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#2282850 - 03/30/23 06:31 PM CFPB releases 1071 final rule
InFairness, CRCM Offline
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InFairness, CRCM
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USA
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#2282867 - 03/30/23 08:05 PM Re: CFPB releases 1071 final rule InFairness, CRCM
TryingtoComply Offline
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888 pages - oh joy!
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#2282872 - 03/30/23 10:20 PM Re: CFPB releases 1071 final rule InFairness, CRCM
TryingtoComply Offline
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Has anyone found the streamlined data collection form?
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#2282873 - 03/30/23 10:26 PM Re: CFPB releases 1071 final rule InFairness, CRCM
TryingtoComply Offline
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Just found it. Appendix E
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#2282894 - 03/31/23 02:03 PM Re: CFPB releases 1071 final rule InFairness, CRCM
InFairness, CRCM Offline
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USA
A few changes from the NPRM I've noted so far:
  • Phased implementation based on number of covered loans originated;
  • Addition of LGBTQ+ status to demographic information to be collected;
  • Increase of number covered loans to trigger reporting from 25 to 100;
  • Factoring, leases, amendments, renewals (even renewals with increase in loan amount) are not covered; and
  • There are no limits on the number of demographic classifications a business owner may choose.
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#2282903 - 03/31/23 03:09 PM Re: CFPB releases 1071 final rule InFairness, CRCM
Adam Witmer Offline
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Great observations, InFairness, CRCM. I hadn't caught the unlimited number of demographic classifications a business owner may choose, but who has had time to read all 888 pages yet. ;-)

For anyone interested, I put together an overview of the 1071 final rule (with a few of my observations) at: https://www.compliancecohort.com/1071-overview
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#2282908 - 03/31/23 03:47 PM Re: CFPB releases 1071 final rule InFairness, CRCM
raitchjay Online
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OK
I think i know the answer to this question (probably "yes") but the answer to this question will make a huge difference for my bank as far as counting covered transactions. I'm digging in to it as we speak, but the question is: are sole propietorships (self-employed folks) a covered "small business concern" under the new rule?
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#2282909 - 03/31/23 03:53 PM Re: CFPB releases 1071 final rule InFairness, CRCM
Adam Witmer Offline
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For the reasons discussed herein, the Bureau is finalizing § 1002.106(a) as proposed, to
define the term business as having the same meaning as the term “business concern or concern”
in 13 CFR 121.105.

As noted above, this definition includes elements such as being “a business entity
organized for profit” that has “a place of business located in the United States” and “operates
primarily within the United States or . . . makes a significant contribution to the U.S.
economy.”510 This definition also provides that a business concern may take a number of
different legal forms, including a trust, sole proprietorship, partnership, limited liability
company, corporation, joint venture, or cooperative, except that where the form is a joint venture
there can be no more than 49 percent participation by foreign business entities in the joint
venture.
511 The Bureau is not providing interpretations of this SBA regulation in subpart B, as
requested by some commenters, because the Bureau believes that existing SBA interpretations
are responsive to commenters’ request for clarification. For example, financial institutions are
not required to collect and report data for not-for-profit applicants, because they are not
“organized for profit” and are thus not a “business concern.”512 Moreover, the Bureau expects
that applications from foreign businesses will fall outside the scope of the rule’s data collection
and reporting requirements unless they have a place of business located in the United States and
they either operate primarily within the United States or they make a significant contribution to
the U.S. economy through payment of taxes or use of American products, materials, or labor.
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#2282910 - 03/31/23 03:57 PM Re: CFPB releases 1071 final rule InFairness, CRCM
raitchjay Online
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OK
Thanks Adam (i obviously hadn't gotten to that definition yet). Appreciate it.
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#2282911 - 03/31/23 03:58 PM Re: CFPB releases 1071 final rule InFairness, CRCM
InFairness, CRCM Offline
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There are also some changes in the technical data specifications.
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#2282913 - 03/31/23 04:05 PM Re: CFPB releases 1071 final rule InFairness, CRCM
Brandon Offline
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Will this cover all commercial loans? Like rental properties, etc? Or more like CRA applicable loans?

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#2282914 - 03/31/23 04:09 PM Re: CFPB releases 1071 final rule InFairness, CRCM
raitchjay Online
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Rule does say that HMDA reportable loans are excluded. It has something to say about CRA ones too, but i don't recall off the top of my head.
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#2282918 - 03/31/23 04:41 PM Re: CFPB releases 1071 final rule InFairness, CRCM
COMPL101TX Offline
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BOL Admins - Since 1071 is part of the Dodd-Frank Act, should there be a designated section in the Dodd-Frank forum section for this final rule? Just asking as I'm sure many new threads will pop-up for 1071 in the coming months.

