What 2021 will mean for the CRA, PPP and more

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The pandemic may have brought attention away from compliance and regulatory changes, but some of that may return this year. Regulators are weighing reforms regarding the Community Reinvestment Act, Home Mortgage Disclosure Act, Paycheck Protection Program and more.

By Mary Thorson-Wright


While community bankers had some long nights in 2020, few could be chalked up to new regulatory compliance changes. Looking to 2021 and beyond, a few final compliance deadlines and several formative issues will likely shape compliance requirements for community banks. Here are the regulatory changes on the horizon that you should know.

“ICBA’s view is, if you are going to reject applications for PPP loan forgiveness for any nonqualifying purpose, the prudent practice is to comply with Regulation B adverse action notice requirements.”
—Mickey Marshall, ICBA

Regulation B and the Paycheck Protection Program (PPP)

Does Regulation B cover applications for loan forgiveness under the PPP? There was no specific guidance from the CFPB about Regulation B and the program since it issued FAQs about the Small Business Administration’s PPP loan application process in May 2020.

“ICBA’s view is, if you are going to reject applications for PPP loan forgiveness for any nonqualifying purpose, the prudent practice is to comply with Regulation B adverse action notice requirements,” says Mickey Marshall, ICBA’s director of regulatory legal affairs. “While not technically a loan, it is related to a loan transaction.”

Community Reinvestment Act (CRA)

The Office of the Comptroller of the Currency (OCC) issued a final rule of CRA changes. The new rules, which are based on bank type—small and intermediate, wholesale and limited purpose, and all other banks—become effective between Oct.1, 2020, and Jan. 1, 2024. Most rules for small and intermediate banks became effective this past October. The OCC rule is primarily based on loan dollar amounts; bigger loans get more credit. The rules require all banks to record, track and report the location of deposits. Community banks should evaluate their coverage, capacity for collecting and maintaining data, and systems for reporting.

The Federal Reserve Board issued an advance notice of proposed rulemaking for CRA changes. The comment period goes until Feb. 16.

The Fed proposes a qualifying activities list, preapproval process, increased transparency and a clearer, more quantitative component for a two-tiered system of small and large banks. It excludes small banks from geocoding deposits. Small banks can choose to follow the current small bank rules or opt into the new performance metrics.

As of December, the final threshold for small bank size had not been set. The proposal is rooted in the number of loans, regardless of dollar amount, and, specifically, loans to small businesses and low- and moderate-income families.

Flood insurance

The Federal Emergency Management Agency (FEMA) published a final rule to codify certain provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014, as well as to clarify existing NFIP rules. The final rule will become effective Oct. 1, 2021.

Home Mortgage Disclosure Act (HMDA)

In 2019, the Consumer Financial Protection Bureau (CFPB) finalized a HMDA provision to extend the temporary threshold for collecting and reporting data about open-end lines of credit for two years (Jan. 1, 2022). For data collection years 2020 and 2021, financial institutions that originated fewer than 500 open-end lines of credit in either of the two preceding calendar years do not need to collect and report that data.

The rule includes partial exemptions from some HMDA requirements in the Economic Growth, Regulatory Relief, and Consumer Protection Act, or S.2155.

The CFPB issued a separate final rule in April 2020 to adjust reporting thresholds. The closed-end threshold (100) was effective July 1, 2020, and the open-end threshold (200) is effective Jan. 1, 2022.

Debt collection practices

CFPB issued a final rule in October 2020 that is effective one year from publication in the Federal Register amending Regulation F, which implements the Fair Debt Collection Practices Act (FDCPA). The final rule addresses, among other things, communications in connection with debt collection and prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection. Watch for developments on further issues in 2021 and beyond.

Implementation of small business loan reporting

Section 1071 of the Dodd-Frank Act amends the Equal Credit Opportunity Act (ECOA) to require reporting of specific categories of business loans. The anticipated rulemaking will require that business lenders implement new policies and procedures to ensure compliance. The CFPB’s Small Business Advisory Review Panel issued an outline of the proposals it is considering.

Bank Secrecy Act (BSA)

The Financial Crimes Enforcement Network (FinCEN) and Federal Reserve Board invited comment on a proposed rule to amend the recordkeeping and travel rule regulations under the BSA.

Consumer access to financial records

The CFPB issued a notice requesting information related to consumer access to financial records under Section 1033 of Dodd-Frank. It seeks comments and information on costs and benefits of consumer data access; competitive incentives; standard-setting; access scope; consumer control and privacy; and data security and accuracy.

Role of supervisory guidance

In October, the federal financial regulatory agencies invited comment on their use of supervisory guidance for regulated institutions.


Mary Thorson Wright, a former Federal Reserve examiner, is a writer in Virginia.

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