Week of Sept. 30

In This Issue…

Agencies finalize rule raising residential real estate appraisal threshold

On Friday, federal banking agencies issued a final rule that raises the appraisal threshold for residential real estate transactions to $400,000. The threshold has been at $250,000. The new threshold addresses numerous concerns raised industry stakeholders over the time and cost of appraisals.

Under the rule, transactions that qualify for the exemption still need to obtain an evaluation consistent with safe and sound banking practices. This evaluation will provide an estimate of the market value of the property without requiring the involvement of a state licensed or certified appraiser. The final rule does not apply to loans sold to or guaranteed by the FHA, HUD, VA, Fannie Mae, or Freddie Mac – which will still require an appraisal, according to each agency’s rules.

For residential real estate transactions exempted from the appraisal requirement as a result of the revised threshold, regulated institutions must obtain an evaluation of the real property collateral that is consistent with safe and sound banking practices. (emphasis added).

Click here to see the notice.

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SAFE Banking Act will benefit customers

Above is the headline from ABA president and CEO Rob Nichols.

In a press conference late last week, Nichols congratulated Reps. Ed Perlmutter (D-Colo.) and Steve Stivers (R-Ohio) on getting H.R. 1595 over the finish line. It’s a “landmark bill that (will) help rectify the differences between federal and state law with regard to cannabis in the 33 states that have voted to legalize (cannabis for either medical or recreational purposes),” Nichols said.

“The winners are the (bank) customers and clients of banks in these states,” he said. “It’s the plumber, it’s the electrician, it’s the accountant, it’s the lawyer than in many cases are being denied access to banking products and services in these states.”

The bill – which Nichols noted resulted from thoughtful bipartisan collaboration – would allow banks to serve cannabis-related businesses in states where it is legal, and would prohibit federal regulators from taking action against a bank solely because cannabis is involved.

The ABA and the state bankers associations in the Alliance will now turn their collective efforts to the Senate this fall. Thursday, Senate Banking Committee Chairman Mike Crapo (R-Idaho) said the Senate’s version of a cannabis banking bill might include additional measures not included in the SAFE Banking Act. Additions could include anti-money laundering measures, protocols for preventing “legacy cash” at unbanked marijuana businesses from being mixed with laundered funds, clarification on interstate banking and measures to address the safety of cannabis products.

Crapo indicated he hopes for a Senate vote on his version of the bill by the end of the year.

“This is an issue in which I have seen strong support not only across the country from various banking institutions– even the small community banks in states that don’t have the issue – but also among colleagues on both sides of the aisle,” Crapo said. “I think there will be good support for it.”

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Banker op-ed: Lack of interoperability in real-time payments could limit choice

A Missouri banker and an ABA Board member recently published an op-ed cautioning about the importance of interoperability in connection with the Federal Reserve’s decision to create its own version of a “real-time payments” mechanism.

“If we don’t have interoperability on day one, the payments system will become fragmented,” warned Luanne Cundiff, president and CEO of First State Bank of St. Charles in St. Charles, Missouri.

Like many traditional community bankers, Cundiff faced the dilemma of joining the Clearing House’s RTP network or waiting for the Federal Reserve to deliver another product. Ultimately, the bank decided to begin working with its core provider to plug into the Clearing House RTP network to meet customers’ needs, rather than waiting for FedNow, which is not expected to be operational until 2023 or 2024.

In her op-ed, Cundiff emphasized the Fed should focus on making interoperability an integral part of FedNow as the new system is being developed, rather than attempting to “retrofit” a solution later.

“I couldn’t agree more,” OBA President and CEO Roger Beverage said. “Interoperability is the ultimate key to an effective real-time payments network. If FedNow is not designed with that goal in mind, the product will further fragment the industry and make the system more complicated for consumers because most of the traditional community banks in Oklahoma and elsewhere simply don’t have the resources to force its creation.

