act states that PMI in connection with a residential mortgage transaction shall terminate with respect to payments for that mortgage insurance made by the mortgagor on the termination date if, on that date, the mortgagor is current on the payments required by the terms of the residential mortgage transaction.  4901(18) defines termination date with respect to a fixed-rate mortgage, to be the date on which the principal balance of the mortgage, based solely on the initial amortization schedule for that mortgage and irrespective of the outstanding balance for that mortgage on that date, is first scheduled to reach 78 percent of the original value of the property securing the loan.  We noted one instance where PMI was not canceled by the Bank when the loan balance reached 78 percent of the original property value.
2.	PMI Cancelation Notification
4904(a) of the Homeowners Protection Act states that not later than 30 days after the date of cancellation or termination of a PMI requirement in accordance with this chapter, the servicer shall notify the mortgagor in writing that (1) that the PMI has terminated and that the mortgagor no longer has PMI; and (2) that no further premiums, payments or other fees shall be due or payable by the mortgagor in connection with the PMI.  We noted one instance where the borrower was not notified of the cancelation of PMI.
H.	SECURE AND FAIR ENFORCEMENT FOR MORTGAGE LICENSING ACT (S.A.F.E. ACT)—
REGULATION G
1.	Written Policies and Procedures
1007.104 of Regulation G requires banks to adopt written policies and procedures to ensure compliance with the S.A.F.E. Act.  The S.A.F.E. Act lists out the elements that should be included in the policies and procedures.  We noted that the Bank’s policy identifies the elements noted in the regulation; however, the policy does not detail the procedures the Bank will follow for each of these elements.  We recommend that the Bank update its procedures to include current practices, using the Bank’s 2010 S.A.F.E. Act Policy and Procedures document as a reference.
2.	Mortgage Loan Originator (MLO) Unique Identifier
1007.105 of the S.A.F.E. Act states that a registered MLO shall provide his or her unique identifier to a consumer upon request, before acting as an MLO and through the originator’s initial written communication with a consumer.  We noted four instances for HELOC applications and two instances for home improvement loans where there was no evidence that the unique identifier was provided.


