Small business demand for services is driving the evolution of our communications networks, and Advocacy recently filed a letter with the Federal Communications Commission (FCC), urging the body to ensure that small businesses have choices that fit their needs, at prices they can afford. Read More
In 2012, Advocacy commented on three key revisions of the Real Estate Settlement Procedures Act (RESPA or Regulation X) and the Truth in Lending Act (TILA or Reg Z):
• The integrated mortgage disclosure statement (comments filed November 6)
• Mortgage servicing rules for ARMs (October 5), and
• Loan originator compensation (October 16).
Mortgage Disclosure Statements. This major rule governs the practices and documents in use when consumers close on real estate loans. Although the proposal makes several changes to RESPA/TILA, the top five issues for small entities concern the costs from the expanded recordkeeping requirements, the difficulties of integrating the two mortgage disclosure statements used under the previous system, problems arising from the revised definition of the term “loan application,” the burden of requiring three days for the presumed receipt of documents, and confusion arising from defining Saturday as a business day.
To alleviate their impact on small business while maintaining the rule’s purpose, Advocacy recommended that CFPB allow for flexibility in small business compliance with the regulation, delaying the effective date of one measure, providing an exemption from another, and specific modifications of others.
Mortgage Servicing. The proposed rule would require periodic statements for residential mortgages, a six-month notification prior to the reset of the initial rate of hybrid Adjustable Rate Mortgages (ARMs), and the possible extension of this requirement to other ARMs. Small entities have said that these changes would be costly for them. Small mortgage servicers use a different business model that is relationship-based and customer service-friendly. As such, they argue that they were not the cause of some of the problems that the statute was meant to address. Advocacy encouraged the CFPB to exempt small entities from many of the requirements of the proposal. For the aspects of the proposal that do not exempt small entities, Advocacy encouraged the CFPB to provide small entities with a sufficient amount of time for them to comply with the requirements of this proposal.
Mortgage Loan Originator Compensation. The proposal would implement statutory changes to Regulation Z’s current loan originator compensation provisions, including a new restriction on the imposition of any upfront discount points, origination points, or fees on consumers under certain circumstances. Advocacy encouraged the CFPB to clarify aspects of the proposal, to fully consider small entities’ concerns, and to carefully consider the alternatives that have been set forth by the industry. Advocacy also encouraged the CFPB to develop revenue limits that reflect the unique business structure of smaller industry members and provide relief to small entities.
The comment letters and fact sheets summarizing them are available on Advocacy’s website.
—Assistant Chief Counsel Jennifer Smith
On November 6, the Office of Advocacy submitted comments to the Consumer Financial Protection Bureau on the proposed rule on Integrated Mortgage Disclosures under the Real Estate Settlement Procedures Act (“RESPA” or Regulation X) and the Truth in Lending Act (“TILA” or Regulation Z). The rule governs the practices and documents in use when consumers close on real estate loans.
Advocacy has held several roundtables to listen to the concerns of small community banks regarding the proposed regulation. Their five top issues concern the costs from the expanded recordkeeping requirements, the difficulties of integrating the two mortgage disclosure statements used under the previous system, problems arising from the revised definition of the term “loan application,” the burden of requiring three days for the presumed receipt of documents, and confusion arising from defining Saturday as a business day.
All of these concerns are perceived as roadblocks to mortgage lending by small community banks. To alleviate their impact on small business while maintaining the rule’s purpose, Advocacy recommended that CFPB allow for flexibility in small business compliance with the regulation, delaying the effective date of one measure, providing an exemption from another, and specific modifications of others. For complete information, see Advocacy’s letter of November 6. The details are also spelled out in a fact sheet on Advocacy’s website.
If you have any questions regarding Advocacy’s position on this issue, please do not hesitate to contact Jennifer Smith at 202-205-6943. For more information about the Office of Advocacy, please visit our website or telephone 202-205-6533. To receive Advocacy’s Regulatory Communications by email, visit www.sba.gov/updates.
—Rebecca Krafft, Editor
On July 24, the Office of Advocacy recommended that IRS eliminate the “use-it-or-lose-it rule” for health flexible spending accounts (FSAs). Advocacy’s letter pointed out that the rule negatively affects small business employers offering health FSAs, and recent changes to tax law make it no longer necessary.
The rules currently require funds remaining in a health FSA at year end to be forfeited. Advocacy’s letter suggested that the IRS allow employers to give plan participants the choice of receiving the unused taxable cash or making a tax-deferred contribution to a 401(k) or other pension plan.
