Compliance Blog

Yesterday, NCUA released Legal Opinion Letter 08-0132 via NCUA Express.  The letter addressed whether a credit union may reclassify a construction and development loan, which is a specific type of member business loans (MBL) with additional requirements, simply as a regular MBL.

NCUA indicates that:

A credit union may reclassify a C&D loan as an MBL when the level and kind of risks for which those limits are in place are no longer present, meaning, if the loan were refinanced at that point, it would not be classified as a C&D loan. A credit union must be able to justify reclassifying a loan and, although we cannot provide a single formula or test, we discuss below factors the NCUA will consider in determining if reclassification is permissible.

The letter contains a good amount of guidance about construction and development lending requirements.  For credit unions that are active in this area, this is a good read.  You can access it here.

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Yesterday, NCUA also released two fraud alerts via NCUA Express.  NCUA Fraud Alert 08-Fraud-04, warns credit unions about a fraud that targets credit union employees.  You can access it here.

These attacks are in the form of e-mails addressed to the employees by name at their credit union e-mail addresses. The e-mails appear to be official correspondence purportedly from either a governmental agency or a vendor of the credit union. The emails include an attachment appearing as an invoice or complaint letter. When the attachment is opened, malicious software is installed that records the users’ keystrokes.
Once downloaded, the software is designed to monitor username and password logins and record the activity entered on the compromised machine.

NCUA also released Fraud Alert 08-Fraud-05, which warns credit unions about a new scam.

The purpose of this fraud alert is to inform you of a scam that involves falsely filing an identity theft claim for the purposes of improving one’s credit report and credit score. The perpetrators are claiming identity theft and filing police reports, causing disputed accounts to be removed from their credit reports (either permanently due to lack of investigation or conclusion, or temporarily while under dispute). While the accounts are removed, credit history improves and credit scores increase dramatically. The perpetrator then obtains credit from one or more credit grantors during the time when the credit score is inflated. The loans obtained through the use of the improved credit history and credit score subsequently go unpaid.

Credit union personnel need to be aware of this activity. Precautions should be taken when a credit report is obtained that reflects the person is a victim of identity theft. That person should be able to provide such documents as the police report they filed, the listing of disputed accounts, and the name(s) of the credit bureaus they filed with. Consideration should also be given to obtaining credit reports from more than one credit reporting agency in these situations as the perpetrator may have only attempted to “clean up” their credit report with one agency.

You may want to pass these along to your security guy or gal.

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I've managed to improperly dress for the weather two days in a row.  Tuesday was balmy.  I wore a sweater vest and jacket.  Wednesday was cold and blustery.  I had an oxford and a thin, fleece vest on.  One day I sweat bullets.  The next day I shiver.  I can somehow read 150 emails a day, but I've never made a habit of checking the weather each morning before I head out the door.   And while this fact bothers me at some level, I'm fairly sure that there exists very little chance of me changing my behavior.