“We’ll continue to watch the Fed’s progress and will keep (member banks) informed.  It’s going to take a while, but if the process is managed correctly, then this issue (lack of interoperability) should not become a roadblock.”

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OBA education corner …

October is here and we can see the cool air coming around the corner for this weekend (we hope)! As we away the blessed respite from Oklahoma’s summer, check out the upcoming seminar, webinars, schools and conferences:

  • FFIEC Cyber Compliance Update, Oct. 8, webinar — A solid understanding of all the cybersecurity-related guidance is key in ensuring all aspects of cybersecurity compliance are being addressed.
  • Violence in Your Workplace: Prevention & Response, Oct. 8, webinar — This session will benefit you not only in your work life, but your personal life as well. Have you ever thought how you would react in a robbery? A violent confrontation? An active shooter situation?
  • Right of Rescission – Review and Update, Oct. 9, webinar — This two-hour program explains all of the rescission rules. It provides easy to understand answers to questions. and it provides a system to assure compliance.
  • Understanding Regulation CC and the New Amendments, Oct. 10, webinar — This webinar provides a review of the most recent amendments to Regulation CC that impact fraud loss allocation and funds availability amounts, along with the customer disclosure requirements for implementing these changes.
  • Opening Business Accounts, Oct. 15, webinar — This two-hour fast-paced webinar examines not only the documentation requirements on business entities available in most states but provides clarity on how to identify who has authority to open and transact on behalf of the entity.
  • 2019 Real Estate Lending Compliance Seminar, Oct. 16, Oklahoma City — The program provides an overview of the real estate lending requirements from ten regulations, along with comprehensive coverage of selected topics, policy suggestions, employee training tips, audit techniques and steps to eliminate past problems.
  • Loan Underwriting Mistakes, Oct. 17, webinar — This program is focused on underwriting primarily commercial and industrial (C&I) loans and will cover common underwriting mistakes that can ultimately lead to problem loans and loan losses.
  • Annual BSA Training for the Frontline, Oct. 17, webinar — This is a look at all the key components of BSA from the frontline point of view including Customer Due Diligence (CDD) rules and their impact on our policy and procedures.
  • Mortgage Servicing Compliance, Oct. 18, webinar — This interactive session will provide an in-depth understanding of rules, which is imperative for anyone performing duties in consumer mortgage servicing areas of your financial institution.
  • E-Sign for Lending and Critical E-Sign Implementation Issues, Oct. 22, webinar — This informative session will be helpful to ensure compliance with e-banking and is targeted for compliance officers, lending staff and loan operations, operations managers, and others responsible for managing online banking, E-SIGN compliance, e-statements, and e-disclosures.
  • Loan Documentation for Secured Commercial Lending, Nov. 12, Oklahoma City — Attend this proactive seminar and receive a thorough overview of commercial lending “loan documentation” with an emphasis on “secured” transactions.
  • Loan Documentation for “Commercial Real Estate” Lending Transactions, Nov. 13, Oklahoma City — Attend this proactive seminar and receive a thorough overview of commercial real estate (CRE) loan documentation.
  • Human Resources Seminar, Nov. 14, Oklahoma City — Whether you’re a current HR manager, recently appointed HR manager, are new to HR or have a non-HR job with HR responsibilities, this course can give you the know-how you need.

Also, save the date and plan ahead now! The dates and site for the 2020 OBA Convention are set! The Convention will take place May 18-20 at the Doubletree-Warren Place in Tulsa. Keep an eye out in the upcoming months for more information!

Finally, the Oklahoma Bankers Chair in Finance and the Center for Financial Studies invites you to a dinner speech by Robert L. Reynolds, president and CEO of Putnam Investments.  The speech, titled “From Here to Security: A Discussion of Retirement Security int he U.S.” will be held on Oct. 18 at the Sam Noble Museum in Norman. To register, or for more information, please visit price.ou.edu/obacfs or contact Melissa Bishop (405.325.5591/mbishop@ou.edu). The registration deadline is Oct. 10.

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