III.	REVIEW PROCEDURES FOR LENDING COMPLIANCE
This section contains detail regarding the scope of our procedures and sample size selected.  The information we reviewed to determine compliance with the regulation is noted.  All observations and significant instances of noncompliance are described in the Observations and Recommendations section of this report.  Absent the inclusion of an observation, no reportable items were noted for the law/regulation reviewed.
We reviewed a sample of loan files, applications and other disclosure information that were selected on a judgmental basis by McGladrey LLP and Bank personnel.  The sampling period was from January 2013 to August 2013.  The loan files and applications reviewed consisted of the following:
	Refinance residence (3)
	Secondary market (1)
	Vehicle secured (3)
	Unsecured (5)
	Open-end real estate (5)
	Applications subject to adverse action (10)		Other residence secured (2)
	Residential construction (1)
	Deposit secured (2)
	Open-end non-real estate (2)
	Commercial loans (6)
Other items sampled include:
	Home Mortgage Disclosure Loan Application Register data integrity (12)
	Adjustable rate mortgage adjustment notices (1)
	Flood insurance adequacy (4)		PMI servicing (1)
	Annual escrow account analysis (1)
	Periodic statements for open-end credit (3)
A.	TRUTH IN LENDING—REGULATION Z
As applicable, we reviewed the following in order to assess compliance with Regulation Z:
•	Closed-end disclosures
•	Itemization of amount financed and annual percentage rate accuracy
•	Open-end disclosures and agreements
•	Adjustable rate mortgage initial disclosures
•	Billing error rights disclosure
•	Billing error disputes
•	Adjustable rate mortgage adjustment notices
•	Periodic statements and card stock (open-end credit)
•	Right of rescission
•	Loan payment conformity
•	Valuation independence
•	Loan originator compensation
•	Subsequent disclosures (change in terms notices, etc.)
•	Home Owner’s Equity Protection Act disclosures
•	Higher-priced mortgage loans
•	Reverse mortgage disclosures
•	Mortgage transfer disclosure
•	Credit card rules
•	Private education loan requirements
B.	REAL ESTATE SETTLEMENT PROCEDURES ACT—REGULATION X
As applicable, we reviewed the following in order to assess compliance with Regulation X:
•	GFE
•	Settlement statement
•	Notice of transfer of servicing disclosure
•	Servicing disclosure statement
•	Affiliate business arrangement disclosure
•	Initial and annual escrow disclosures
•	Kickbacks and unearned fees
C.	EQUAL CREDIT OPPORTUNITY—REGULATION B
As applicable, we reviewed the following in order to assess compliance with Regulation B:
•	Collection of monitoring information
•	Adverse action notices
•	Appraisal notices
•	Rules concerning evaluation of applications
•	Rules concerning requests for information
•	Rules concerning extensions of credit
•	Evidence of intent to apply for joint credit
D.	HOME MORTGAGE DISCLOSURE LOAN APPLICATION REGISTER REVIEW—REGULATION C
As applicable, we reviewed the following in order to assess compliance with Regulation C:
•	Applicability
•	Loan Application Register accuracy
•	Reporting
E.	CREDIT PRACTICES RULE—REGULATION AA
As applicable, we reviewed the following in order to assess compliance with Regulation AA:
•	Cosigner notice
•	Unfair late charges
F.	LOANS IN AREAS HAVING SPECIAL FLOOD HAZARDS
As applicable, we reviewed the following in order to assess compliance with the flood insurance rules:
•	Standard flood hazard determination
•	Notice of special flood hazard
•	Adequacy of flood insurance
•	Force-placed flood insurance procedures
G.	FAIR CREDIT REPORTING ACT/FAIR AND ACCURATE CREDIT TRANSACTIONS—REGULATION V
As applicable, we reviewed the following as part of our file review in order to assess compliance with the Fair Credit Reporting Act and Regulation V:
•	Credit score disclosure and notice to home loan applicant
•	Risk-based pricing
•	Negative information disclosure
•	Use of medical information
•	Address discrepancy reconciliation
•	Active duty and fraud alerts
•	Identity theft red flags
-	Written identity theft program and associated procedures
-	Identity theft red flag risk assessment
-	Board reports
-	Training documentation
•	Truncation of account numbers
•	Proper disposal of consumer reports
•	Duties of cardholders regarding change of address
•	Reporting information to the credit bureau with accuracy and integrity
•	Direct disputes
H.	HOMEOWNERS PROTECTION ACT—PMI
As applicable, we reviewed the following in order to assess compliance with PMI:
•	Cancellation and termination of PMI
•	Disclosure and notification requirements
•	Return of unearned premiums
I.	HOMEOWNERSHIP COUNSELING
•	Notification requirements
J.	SERVICEMEMBERS’ CIVIL RELIEF ACT
As applicable, we reviewed the following in order to assess that compliance with Servicemembers’ Civil Relief Act provides certain protections to service members, including certain eviction protections, lease termination rights and interest rate adjustments:
•	Interest rate reductions
•	Residential and motor vehicle leases
•	Foreclosure/eviction from bank-owned property
•	Servicemembers’ Civil Relief Act default notice
K.	CONSUMER PROTECTION IN SALES OF INSURANCE
As applicable, we reviewed the following in order to assess compliance with the Consumer Protection in Sales of Insurance regulation:
•	Solicitation/application disclosure
•	Insurance sales disclosure
L.	S.A.F.E. ACT
We reviewed the following for compliance with the act:
•	Policy and procedures
•	Bank-required registration
•	Loan originator registration
•	Third-party arrangements
•	Unique identifier
•	Annual review of procedures
M.	PROTECTING TENANTS AT FORECLOSURE ACT
As applicable, we reviewed the following in order to assess compliance with the Protecting Tenants at Foreclosure Act:
•	Policy and procedures
N.	UNFAIR, DECEPTIVE OR ABUSIVE ACTS OR PRACTICES
Throughout our review and testing procedures, we were mindful of practices and/or information that could be perceived as unfair or deceptive.

