Consumer Financial Services Alert - September 22, 2009 September 22, 2009
In This Issue

FRB to Issue Compliance Ratings to Nonbank Subsidiaries of Bank Holding Companies and Foreign Banking Organizations

The FRB established a new Consumer Compliance Supervision Program for nonbank subsidiaries of bank holding companies and foreign banking organizations. The Program will monitor compliance of activities covered by consumer protection laws and regulations, establish a new rating system, and investigate consumer complaints.

The Program formally implements a pilot program that was launched by the FRB in conjunction with the FTC and the OTS in 2007. The pilot program, however, was not as extensive as the Program currently being implemented. Under the Program, the FRB, through targeted and full scope examinations, will compile risk profiles of, and issue compliance ratings to, nonbank subsidiaries. Click here for the FRB’s letter announcing the Program.

FDIC Issues Final Rule Extending the Increase of the Standard Maximum Deposit Insurance Amount and Finalizing Revocable Trust Account and Mortgage Servicing Account Regulations

The FDIC adopted a final rule which extends the increase in the standard maximum deposit insurance amount to $250,000 through December 31, 2013. The final rule also finalizes, without substantive change, the FDIC’s revisions to its mortgage servicing account and revocable trust account regulations made by interim rules in 2008 that were reported in the October 21, 2008 and October 7, 2008 Consumer Financial Services Alerts. The final rule is effective October 19, 2009. Click here for the final rule.

FDIC Launches Foreclosure Prevention Initiative to Prevent Foreclosure Rescue Scams

The FDIC began a program to help prevent unnecessary and fraudulent foreclosure rescue scams by (1) providing a telephone and Internet referral service via the FDIC's call center or website which directs borrowers to legitimate counselors, mortgage servicers, and state and federal law enforcement agencies, and (2) creating a foreclosure information “tool kit” for borrowers. Click here for more information on the initiative, including access to the tool kit.

FDIC Eliminates Three Transfer Sublimit for Savings Deposit Withdrawals

The FDIC issued a final rule amending its regulations to eliminate the three transfer sublimit on checks, debit cards, or similar order made by the depositor and payable to third parties from savings deposits. The overall six transfer limit on pre-authorized or automatic withdrawals will still exist. The final rule parallels a recent amendment to Regulation D by the FRB which took effect on July 2, 2009. The FDIC’s final rule was effective on September 15, 2009. Click here for the final rule.

Massachusetts Issues Industry Letter on SAFE Act Requirements

The Massachusetts Division of Banks published an industry letter alerting lenders of actions it has taken to implement legislation enacted by Massachusetts in compliance with the federal Secure and Fair Enforcement of Mortgage Licensing Act of 2008 (reported in the August 11, 2009 Consumer Financial Services Alert). Actions taken include filing of emergency regulations, which became effective on September 15, 2009, and publishing FAQs. Click here for the letter and here for the FAQs.