COMPLIANCE CORNER with Timothy A. Schenk KBA Assistant General Counsel tschenk@kybanks.com
COMPLIANCE QUESTIONS & ANSWERS
Last month we hosted compliance, risk and trust roundtables that created good discussions about pertinent compliance issues. We wanted to share highlights of those discussions and answers. Please feel free to reach out to me at tschenk@kybanks.com with additional questions. We have been receiving EIP stimulus payments under the latest stimulus bill for customers who deceased in 2020. How should these payments be handled? Payments for customers who deceased in 2020 under the third stimulus must be returned. The IRS provided specific instructions for returning an economic impact payment (EIP) sent to a person who deceased in 2020 and received a EIP under the third stimulus bill. The information is available at iris.gov (https://www.irs.gov/newsroom/returning-an-economic-impact-payment), but in summary: If the payment was a paper check and it hasn’t been cashed: • Write “Void” in the endorsement section on the back of the check. • Mail the voided Treasury check immediately to the appropriate IRS location for your state. • Don’t staple, bend or paper clip the check. • Include a note stating the reason for returning the check. If the payment was a paper check and you have cashed it, or if the payment was a direct deposit:
We are only doing escrow accounts for loans that are HPML. We have one loan on the books that was done back in 2013 that is not a HPML. The Loan Officer let them do an escrow account because they wanted it. Our bank assets are less than 200,000,000. We also originated less than 1,000 loans during the previous calendar year. We are in a distressed and underserved county in Kentucky. Do we still have to do escrow accounts on a HPML under the new rule? Also, how does this new rule interplay with the escrow requirements for flood insurance? The best way to explain it is that there are two buckets: one for HPML and one for flood. The two are mutually exclusive. Let’s start with the HPML escrow exemption. The new rule, “TILA section 129D(c)(2), as amended by the EGRRCPA, requires the Bureau to issue regulations to exempt from the HPML escrow requirement any loan made by an insured depository institution or insured credit union secured by a first lien on the principal dwelling of a consumer if: (1) the institution has assets of $10 billion or less; (Meet). (2) the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; (Meet). (3) certain of the existing Regulation Z HPML escrow exemption criteria, or those of any successor regulation, are met.” Those criteria, referenced in part three (3) above, are:
• Submit a personal check, money order, etc., immediately to the appropriate IRS location for your state. • Write on the check/money order made payable to “U.S. Treasury” and write “2020EIP,” and the taxpayer identification number (Social Security number, or individual taxpayer identification number) of the recipient of the check. • Include a brief explanation of the reason for returning the EIP. For Kentucky residents, the check must be returned to: Atlanta Refund Inquiry Unit, 4800 Buford Highway, Mail Stop 112, Chamblee, Georgia 30341.
20 | KENTUCKY BANKER MAGAZINE
(1) the requirement that the creditor extend credit in a rural or underserved area (§ 1026.35(b)(2)(iii)(A)); (Most likely a yes, but the official comment on the criteria states): A. In general, whether the rural-or-underserved test is satisfied depends on the creditor’s activity during the preceding calendar year. However, if the application for the loan in question was received before April 1 of the current calendar year, the creditor may instead meet the rural-or-underserved test based on its activity during the next-to-last calendar year. This provides creditors with a grace period if their activity meets the rural-or-underserved test (in § 1026.35(b) (2)(iii)(A)) in one calendar year but fails to meet it in the next calendar year.
