CUNA Regulatory Comment Call
October 27, 2006
General Lending Maturity Limit and Providing Certain Services to Nonmembers Under the Regulatory Relief Act
- Acting quickly to implement new powers for federal credit unions, the NCUA
Board unanimously voted at the October 19, 2006 Board meeting to issue an interim
final rule with request for comments on two provisions of the Reg Relief Act:
(1) An increase in the general maturity for loan limits from 12 to 15 years.
- Exceptions to the earlier 12 year maturity limit restriction have existed for years; and federal credit unions have been allowed to make loans on a home that "is or will be" a member's principal residence with up to a 40-year maturity. Also, any second mortgage loan, home improvement loan, and loan secured by a mobile home, recreational vehicle or boat that will be used as the member's residence are permitted to be made for a maturity up to 20 years.
- The regulatory relief legislation provides federal credit unions with greater flexibility in making their own business decisions on structuring loan maturities, on both secured and unsecured loans. Examples of the types of loans that FCUs may now consider making for maturities up to 15 years include: vacation home loans; undeveloped land loans; RV loans; boat loans; member business loans; and student loans.
- In the interim final rule, NCUA recognizes that the prompt corrective action (PCA) rule has several references to the 12-year loan term in the alternative risk-based net worth classification. NCUA staff will evaluate if this calculation will change. If necessary, NCUA will address this issue in a future rulemaking.
- The rule emphasizes that federal credit unions (FCUs) must comply with the Bank Secrecy Act (BSA) and other money laundering laws and regulations, including Customer Identification Program (CIP) regulations and Part 748 of NCUAs Rules (Security Program, Report of Crime and Catastrophic Act and Bank Secrecy Act Compliance) when providing services to nonmembers in their FOM. In addition, FCUs must safeguard the private financial information of and provide the required financial privacy notices to those nonmembers.
- NCUA did not implement the Reg Relief amendment that allows a merging credit unions net worth to be included in the continuing credit unions net worth for purposes of PCA. NCUA is reviewing the issue separately and is awaiting changes to the definition of net worth that are being contemplated by the Federal Accounting Standards Board.
- The interim final rule is effective October 27, 2006.
- Comments are due to NCUA by December 26, 2006. Please send your comments to CUNA by December 8, 2006. Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Deputy General Counsel Mary Dunn at email@example.com or to Senior Regulatory Counsel Catherine Orr at firstname.lastname@example.org; or mail them to Mary or Catherine in c/o CUNA's Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, 6th Floor - South Building, Washington, DC 20004. You may also contact us at 800-356-9655, ext. 6743, if you would like a copy of the interim final rule, or you may access it here.
QUESTIONS REGARDING THE INTERIM FINAL RULE
- Besides the PCA rules references to the 12-year unsecured loan term, are there
any other provisions in NCUAs rules that need to be modified to conform with the Reg
Relief provisions on general loan maturity limits?
Yes ____ No ____
If yes, what are those regulatory provisions?
- Are there any specific provisions in NCUAs rules that should be revised to
facilitate FCUs providing the enumerated financial services to anyone eligible for
membership in the credit union regardless of membership status, such as obligations
concerning privacy notices?
Yes ____ No ____
If yes, please explain.
- Other comments?
Eric Richard EVP &General Counsel (202) 508-6742 email@example.com |
Mary Mitchell Dunn SVP & Deputy General Counsel (202) 508-6736 firstname.lastname@example.org
Jeffrey Bloch Senior Assistant General Counsel (202) 508-6732 email@example.com
Lilly Thomas Assistant General Counsel (202) 508-6733 firstname.lastname@example.org
Catherine Orr Senior Regulatory Counsel (202) 508-6743 email@example.com