IV.	EXHIBIT A—ASSUMPTIONS AND LIMITING CONDITIONS
Our procedures were restricted to an examination of a limited sample of documents, a review of policies and written procedures as specified in our report and interviews with certain Bank personnel.  Our procedures did not include tests to determine the accuracy of Bank personnel responses to our direct inquiries, except where so stated and then only to the extent described.  Our procedures also did not include tests to determine the completeness or accuracy of the samples and lists that were submitted to us by Bank personnel.  Our report outlines our observations and includes recommendations, where appropriate.
Our report is limited to a test of compliance with only the specifically referenced laws and regulations.  Therefore, conclusions cannot be drawn regarding all applicable laws and regulations, nor were the samples large enough to provide any basis for conclusions about the Bank’s compliance with all such applicable laws and regulations.  The procedures do not constitute a compliance examination following generally accepted auditing standards or regulatory guidelines.  We relied on certain information within the Bank’s credit files and other official records presumed to be valid and legally binding Bank documents.  We also relied on interviews and representations of Bank personnel to develop findings and recommendations.
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McGladrey is committed to maintaining the confidentiality and privacy of our clients and the privacy of our client’s customers.  Section 502(e) (4) of the Gramm-Leach-Bliley Act legislation allows your institution to disclose personally identifiable financial information about your customers to us.  We are subject to the exception under Section 502 as a professional firm that assesses your institution’s compliance with industry standards.  Our policy is to maintain procedures to safeguard your customer’s information and not to reuse that information for any other purpose.


V.	EXHIBIT B—NEW AND REVISED CONSUMER REGULATORY COMPLIANCE REQUIREMENTS
This summary does not include the following annual adjustments:  Consumer Reporting Agency asset-size thresholds for small and intermediate banks, Home Mortgage Disclosure Act asset-size exemption threshold, and the Home Owner’s Equity Protection Act dollar amount that triggers additional disclosures.  If you cannot access a document through the link provided, copy and paste the address into your URL making sure that all hyphens, etc. copy over to the URL, appropriately.
Mandatory Compliance Date	Rule	Summary	Final Rule Location
January 2012	FFIEC—Supplement to Authentication in an Internet Banking Environment	The Federal Financial Institutions Examination Council issued supplemental guidance to reinforce the 2005 Authentication in an Internet Banking Environment Guidance.  The 2005 guidance supplemented the guidance issued in 2001.  It is not surprising that new guidance is issued periodically given the changes in technology and increased incidents of identity theft and other types of fraud.  For the first time, the 2011 guidance supplement distinguishes between retail and commercial accounts.  Controls over commercial accounts should be stronger than retail accounts.  Examiners have been directed to formally assess financial institutions’ use of the guidance supplement beginning in January 2012.  If your institution is not fully compliant at that point, a reasonable action plan as to what the institution is doing to become compliant with corresponding time frames should be in place.  The supplemental guidance applies to traditional Internet banking transactions, as well as mobile banking, mobile payments, telephone banking, if high-risk transactions are being conducted, voice response units, and online banking systems that do not allow transfers, but allow access to check images where nonpublic personal information is visible.	http://www.ffiec.gov/pdf/Auth-ITS-Final%206-22-11%20(FFIEC%20Formated).pdf

January 31, 2012	FDIC Revised Guidance—Payment Processors	The FDIC has recently seen an increase in the number of relationships between financial institutions and payment processors in which the payment processor, who is a deposit customer of the financial institution, uses its relationship to process payments for third-party merchant clients.  Payment processors typically process payments either by creating and depositing remotely created checks (RCCs)—often referred to as “Demand Drafts”—or by originating Automated Clearing House (ACH) debits on behalf of their merchant customers.  The payment processor may use its own deposit account to process such transactions, or it may establish deposit accounts for its merchant clients.  The FDIC is releasing this revised guidance on payment processor relationships.	http://www.fdic.gov/news/news/financial/2012/fil12003.html#cont

