Pub. 5 2015-2016 Issue 4

16 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S FEATURE ARTICLE In the last few months, there have been some important and interesting developments, which could affect your bank. SILVIA GARCIA MAGGIO ASSOCIATE GENERAL COUNSEL COMPLIANCE ALLIANCE Silvia’s Compliance Hot Topics - October 2015 I n our fast-paced industry, it can be easy to miss important updates on the day-to-day. In the last few months, there have been some important and interesting develop- ments, which could affect your bank. From my perspective, the top three “need-to-know” up- dates include preparing for the Flood Escrow Rule in 2016; the Citizens Enforcement Action; and what the USA Freedom Act means for banks. Are banks going to be required to escrow flood insurance? Are there any exceptions? What about existing loans. The Final Flood Regulations released this past June implemented the requirement that lenders escrow flood insurance premiums and fees for all loans secured by residential real property (or mobile homes) beginning January 1, 2016. In addition, lenders will be required to deliver new notices notifying borrowers of the escrow requirement. Following these changes, the model forms in the appendices have been revised and updated to include the escrow lan- guage. Those newmodel forms (or substantially similar language) will also need to be used beginning January 1, 2016. The good news is that there are some exemption, including: the small creditor exemption; subordinate liens on a covered property; loans on property covered by an association’s flood coverage (e.g., RCBAP coverage); business and agricultural-purpose loans, HELOCs; non-performing loans and short-term loans (12 months or less). Existing loans are not wholly exempt from the escrow requirement. Lenders are required to offer borrowers the option to escrow flood insurance premiums and fees on covered loans that are outstanding as of January 1, 2016. However, that change in flood procedures does not have to be rolled out at the same time as the escrow requirement on new transactions. The flood updates give a grace period to come into compliance with those requirements and there- fore, lenders must give notice of the availability of flood escrow on existing accounts by June 30, 2016. That model form is also provided in the appendices to the regulation. What is the Citizens Bank Consent Or- der andWhat does thatmean formy bank? A CFPB Consent Order was entered against RBS Citizens Group, Inc. for Unfair Acts and Practices related to deposit discrepancies on August 11, 2015. Per the consent order, Citizens had a system in place wherein if the amount of a discrepancy were below a certain threshold,