NCUA Provides Insight on Off-Site Examination and Supervision Approach
Credit unions should review Letter to Credit Unions 20-CU-17 as it applies to off-site exams during COVID-19.
The National Credit Union Administration (NCUA) released Letter to Credit Unions 20-CU-17, which provides insight into the its current examination and supervision approach, to help ensure the safety of personnel and the safety and soundness of the credit union system.
The NCUA’s off-site policy is for all employees and contracted support staff to remain off-site until further notice. The NCUA may conduct onsite work at a credit union if there are serious or time sensitive matters that need to be addressed.
Examiners will continue to work with credit unions to conduct examination work off-site if the credit union is able to accommodate off-site reviews. Examiners will also be mindful of the impact information requests may have on a credit union experiencing operational and staffing challenges associated with the COVID-19 pandemic. It is suggested that the credit union appoint one person to serve as primary point of contact for information requests to streamline the information requests from the NCUA. Information exchanged between examiners and the credit unions can be done using NCUA’s Secure File Transfer Portal (SFTP).
The NCUA will issue examination reports for examination completed off-site. Any corrective actions issued to a credit union will consider the impact of the pandemic on the credit union’s operations and financial condition and will be prioritized appropriately. Examiners will consider the extraordinary circumstances credit unions are facing when reviewing a credit union’s financial and operational condition and assigning CAMEL and risk ratings.
Question of the Week
Q. Can the credit union consider a member’s medical condition when determining eligibility for credit? What if the member disclosed the condition to the credit union directly?
A. No, medical conditions cannot be used as criteria for determining loan eligibility. The Fair Credit Reporting Act (FCRA) generally prohibits creditors from obtaining and using medical information in connection with the determination of a member’s eligibility, or continued eligibility, for credit. However, a creditor can obtain and use medical information as long as:
- The information is the type of information routinely used in making credit eligibility determinations, such as information relating to debts, expenses, income, benefits, assets, collateral, or the purpose of the loan, including the use of proceeds;
- The creditor uses the medical information in a manner and to an extent that is no less favorable than it would use comparable information that is not medical information in a credit transaction; and
- The creditor does not take the consumer’s physical, mental, or behavioral health; condition or history; type of treatment; or prognosis into account as part of any such determination.
The FCRA provides several examples of when use of this information would be permissible and impermissible. Here is an example of permissible use of medical information:
Example of permissible use: A consumer includes on an application for credit information about two $20,000 debts. One debt is to a hospital; the other debt is to a retailer. The creditor contacts the hospital and the retailer to verify the amount and payment status of the debts. The creditor learns that both debts are more than 90 days past due. Any two debts of this size that are more than 90 days past due would disqualify the consumer under the creditor’s established underwriting criteria. The creditor denies the application on the basis that the consumer has a poor repayment history on outstanding debts. The creditor has used medical information in a manner and to an extent no less favorable than it would use comparable non-medical information.
Example of impermissible use: A consumer meets with a loan officer of a creditor to apply for a mortgage loan. While filling out the loan application, the consumer informs the loan officer orally that she has a potentially terminal disease. The consumer meets the creditor’s established requirements for the requested mortgage loan. The loan officer recommends to the credit committee that the consumer be denied credit because the consumer has that disease. The credit committee follows the loan officer’s recommendation and denies the application because the consumer has a potentially terminal disease. The creditor has used medical information in a manner inconsistent with the exception by taking into account the consumer’s physical, mental, or behavioral health, condition, or history, type of treatment, or prognosis as part of a determination of eligibility or continued eligibility for credit.
In summary, your credit union can consider the member’s medical debts and expenses when determining the ability to repay the debt. However, the information regarding their medical condition cannot be used to determine eligibility for credit.
National Credit Union Administration (NCUA)
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Office of Foreign Assets Control (OFAC)
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Questions? Contact the Compliance Hotline: 1.800.546.4465; [email protected].