Compliance Blog

Written by JiJi Bahhur, Regulatory Compliance Counsel

With the effective date of the final loan participation rule right around the corner (September 23, 2013), the National Credit Union Administration (NCUA) released, just last week, supervisory guidance to assist with the loan participation waiver process.  The Supervisory Letter, which is the enclosure to NCUA Letter to Credit Unions 13-CU-07, provides the process by which credit unions may obtain waivers, expectations for examiner review of waivers, and overall compliance with Part 701.22 of the NCUA Rules and Regulations.   

If your credit union buys participation interest in loans made by third parties, you are going to want to take a look at this Supervisory Letter.  It is very detailed and includes, among other items, the types of waivers available; what information is required on the waiver applications; the considerations NCUA looks at when evaluating a waiver request; the timing of waiver responses and appeals; what loan participations are permissible for credit unions; loan participation policy requirements; and master agreement requirements. 

NCUA’s loan participation rule is designed to protect buyers of loan participations.  If your credit union is in the business of buying participation interests, the rule applies to you and the Supervisory Guidance will be able to provide you with additional, explanatory information for the parts of the rule you may have been unsure about. 

To view the final loan participation rule, click here.  To view Letter to Credit Unions 13-CU-07 and the Supervisory Letter, click here and here.  Also, if you haven’t already, check out the September 2013 NAFCU Compliance Monitor – it features an article on NCUA’s final loan participation rule (NAFCU log-in required).