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#2282941 - 03/31/23 08:24 PM Re: CFPB releases 1071 final rule COMPL101TX
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My own belief is that it is integral to Reg B which is Lending - and Fair Lending in particular. I'm also certain that as time goes on and folks work on implementation the threads will scatter elsewhere and keeping them tidy and organized would be like herding cats.
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#2282958 - 04/03/23 12:27 PM Re: CFPB releases 1071 final rule Brandon
InFairness, CRCM Offline
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InFairness, CRCM
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Originally Posted by Brandon
Will this cover all commercial loans? Like rental properties, etc? Or more like CRA applicable loans?

Brandon, coverage is based on borrower gross annual revenue and product type.
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#2283020 - 04/04/23 04:58 PM Re: CFPB releases 1071 final rule InFairness, CRCM
ComplyGuy Offline
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Originally Posted by InFairness, CRCM
Originally Posted by Brandon
Will this cover all commercial loans? Like rental properties, etc? Or more like CRA applicable loans?

Brandon, coverage is based on borrower gross annual revenue and product type.
Interesting you say product type? We sometimes route small business loans through our consumer application process. For example if it is a small dollar vehicle loan or something similar. So, technically it is considered a consumer loan in our reports even those it is business purpose. My understanding is that these are covered under the rule by the "purpose" requirement.

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#2283022 - 04/04/23 05:12 PM Re: CFPB releases 1071 final rule InFairness, CRCM
rlcarey Offline
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We sometimes route small business loans through our consumer application process.

I hope you do not do the same thing for your call reporting.
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#2283023 - 04/04/23 06:16 PM Re: CFPB releases 1071 final rule ComplyGuy
InFairness, CRCM Offline
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Originally Posted by ComplyGuy
Originally Posted by InFairness, CRCM
Originally Posted by Brandon
Will this cover all commercial loans? Like rental properties, etc? Or more like CRA applicable loans?

Brandon, coverage is based on borrower gross annual revenue and product type.
Interesting you say product type? We sometimes route small business loans through our consumer application process. For example if it is a small dollar vehicle loan or something similar. So, technically it is considered a consumer loan in our reports even those it is business purpose. My understanding is that these are covered under the rule by the "purpose" requirement.

Certain products are excluded in their entirety. Examples of excluded products include commercial insurance premium finance loans, loans covered by HMDA, trade credit, public utilities credit, and securities credit.
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#2283035 - 04/04/23 10:19 PM Re: CFPB releases 1071 final rule rlcarey
ComplyGuy Offline
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Originally Posted by rlcarey
We sometimes route small business loans through our consumer application process.

I hope you do not do the same thing for your call reporting.
We do, because there is a threshold amount of $50,000 to be considered commercial for that purpose. I don't believe there is such a threshold for loan size in the new rule, is there?

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#2283042 - 04/05/23 11:33 AM Re: CFPB releases 1071 final rule InFairness, CRCM
rlcarey Offline
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Interesting. I have read the instructions for Schedule RC-C and I have never once run into a limit of $50,000 for reporting a loan as Commercial or Industrial.

Do you have a citation?

Line 4

Commercial and industrial loans. Report loans for commercial and industrial purposes to sole proprietorships, partnerships, corporations, and other business enterprises, whether secured (other than those that meet the definition of a “loan secured by real estate”) or unsecured, single-payment or installment. On the FFIEC 041, all banks should report the total of these loans in column B, and banks with $300 million or more in total assets should also report in the appropriate subitems of column A a breakdown of these loans between those loans to U.S. and non-U.S. addressees. On the FFIEC 031, all banks should report a breakdown of these loans between those to U.S. and non-U.S. addressees for the fully consolidated bank in the appropriate subitems of column A and for domestic offices in the appropriate subitems of column B.

Commercial and industrial loans may take the form of direct or purchased loans. Include loans to individuals for commercial, industrial, and professional purposes but not for investment or personal expenditure purposes. Also include the reporting bank's own acceptances that it holds in its portfolio when the account party is a commercial or industrial enterprise. Exclude all commercial and industrial loans held for trading.

Include loans of the types listed below as commercial and industrial loans. These descriptions may overlap and are not all inclusive.