March 16, 2012	FinCEN CTR Aggregation Guidance	In response to confusion and requests by financial institutions, the Financial Crimes Enforcement Network (FinCEN) issued guidance on March 16, 2012, to clarify how and when to aggregate cash transactions that exceed $10,000 on a Currency Transaction Report (CTR) for businesses with common ownership.  FinCEN reminds us that financial institutions are required to aggregate multiple currency transactions that exceed $10,000 and complete a CTR when it has knowledge that the transactions are conducted by or on behalf of any person in any one business day. 	http://www.fincen.gov/statutes_regs/guidance/html/FIN-2012-G001.html

April 2012	Federal Reserve—CHARM Booklet	The Federal Reserve updated the Consumer Handbook on Adjustable Rate Mortgages (CHARM) booklet in April 2012.  The booklet has been updated to include agency information for the Consumer Financial Protection Bureau (CFPB) among other items.	http://files.consumerfinance.gov/f/201204_CFPB_ARMs-brochure.pdf

April 30, 2012	National Labor Relations Board Posting Requirement
(Right to Organize)	The National Labor Relations Board (NLRB) requires employers to post notices informing employees of their right to organize under the National Labor Relations Act.  The Employee Rights poster describes the employee’s rights and mediation channels provided under the NLRB, including the employee’s right to organize unions, bargain collectively with their employer, and be protected from unfair labor practices.  The board’s jurisdiction covers the majority of nongovernment employers, including nonprofits, employee-owned businesses, labor organizations, nonunion businesses, and businesses in states with “Right to Work” laws.  Employers can download and print the poster from the NLRB website.  	Federal Register:  www.gpo.gov/fdsys/pkg/FR-2011-08-30/pdf/2011-21724.pdf
FAQs:  http://www.nlrb.gov/404.htm

June 7, 2012	FinCEN Payroll Customer CTR Exemptions	The FinCEN published a final rule on June 7, 2012, amending the Currency Transaction Reporting (CTR) exemption requirements of the Bank Secrecy Act.  The change brings the payroll customer exemption in line with the terminology used in the exemption pertaining to nonlisted businesses.  Specific provisions of the final rule include replacing the term “regularly” with “frequently” for the payroll customer exemption.	http://www.gpo.gov/fdsys/pkg/FR-2012-06-07/pdf/2012-13781.pdf

June 21, 2012	Federal Reserve and OCC—Foreclosure Remediation Framework	The Federal Reserve Bank (FRB) and the Office of the Comptroller of the Currency (OCC) issued a financial remediation framework to be used by independent consultants that have been commissioned by federal banking regulators to conduct reviews of foreclosure practices of the mortgage services found to have deficient mortgage servicing and foreclosure practices.  The framework provided should help ensure that similarly situated borrowers who suffered financial injury as a result of errors in foreclosure actions on their homes are treated similarly.	http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20120621b2.pdf

July 1, 2012	Bank Secrecy Act (FinCEN)—E-Filing	Financial institutions must align their operations and technology platforms to begin filing CTR and SAR forms electronically by July 1, 2012.  Bankers can access the discrete filing function by logging into the BSA E-Filing System and entering a preapproved user ID and password.  FinCEN may grant a limited-duration hardship for those institutions that cannot make the deadline.
FinCEN recognizes that many financial institutions may not have been unable to access the E-Filing System through no fault of their own from July 1st – July 8th, 2012, and/or certain reports were delayed past the required due date for filing BSA-related reports.  FinCEN announced that state and federal regulators were notified of the circumstances and examiners should consider the system delays and unintended errors during when examining the financial institution’s report filings for this period.	http://www.fincen.gov/whatsnew/html/20120221.html




