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Feb 04, 2010
Categories: Consumer Lending Home-Secured Lending

NCUA Guidance; Z-Thoughts of the Day

Posted By Anthony Demangone

While Regulation Z haunts us in our sleep, NCUA continues to issue guidance relevant to compliance officers.  Here's a few items that have been kicking around in my in-box.
You have asked if a federal credit union (FCU) can provide residential mortgage loan processing and servicing to credit unions as a correspondent service under the incidental powers rule where the credit union receiving the service would fund the loan and the loan would close in the funding credit union’s name. 12 C.F.R. §721.3(b). We conclude this would be permissible as a correspondent service and note, as required for all incidental powers activities, FCUs must comply with any applicable NCUA regulations, policies, and legal opinions, as well as state and federal law applicable to the activity. 12 C.F.R. §721.5.

  • NCUA has issued Letter to Credit Union 10-CU-01.  The letter shares a Supervisory Letter issued to all NCUA field staff regarding the supervision of low income and community development credit unions.  It is a great overview of these two types of credit unions.  NCUA also notes that the guidance would be useful for any credit union looking to serve people of "modest means."
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    It seems negligent to ignore Regulation Z.  So here are my two Z-thoughts of the day:
    1. You likely rely on third party vendors for many aspects of your credit card program.  If you fear that your vendor will be unable to meet some deadline, be proactive.  Document your efforts to comply.  Save emails and other vendor communications.  Ask them to explain why they won't meet a deadline, and save their response.  Feel free to push them - remember, you are paying them for their ability to provide solutions.  Should an examiner inquire why you are not in compliance with some aspect of the rule, you'll at least be able to show your due diligence and efforts.
    2. As we tinker with rates, don't forget an important Credit CARD Act provision that has yet to be implemented.   Section 101 of the Credit CARD Act contains a provision that requires creditors that increase an APR on a credit card after January 1, 2009 to revisit the increase later to see if the rate should be reduced.  The Fed has not issued regulations yet to address this, so we don't have details on what we'll have to do.  But ask yourself this: If someone asked you to provide a list of credit card accounts that might be subject to this upcoming requirement, would you be able to do so? Would you be able to pull a list of credit card accounts that had their rate increased since January 1, 2009?

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