COMMENT CALL: The National Credit Union Administration (NCUA) announced its eighth round of proposed regulatory changes associated with NCUA’s Deregulation Project. The project is an ongoing review of NCUA’s regulations to ensure they are focused on credit unions’ safety, soundness, and resilience. Information on the earlier rounds can be found in the “open comment calls” and the “closed comment calls” Regulatory Advocacy pages of our website.
In this round, the NCUA is requesting comments on one new proposal that would eliminate unduly burdensome requirements related to third-party servicing of indirect vehicle loans. The proposal is summarized below.
Round Eight
- Third-party servicing of indirect vehicle loans. Currently, §701.21(h) of the NCUA’s regulations limits the aggregate amount of indirect loans and participations in indirect loans that federal credit unions may purchase from any one servicer to 50% of the credit union’s net worth. After 30 months of experience with a particular servicer, the rule increases the limit to 100% of net worth. Federally insured, state-chartered credit unions (which includes all Wisconsin state-chartered credit unions) are subject to the same requirements, pursuant to §741.203(c) of the NCUA regulations.
The NCUA’s proposal would remove both sections of the regulations, allowing credit union boards to develop their own policies. The NCUA wrote: “Credit union boards will continue to be responsible for developing policies and procedures that protect the safety and soundness of the credit union and ensure that their purchases of indirect vehicle loans serviced by third parties are appropriately scaled for the credit union’s size and the complexity of the transactions. If this proposal is adopted as final, the NCUA will continue to monitor credit unions’ purchases of indirect vehicle loans serviced by third parties through the examination process.”
Impact on credit unions: Removing these limits would reduce regulatory burden and give credit unions and their boards more flexibility to decide the amount of purchased indirect vehicle loans serviced by third parties that is appropriate for the credit union’s size, the complexity of the transactions, and the board’s risk tolerance.
Make your voice heard
The League may comment on this proposal, depending on the feedback we receive from Wisconsin’s credit unions. Please email Paul Guttormsson with your thoughts on this round of NCUA regulatory relief proposals by May 19, so that our comment letter (which is due May 26) can reflect your positions.
Compliance Roundtable – April 1 (Webinar)
Join a member of The League’s compliance team as they lead a discussion on the latest changes in regulations and need to know information to keep your credit union in compliance. You can find more information or register on our website.