http://www.fincen.gov/whatsnew/html/20120717.html

July 6, 2012	Flood Insurance Reform and Modernization Act of 2012	President Obama signed the Biggert-Waters Flood Insurance Reform and Modernization Act of 2012 into law July 6, 2012, as part of the greater Moving Ahead for Progress in the 21st Century Act, also known as MAP-21.
Two of the Biggert-Waters Act’s main provisions affecting financial institutions, and effective immediately upon signing of the Act, are Sections 100208 and 100203.  Section 100208 provides for an increase in civil monetary penalties, from $350 to $2,000 per flood violation, and eliminates the annual maximum of $100,000.  Section 100203 reauthorizes the National Flood Insurance Program (NFIP) for five years, through September 30, 2017.  Previously, the NFIP was extended for only short periods at a time and required regular government intervention to re-extend the program.  Other sections of the Act appear to require implementing regulations and applicable guidance from the regulatory agencies before they can be implemented.	http://www.gpo.gov/fdsys/pkg/BILLS-112hr4348enr/pdf/BILLS-112hr4348enr.pdf

July 18, 2012	CFPB—Marketing Add-On Products	The CFPB issued their 6th bulletin this year on July 18, 2012.  The bulletin addresses CFPB’s expectations of institutions that market credit card add-on products, such as debt protection, credit score tracking, and identity theft protection to name a few.  The bulletin includes this footnote “Although this bulletin focuses on credit card add-on products, institutions should take the guidance that it provides into consideration when they offer similar products in connection with other forms of credit or deposit services.”  The main expectation is that products are offered in compliance with Federal Consumer Financial Law.  Applicable consumer protections, such as the Truth in Lending Act/Regulation Z, are discussed within the bulletin.  	http://files.consumerfinance.gov/f/201207_cfpb_bulletin_marketing_of_credit_card_addon_products.pdf

July 22, 2012	CFPB—Alternative Mortgage Transaction Parity Act (AMPTA) and the Truth in Lending Act	This is one of the CFPB first rulemakings.  The interim final rule establishes Regulation D pursuant to the Alternative Mortgage Transaction Parity Act (AMTPA) and the Truth in Lending Act.  The interim final rule states the purpose of the regulation is to “balance access to responsible credit and enhanced parity between State and federal housing creditors regarding the making, purchase, and enforcement of alternative mortgage transactions with consumer protection and the interests of the States in regulating mortgage transactions generally.”  According to the regulation, an alternative mortgage transaction means a loan, credit sale or account:
(1) That is secured by an interest in a residential structure that contains one to four units, whether or not that structure is attached to real property, including an individual condominium unit, cooperative unit, mobile home or trailer, if it is used as a residence; (2) That is made primarily for personal, family or household purposes; and (3) In which the interest rate or finance charge may be adjusted or renegotiated.	http://www.gpo.gov/fdsys/pkg/FR-2011-07-22/pdf/2011-18676.pdf

November 16, 2012	Delayed Implementation of Certain New Mortgage Disclosures	On November 16, 2012, the CFPB passed a final rule delaying the effective date for certain new proposed mortgage disclosures.  The mortgage loan disclosures that are being delayed generally require disclosure at application or shortly before consummation of the mortgage loan.  The final rule lists the applicable disclosures along with the section of the Dodd-Frank Act that mandates the disclosure.  The following is a partial listing of the disclosures being delayed taken from the final rule:
•	Disclosure prior to consummation regarding waiver of escrow in connection with the transaction
•	Disclosure regarding cancellation of escrow after consummation
•	Disclosure of monthly payment, including escrow, and initial and fully-indexed rate for variable-rate residential mortgage loan transactions
•	Disclosure of aggregate amount of mortgage originator fees and the amount of fees paid by the consumer and the creditor
•	Disclosure of total interest as a percentage of principal
•	Loan originator identifier requirement
•	Consumer notification of the right to receive a copy of an appraisal
Instead of the provisions taking effect on January 21, 2013, the final rule pushes the effective date to coincide with the effective date of the RESPA/TILA Integrated Disclosure rule.	http://files.consumerfinance.gov/f/201211_cfpb_final-rule_title-XIV-disclosures-extension.pdf