Advocacy’s fact sheet on the issue provides additional information.
On June 28, the Office of Advocacy submitted comments to the National Oceanic and Atmospheric Administration on a proposed sea turtle conservation rule imposing new shrimp trawling requirements.
Here are several excerpts from the letter, addressed to Dr. Jane Lubchenco, NOAA administrator. The full text is available on the Office of Advocacy’s website.
“The Office of Advocacy of the U.S. Small Business Administration (Advocacy) respectfully submits these comments to the National Oceanic and Atmospheric Administration (NOAA) regarding its proposed sea turtle conservation rule to require the use of turtle excluder devices in the nets of all skimmer trawls, pusher-head trawls, and wing nets rigged for shrimp fishing.
“Through a series of regional roundtables and meetings, Advocacy has conducted extensive outreach with small businesses operating in the southeastern U.S. shrimp fisheries that are concerned that the proposed rule will cause significant economic harm to the already fragile shrimping industry in the Gulf of Mexico. Advocacy believes that further analysis of the economic impacts of various alternatives to the proposed rule, as well as further study of the impact shrimping activities have on sea turtle populations, are warranted before NOAA finalizes new sea turtle conservation rules.
“In light of the significant economic impact the proposed rule would have on small businesses in the commercial shrimping industry, as well as uncertainty regarding the cause of recent sea turtle strandings, Advocacy suggests that NOAA withdraw the proposed rule and re-open a comment period at a later date, when more data is available.”
On June 1, the Office of Advocacy submitted comments on the Office of Management and Budget’s request for information on Federal Participation in the Development and Use of Voluntary Consensus Standards and In Conformity Assessment Activities. Advocacy also published a fact sheet summarizing the letter.
Also on June 1, Advocacy submitted comments on the Office of the Federal Register’s request for comments on the Petition for Rulemaking on “Incorporation by Reference” and the term “Reasonably Available” that was recently published in the Federal Register. A fact sheet summarizing it is available here.
If you have any questions regarding Advocacy’s position on this issue, please do not hesitate to contact Bruce Lundegren at 202-205-6144 David Rostker at 202-205-6966. For more information about the Office of Advocacy, please visit our website or telephone 202-205-6533.
On December 5, 2011 the Office of Advocacy (Advocacy) filed public comments with the Department of Agriculture, Animal and Plant Health Inspection Service (APHIS) on the proposed rule entitled Traceability for Livestock Moving Interstate. A copy of Advocacy’s comments may be viewed at www.sba.gov/advocacy.
For more information, visit Advocacy’s website at http://www.sba.gov/advocacy or contact Kia Dennis at 202-205-6936.
On December 1, 2011, the U.S. Small Business Administration’s (SBA) Office of Advocacy (Advocacy) submitted comments to the Department of Homeland Security (DHS) on DHS’ Proposed Ammonium Nitrate Security Program Rule. [76 Fed. Reg. 46908 (August 3, 2011)]. DHS’ proposed rule would regulate the sale and transfer of ammonium nitrate pursuant to section 563 of the Fiscal Year 2008 Department of Homeland Security Appropriations Act, which seeks to prevent the use of ammonium nitrate in an act of terrorism. Ammonium nitrate is a chemical used primarily in fertilizers and explosives, but can also be mixed with fuel oil to create a bomb like that used in the 1995 Oklahoma City bombing that killed 168 people. DHS’s proposed rule would establish a program to register and vet ammonium nitrate sellers and purchasers, verify and approve transfers of ammonium nitrate, require reporting of theft or loss, and provide for inspections/audits, civil penalties, and adjudications and appeals.
Following publication of DHS’ proposed rule, a number of small business representatives contacted Advocacy and expressed concerns with various aspects of the proposed rule. In response, Advocacy hosted a small business roundtable on November 22, 2011 to discuss the proposed rule and to obtain small business input on it. Representatives from DHS attended the meeting and provided a background briefing on the proposed rule.
On November 22, 2011, the Office of Advocacy (Advocacy) submitted a comment letter to the U.S. Department of Health and Human Services (HHS) discussing Advocacy’s views on HHS’ National Toxicology Program’s (NTP) Report on Carcinogens (RoC). The comment letter was submitted during a request for public comment on the NTP’s proposed RoC Review process which closes on November 30, 2011. Advocacy’s comment letter includes the following points: