NCUA Extends Federal Credit Unions’ Meeting Flexibility

The National Credit Union Administration issued Letter to Federal Credit Unions 21-FCU-06 which extends the flexibility for federal credit unions to conduct meetings virtually in 2022.

As previously provided, a federal credit union may adopt at any time, by a two-thirds vote of its board of directors, the following bylaw amendment to Article IV without additional approvals by the NCUA:

Section 6. Emergency exception to in-person quorum requirement. This credit union may hold its annual meeting of the members, the required in-person regular meeting of the board of directors under Article VI, and special member meetings for authorized purposes other than member expulsion under Article XIV of these bylaws, virtually and without an in-person quorum if all of the following conditions apply and are certified in meeting minutes by a resolution of the majority of a quorum of the board of directors:

  • At least one of the following is located in an area where a federal, state, or local authority has declared a state of emergency or major disaster:
    1. all or part of a community the credit union serves; or
    2. the credit union’s headquarters.
  • The credit union has the technological capacity to facilitate virtual meeting attendance, voting, and participation.
  • Members receive at least seven days’ advance notice of the change of a member meeting to a virtual meeting format and appropriate instructions for how to join, participate, and vote during the virtual meeting.
  • The NCUA has issued general or specific guidance notifying the credit union that it is appropriate to invoke this bylaw provision.

A federal credit union may choose to adopt the amendment with or without the underlined language related to meetings of the board of directors.

Federal credit unions choosing to adopt the amendment (with or without the language related to board of directors’ meetings) should ensure that the cross-citations conform to their version of the bylaws.

The NCUA hereby notifies all federal credit unions that, if they have adopted this bylaw amendment, it is appropriate to invoke its provisions at any point in 2022 for meetings occurring in that year if a majority of the board of directors so resolves for each such meeting. General quorum requirements must still be met for all-virtual meetings.

Question of the Week

Q. Can a federally chartered credit union recoup settlement costs and fees it waived in relation to a Member Business Loan (MBL) without those costs being considered a prohibited prepayment penalty?

A. Yes, as long as the recoupment period is reasonable in terms of the size and type of fees being waived. In NCUA’s Opinion Letter 08-0731, the NCUA addressed this issue by first noting that the Federal Credit Union Act allows borrowers to repay a loan before maturity without penalty. Therefore, an FCU is prohibited from charging a borrower a prepayment penalty if she were to pay off the loan before it is due. However, in another analysis of non-member business loan waiver of appraisal and title fees, it was determined that these were not prohibited penalties since they were disclosed and agreed to by the borrower, and the recoupment period was a reasonable one or two years.

Related Link

NCUA Opinion Letter 08-0731

Compliance Alerts

National Credit Union Administration

Federal Credit Union Meeting Flexibility in 2022 Due to the COVID-19 Pandemic

The NCUA issued Letter to Federal Credit Unions 21-FCU-06 which extends the flexibility for federal credit unions to conduct meeting virtually for 2022.

Final Rule on Shared Service Facilities Modernizes Requirements

The NCUA approved a final rule that revises the definition of service facility for multiple common-bond federal credit unions. The final rule includes any shared branch, shared ATM, or shared electronic facility in the definition of “service facility” for a multiple common-bond federal credit union that participates in a shared branching network. The federal credit union does not need to be an owner of the shared branch network for the shared branch or shared ATM to be a service facility.

2021 Consumer Compliance and Fair Lending Regulatory Update

The NCUA will be hosting a webinar for the 2021 Consumer Compliance and Fair Lending Regulatory Update on Dec. 1 at 3 p.m. EST. The topics covered include 2022 consumer compliance exam scope activities, fair lending updates, observations from 2021 consumer compliance exam scope activities, and regulatory updates.

NCUA Board Calls on Congress to Make CLF Enhancements Permanent

The NCUA Board sent a letter to Congress which requested to make the CARES Act enhancements to the Central Liquidity Facility (CLF) permanent.

Consumer Financial Protection Bureau

CFPB Seeks Input on Detecting Discrimination in Mortgage Lending

The CFPB released a Request for Information (RFI) to seek input on the HMDA rule. The RFI will focus on institutional and transactional coverage, data points, benefits of new data and disclosure requirements, and operational and compliance costs.

Financial Crimes Enforcement Network

FinCEN Calls Attention to Environmental Crimes and Related Financial Activity

FinCEN issued notice FIN-2021-NTC4 to call attention to an upward trend in environmental crimes and associated illicit financial activity.

Office of Foreign Assets Control

OFAC has updated the SDN list as of Nov. 23. The last update prior to this was Nov. 15.

­­­­­­­­­­­­­­­­­­­­­Questions? Contact the Compliance Hotline: 1.800.546.4465; compliance@nwcua.org.

Posted in Compliance News, Compliance News, Compliance Question.