January 1, 2013	Regulation Z—Credit Card Disclosures	Regulation Z requires tabular formats for credit card application and solicitation disclosures, as well as account opening disclosures for credit cards.  One of the required disclosures informs borrowers of the ability to obtain additional information from the regulator’s website.  Since the regulation oversight has changed from the Federal Reserve to the CFPB, the disclosures needed to be tweaked.  The CFPB is giving creditors until January 1, 2013, to use the accurate disclosures.	http://ecfr.gpoaccess.gov/graphics/pdfs/er29jn10.000.pdf:  Form before update
http://ecfr.gpoaccess.gov/graphics/pdfs/er22de11.009.pdf:  Form after update
January 1, 2013	Regulation B—Adverse Action Notices	Under Regulation B, creditors are to provide adverse action notices which include the name and address of the Federal agency which administers compliance with the Equal Credit Opportunity Act.  Financial institutions over $10 billion have until January 1, 2013 for the notices to include the CFPB information since that is now the Federal agency administering compliance.	http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=13b793afbaa040007dc27753d95ce5e4&rgn=div9&view=text&node=12:8.0.2.14.1.0.1.17.2&idno=12

January 1, 2013	Regulation V—Risk- Based Pricing Notices	Regulation V requires creditors to put a statement directing consumers to a website to obtain more information about consumer reports.  This statement is to be on Risk-Based Pricing Notices.  Rather than the Federal Reserve or FTC’s website, the notice should direct borrowers to the CFPB’s website.	http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=da947df869a404e2f078399f343a44bc&rgn=div9&view=text&node=12:8.0.2.14.16.13.1.2.32&idno=12

February 7, 2013
[DELAYED]
A proposed rule dated December 31, 2012 addresses three narrow issues and temporarily delays the effective date of February 7, 2013 until Spring 2013.  The proposed rule can be found here: http://files.consumerfinance.gov/f/201212_cfpb_remittances-proposal.pdf.
On January 22, 2013 the following rule was issued temporarily delaying the effective date of Feb. 7, 2013: http://files.consumerfinance.gov/f/201301_cfpb_remittances-rule_effective-date-delay.pdf.
Once the final rule is published, this Summary will be updated.	Regulation E—Remittance Transfers	The CFPB published this final rule to implement Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which creates a comprehensive new system of consumer protections for remittance transfers sent by consumers in the United States to individuals and businesses in foreign countries.  Consumers transfer 10s of billions of dollars from the United States each year.  However, these transactions were generally excluded from existing federal consumer protection regulations in the United States until the Dodd-Frank Act expanded the scope of the Electronic Fund Transfer Act to provide for their regulation.
An amendment to this final rule was issued by the CFPB on August 7, 2012, as the bureau concluded that those institutions that consistently conduct 100 or fewer remittance transfers per year do not provide transfers in the “normal course of business” and therefore, are not subject to the new requirements.  However, if a company that provided 100 or fewer remittance transfers in the previous year provides more than 100 remittance transfers in the current year, the rule provides a reasonable transition period to come into compliance.  The amendment to the final rule also adjusts certain rules regarding remittance transfers that consumers schedule several days in advance of the transfer.  The changes are designed to address concerns that remittance transfer providers might stop offering transfers scheduled in advance due to concerns about compliance costs under the new requirements.	http://www.gpo.gov/fdsys/pkg/FR-2012-02-07/pdf/2012-1728.pdf
The amendment to the final remittance transfer rule: http://files.consumerfinance.gov/f/201208_CFPB_remittance_rule.pdf

March 31, 2013	Bank Secrecy Act (FinCEN)	The mandatory use of new CTR and SAR forms was extended and will be in effect March 31, 2013.  	http://www.fincen.gov/news_room/nr/html/20120217.html

June 1, 2013	Regulation Z—Escrow Requirements	As taken from the CFPB’s website, “The rule implements statutory changes made by the Dodd-Frank Act that lengthen the time for which a mandatory escrow account established for a higher-priced mortgage loan must be maintained. The rule also exempts certain transactions from the statute’s escrow requirement. The primary exemption applies to mortgage transactions extended by creditors that operate predominantly in rural or underserved areas, originate a limited number of first-lien covered transactions, have assets below a certain threshold, and do not maintain escrow accounts on mortgage obligations they currently service.”  See: http://files.consumerfinance.gov/f/201301_cfpb_escrow-requirements-rule_summary.pdf for a detailed summary of the rule.	http://files.consumerfinance.gov/f/201301_cfpb_final-rule_escrow-requirements.pdf

