On December 4, President Obama signed into law H.R. 22, the “Fixing America’s Surface Transportation Act” (FAST Act). Although a transportation bill on its surface, the bill also contains various provisions that are intended to provide regulatory relief to community banks and improve the efficiency of state financial regulation. Significant provisions in the bill include: (i) establishing a process that allows parties, including banks and other stakeholders, to petition the CFPB for “rural” or “underserved” designations in certain areas for the purposes of the CFPB’s ability-to-repay rule; (ii) expanding the CFPB’s ability to exempt creditors serving rural or underserved areas from escrow requirements; (iii) granting greater flexibility to the CFPB in regards to treating a balloon loan as a qualified mortgage, if a community bank or creditor operating in a rural or underserved area extended the loan; (iv) increasing the threshold for 18-month exam cycles for well-capitalized banks from $500 million to $1 billion; and (v) authorizing the Nationwide Mortgage Licensing System – which state regulators use to license various nonbank financial services industries, such as money transmitters, payday lenders, and debt collectors – to process background checks for non-mortgage license applicants.
In addition, the act provides relief to all financial institutions meeting certain criteria from annual Gramm-Leach-Bliley privacy notice requirements. Pursuant the Gramm-Leach-Bliley Act (GLBA) and Regulation P, financial institutions were required to submit privacy notices, physically, or with consent electronically, to customers; in 2014, the CFPB amended Regulation P permitting institutions to post privacy notices online without customer consent, so long as certain criteria were met. The FAST Act’s statutory change in Section 75001 removes some of the criteria so that financial institutions do not have to send annual privacy notices so long as (i) their information sharing practices have not changed since its last notice; and (ii) they do not engage in information sharing that requires providing customers with an opt-out under the GLBA.