NCUA, State and Federal Banking Regulators Issue Interagency Examiner Guidance

The guidance promotes flexibility when examining financial institutions affected by COVID-19.

6/30/2020Binder with Compliance label sitting on desk

The National Credit Union Administration, along with the other federal banking regulators in conjunction with the state bank and credit union regulators, issued examiner guidance to promote consistency and flexibility in the supervision and examination of financial institutions affected by the pandemic.

Examiners will continue to maintain a clear understanding of the financial condition of each institution and the effectiveness of each institution’s risk assessment and response to the economic changes. Examiners should assess the reasonableness of management’s actions in response to the pandemic given the institution’s business strategy and operational capacity in the distresses economic and business environment in which the institution operates. The examiners will consider whether an institution’s management appropriately planned for financial resiliency and continuity of operations, implemented prudent policies, and is pursuing realistic resolution of the issues confronting the institution.

Some of the key focuses in the guidance related to assessing the CAMELS rating include:

  • Overall supervisory assessment
  • Effectiveness of institution’s assessment of risk
  • Capital adequacy
  • Asset quality
  • Management
  • Earnings
  • Liquidity
  • Sensitivity to market risk

Question of the Week

Q. One of our members has died, and his executor wants to open an estate account. He also wants a debit card to go with the checks. Is this acceptable?

A. The regulations do not prohibit a credit union from offering a debit card on a decedent account, but keep in mind the purpose of such an account. The executor’s job is to pay the decedent’s debts, after which the account will be closed. One of the safest ways to track the transactions is to use checks. Thus, the credit union might develop a policy that limits the kinds of services provided to estate accounts.

Legal Briefs

National Credit Union Administration

Interagency Examiner Guidance for Assessing Safety and Soundness Considering the Effect of the COVID-19 Pandemic on Institutions

The NCUA, along with other federal and state financial regulators, issued interagency guidance to outline the supervisory principles for assessing the safety and soundness of institutions given the ongoing impact of the COVID-19 pandemic. The guidance provides insight into several key areas: overall supervisory assessment, effectiveness of institution’s assessment of risk, capital adequacy, asset quality, management, earnings, and liquidity.

NCUA Extends MDI Mentoring Grants Application Deadline to July 31
Credit unions eligible to apply for the NCUA’s minority depository institutions mentoring grants now have until Friday, July 31 to submit their applications. The NCUA will make grants of up to $25,000 to help small institutions establish mentoring programs with larger, low-income designated credit unions to provide expertise and guidance in serving low-income and underserved populations.

Agencies Release Proposed Revisions to Interagency Questions and Answers Regarding Flood Insurance
The NCUA, along with the other federal financial institution regulators, have proposed new questions and answers under the joint flood insurance rules. The new Q&As will include escrow of flood insurance premiums, detached structure exemption, and force-placement procedures.

NCUA to Delay Start of Phased Resumption of Onsite Operations
Due to recent trends in public health data and administrative concerns, the NCUA is delaying the start of its phased resumption of onsite operations.

Consumer Financial Protection Bureau

CFPB Issues Proposed Rules to Address GSE Patch
The CFPB released two NPRM to address the impending expiration of the Government-Sponsored Enterprises Patch (GSE Patch). The proposed rules would the replace debt to income limit with a price-based approach which measures the loan’s price by comparing the loan’s APR to the APOR for a comparable transaction.

CFPB Issues Interim Final Rule on Loss Mitigation Options for Homeowners Recovering from Pandemic-Related Financial Hardships
The CFPB released an IFR which makes it clear that servicers do not violate RESPA by offering certain COVID-19 related loss mitigation options based on an evaluation of limited application information collected from the borrower.

CFPB Issues Interpretive Rule on Method for Determining Underserved Areas
The CFPB issued an interpretive rule to provide guidance about the way in which the CFPB determines which counties qualify as “underserved” for a given calendar year.

Federal Financial Institutions Examination Council

Agencies Release List of Distressed or Underserved Nonmetropolitan Middle-Income Geographies
The FFIEC announced the availability of the 2020 list of distressed or underserved nonmetropolitan middle-income geographies. These are geographic areas where revitalization or stabilization activities are eligible to receive CRA consideration.

FFIEC Announces Availability of 2019 Data on Mortgage Lending
The FFICE announced the availability for 2019 HMDA data.

Internal Revenue Service

IRS Announces Rollover Relief for Required Minimum Distributions from Retirement Account that were Waived Under the CARES Act
The IRS announced that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020.

Office of Foreign Assets Control

OFAC has updated the SDN list as of June 25. The last update prior to this was June 18.

Questions? Contact the Compliance Hotline: 1.800.546.4465; [email protected].