June 1, 2013	Regulation Z—Loan Originator Compensation Requirements [Sections 1026.36(h) and 1026.36(i) only].	As taken from the CFPB’s website, “The final rule revises or provides additional commentary on Regulation Z’s restrictions on loan originator compensation, including application of these restrictions to prohibitions on dual compensation and compensation based on a term of a transaction or a proxy for a term of a transaction, and to recordkeeping requirements. The amendments to § 1026.36(h) and (i) are effective on June 1, 2013. All other provisions of the rule are effective on January 10, 2014.
Section 1026.36(h) restricts mandatory arbitration agreements in residential mortgage loans and extensions of open-end credit secured by the consumer’s principal dwelling. It also prohibits provisions of these loans and related agreements from being applied or interpreted to bar a consumer from bringing a Federal claim in court.
Section 1026.36(i) prohibits financing single-premium credit insurance for home equity lines of credit and closed-end credit transactions secured by the consumer’s principal dwelling.”
See http://files.consumerfinance.gov/f/201301_cfpb_loan-originator-compensation-rule_summary.pdf for a detailed summary of the rule.	http://files.consumerfinance.gov/f/201301_cfpb_final-rule_loan-originator-compensation.pdf

January 10, 2014	Regulation Z—Ability to Repay  and Qualified Mortgage Standards	As taken from the CFPB’s website, “the final rule implements sections 1411 and 1412 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which generally require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for “qualified mortgages.” The final rule also implements section 1414 of the Dodd-Frank Act, which limits prepayment penalties. Finally, the final rule requires creditors to retain evidence of compliance with the rule for three years after a covered loan is consummated.”  See http://files.consumerfinance.gov/f/201301_cfpb_ability-to-repay-summary.pdf for a detailed summary of the rule.
http://files.consumerfinance.gov/f/201301_cfpb_final-rule_ability-to-repay.pdf
FYI:  There is a companion proposal that accompanied this final rule that can be found at http://files.consumerfinance.gov/f/201301_cfpb_concurrent-proposal_ability-to-repay.pdf.

January 10, 2014	Regulation Z—Higher-Cost Mortgage and Homeowner-
ship Counseling
Regulation X—Homeowner-
ship Counseling	As taken from the CFPB’s website, “The final rule amends Regulation Z (Truth in Lending) by expanding the types of mortgage loans that are subject to the protections of the Home Ownership and Equity Protections Act of 1994 (HOEPA), revising and expanding the tests for coverage under HOEPA, and imposing additional restrictions on mortgages that are covered by HOEPA, including a pre-loan counseling requirement. The final rule also amends Regulation Z and Regulation X (Real Estate Settlement Procedures Act) by imposing certain other requirements related to homeownership counseling, including a requirement that consumers receive information about homeownership counseling providers.”  See: http://files.consumerfinance.gov/f/201301_cfpb_high-cost-mortgage-rule_summary.pdf for a detailed summary of the rule.	http://files.consumerfinance.gov/f/201301_cfpb_final-rule_high-cost-mortgages.pdf