(2) Loans for the purpose of financing capital expenditures and current operations.
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#2283045 - 04/05/23 01:28 PM Re: CFPB releases 1071 final rule rlcarey
ComplyGuy Offline
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Posts: 288
Originally Posted by rlcarey
Interesting. I have read the instructions for Schedule RC-C and I have never once run into a limit of $50,000 for reporting a loan as Commercial or Industrial.

Do you have a citation?

Line 4

Commercial and industrial loans. Report loans for commercial and industrial purposes to sole proprietorships, partnerships, corporations, and other business enterprises, whether secured (other than those that meet the definition of a “loan secured by real estate”) or unsecured, single-payment or installment. On the FFIEC 041, all banks should report the total of these loans in column B, and banks with $300 million or more in total assets should also report in the appropriate subitems of column A a breakdown of these loans between those loans to U.S. and non-U.S. addressees. On the FFIEC 031, all banks should report a breakdown of these loans between those to U.S. and non-U.S. addressees for the fully consolidated bank in the appropriate subitems of column A and for domestic offices in the appropriate subitems of column B.

Commercial and industrial loans may take the form of direct or purchased loans. Include loans to individuals for commercial, industrial, and professional purposes but not for investment or personal expenditure purposes. Also include the reporting bank's own acceptances that it holds in its portfolio when the account party is a commercial or industrial enterprise. Exclude all commercial and industrial loans held for trading.

Include loans of the types listed below as commercial and industrial loans. These descriptions may overlap and are not all inclusive.

(2) Loans for the purpose of financing capital expenditures and current operations.
https://ncua.gov/files/publications/regulations/call-report-instructions-march-2023.pdf
Schedule A Section 1
13. COMMERCIAL LOANS/LINES OF CREDIT NOT REAL ESTATE SECURED (ACCOUNTS 526, 900P, AND 400P)
Include the rate, number, and outstanding balance of all commercial loans defined
in §723.2 and not secured by real estate. Unused loan commitments must be
reported in the Off-Balance Sheet Commitments section.
Excluded from this definition per §723.2 are covered loans issued under the Small
Business Administration's Paycheck Protection Program, 15 U.S.C. 636(a)(36), as
well as loans:

• made by a corporate credit union;
• made by a federally insured credit union to another federally insured credit
union; (Reported on the Statement of Financial Condition as an investment)
• made by a federally insured credit union to a credit union service
organization; (Reported on Schedule C Credit Union Service Organization
Information)
• secured by a single 1- to 4-family residential property whether or not it is the
borrower’s primary residence; (Reported elsewhere on the Loans & Leases
schedule as secured by a single 1- to 4-family residential property.)
• fully secured by shares in the credit union making the extension of credit or
deposits in other financial institutions; (Reported as All Other Secured NonReal Estate Loans/Lines of Credit on the Loans & Leases schedule)
• secured by a vehicle manufactured for household use; (Reported as new or
used vehicle loans on the Loans & Leases schedule)
• that would otherwise meet the definition of commercial loan and which, when
the aggregate outstanding balances plus unfunded commitments less any
portion secured by shares in the credit union to a borrower or an associated
borrower, are equal to less than $50,000. In this case, the loan should be
reported on the Loan & Lease schedule according to the underlying collateral.

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#2283050 - 04/05/23 02:08 PM Re: CFPB releases 1071 final rule InFairness, CRCM
rlcarey Offline
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Ah - you are a credit union - that explains it.
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#2283062 - 04/05/23 03:34 PM Re: CFPB releases 1071 final rule COMPL101TX
John Burnett Offline
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Cape Cod
Originally Posted by COMPL101TX
BOL Admins - Since 1071 is part of the Dodd-Frank Act, should there be a designated section in the Dodd-Frank forum section for this final rule? Just asking as I'm sure many new threads will pop-up for 1071 in the coming months.


We have set up the new forum, and I am transplanting this thread to it.
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#2283142 - 04/07/23 02:46 AM Re: CFPB releases 1071 final rule InFairness, CRCM
IronP2717 Offline
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What's the error rate threshhold for Sec 1071 Business LAR? Not finding it.

I hope we all come up with an acronym for this rule.....BLAR, maybe?

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#2283143 - 04/07/23 11:17 AM Re: CFPB releases 1071 final rule InFairness, CRCM
rlcarey Offline
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rlcarey
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Galveston, TX
Error rate thresholds would be communicated as part of the examination process. You would never see an error rate threshold outlined in the regulations. The regulation always is - you must comply - no exceptions.
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