Kristy Curl is a Director with Treliant. She assists financial institutions of all sizes to establish robust compliance programs and perform compliance reviews related to deposits, lending, and Bank Secrecy Act/Anti-Money Laundering (BSA/AML) requirements. She also develops and conducts board, executive, and staff-level regulatory training programs. At Treliant, Kristy has…
- Source: federalregister.gov
As the CFPB has provided updates to the HELOC Booklet, now is a good time to review the various channels through which your financial institution is obtaining HELOC applications to ensure the most recent version of the booklet is being provided to consumers. Treliant can help assist financial institutions and non-financial institutions in analyzing their mortgage product offerings, delivery channels, and loan application operations to ensure compliance with all regulatory requirements.
On Friday, December 16th, the Consumer Financial Protection Bureau (CFPB) announced that an updated version of the “What You Should Know about Home Equity Lines of Credit” also known as the HELOC Booklet had been made available for download from the CFPB’s website. The CFPB stated that the updates were made to align with their educational efforts, to be more concise, and to improve readability and usability. The design of the booklet is similar to that of the “Your Home Loan Toolkit: A Step-by-Step Guide” and the “Consumer Handbook on Adjustable-Rate Mortgages” (also known as the CHARM booklet).
The HELOC booklet is a required disclosure with specific timing requirements under Regulation Z. If your bank provides paper HELOC applications, the HELOC booklet should be printed and provided at the same time a consumer obtains a paper application. For audit purposes, financial institutions have always been allowed to use up their paper supply of the older version of the booklet before having to update their application packages with the newest version. What Compliance departments have to be cognizant of are the following:
- Employees who store supplies in their desks;
- Branch staff who copy existing pages/pamphlets without determining whether it is the most recent version;
- Loan staff who run out their stock of the HELOC booklet and stop providing it all together; and
- Other application delivery channels (websites, mobile applications, fintech applications, etc.) where a paper supply would not be used.
For online application channels, whether owned/hosted by the financial institution or a fintech company/partner, the updated version should begin to be provided within a reasonable time of the CFPB’s announcement. There are several options regarding how the HELOC booklet/Disclosure can be provided, but it is still required at the time of application and not along with the group of disclosures that can be provided within 3 days of application. Compliance departments should:
- Check with their software vendors, fintech providers, or internal IT or Marketing Departments to ensure that links to the booklet are working on all websites;
- Verify that updates to links are scheduled to be made;
- Confirm that the updates were made as scheduled and are working properly; and
- Review processes that provide the HELOC booklet via email and ensure the email packages are updated to include the new version of the booklet.