Compliance Blog

Yesterday, NCUA released Legal Opinion Letter 07-1024.  You can obtain a copy of the opinion letter here.  The letter is a must read for credit unions that do open-end lending, and especially for those who do so via a mechanism such as LOANLINER.  Here's a snippet:

NCUA’s interpretation of Regulation Z, confirmed as correct by legal staff at the Fed, is that any extension of consumer credit is either open-end credit or closed-end credit. Accordingly, an extension of consumer credit by an FCU meeting the Regulation Z definition of open-end credit is, for NCUA’s purposes, a line of credit and not subject to maturity limits. An extension of consumer credit by an FCU that does not meet the Regulation Z definition of open-end credit is, therefore, closed-end credit and subject to applicable maturity limits under the FCU Act and NCUA’s regulations. (Emphasis added.)

If your credit union does open-end lending, I suggest that you read the guidance in its entirety.  Good stuff, people. Good stuff.

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NAFCU members: The February NAFCU Regulatory Compliance Newsletter is now available.  Download it here.