January 10, 2014	Regulation X and Z—Mortgage Servicing Rules	As taken from the CFPB’s website, “the Regulation X final rule implements Dodd-Frank Act sections addressing servicers’ obligations to correct errors asserted by mortgage loan borrowers; to provide certain information requested by such borrowers; and to provide protections to such borrowers in connection with force-placed insurance. Additionally, this final rule addresses servicers’ obligations to establish reasonable policies and procedures to achieve certain delineated objectives; to provide information about mortgage loss mitigation options to delinquent borrowers; to establish policies and procedures for providing delinquent borrowers with continuity of contact with servicer personnel capable of performing certain functions; and to evaluate borrowers’ applications for available loss mitigation options. Further, this final rule modifies and streamlines certain existing servicing-related provisions of Regulation X.  The Regulation Z final rule implements Dodd-Frank Act sections addressing initial rate adjustment notices for adjustable-rate mortgages, periodic statements for residential mortgage loans, prompt crediting of mortgage payments, and responses to requests for payoff amounts. This final rule also amends current rules governing the scope, timing, content, and format of disclosures to consumers regarding the interest rate adjustments of their variable-rate transactions.”
See http://files.consumerfinance.gov/f/201301_cfpb_servicing-rules_summary.pdf for a detailed summary of the mortgage servicing final rules.	Regulation X: http://files.consumerfinance.gov/f/201301_cfpb_final-rule_servicing-respa.pdf
Regulation Z: http://files.consumerfinance.gov/f/201301_cfpb_final-rule_servicing-tila.pdf

January 10, 2014	Regulation Z—Loan Originator Compensation Requirements	As taken from the CFPB’s website, “The final rule revises or provides additional commentary on Regulation Z’s restrictions on loan originator compensation, including application of these restrictions to prohibitions on dual compensation and compensation based on a term of a transaction or a proxy for a term of a transaction, and to recordkeeping requirements. The final rule also establishes tests for when loan originators can be compensated through certain profits-based compensation arrangements. At this time, the Bureau is not prohibiting payments to and receipt of payments by loan originators when a consumer pays upfront points or fees in the mortgage transaction.”  See http://files.consumerfinance.gov/f/201301_cfpb_loan-originator-compensation-rule_summary.pdf for a detailed summary of the Regulation Z loan originator compensation rule.	http://files.consumerfinance.gov/f/201301_cfpb_final-rule_loan-originator-compensation.pdf

January 18, 2014	Regulation Z—Appraisals for Higher-Priced Mortgage Loans	As taken from the FDIC’s final rule (the Dodd-Frank Act mandated the federal regulatory agencies each issue this final rule), “the revisions to Regulation Z implement a new provision requiring appraisals for ‘higher-risk mortgages’ that was added to TILA by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act or Act). For mortgages with an annual percentage rate that exceeds the average prime offer rate by a specified percentage, the final rule requires creditors to obtain an appraisal or appraisals meeting certain specified standards, provide applicants with a notification regarding the use of the appraisals, and give applicants a copy of the written appraisals used.”  See http://files.consumerfinance.gov/f/201301_cfpb_tila-appraisals-rule_summary.pdf for a detailed summary of the Regulation Z appraisal rule.	http://www.fdic.gov/news/board/2013/2013-01-15_notice_dis-a_res.pdf

January 18, 2014	Regulation B—Disclosure and Delivery Requirements for Copies of Appraisals and Other Written Valuations	As taken from the CFPB’s website, “the final rule revises Regulation B to implement an ECOA amendment concerning appraisals and other valuations that was enacted as part of the Dodd-Frank Act. In general, the revisions to Regulation B require creditors to provide to applicants free copies of all appraisals and other written valuations developed in connection with an application for a loan to be secured by a first lien on a dwelling, and require creditors to notify applicants in writing that copies of appraisals will be provided to them promptly.”  See http://files.consumerfinance.gov/f/201301_cfpb_ecoa-appraisals-rule_summary.pdf for a detailed summary of the Regulation B appraisal rule.	http://files.consumerfinance.gov/f/201301_cfpb_final-rule_ecoa-appraisals.pdf

May 30, 2015	FEMA—Updated Standard Flood Hazard Determination Form	The FEMA Form number for the Standard Flood Hazard Determination Form (SFHDF) has been changed from FEMA Form 81-93 to FEMA Form 086-0-32 and the form has been revised.  FEMA will be allowing users until May 30, 2015 (when the form is set to expire), for Lender and Determination Company systems changes before final adoption of the form is required.  The form was released by FEMA in June of 2012.	http://www.fema.gov/library/viewRecord.do?id=1394