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NCUA Upcoming Rulings

Posted: Jun 24, 2021 | Author: Cornerstone League
CAMEL ratio  CECL  compliance  COVID-19  flood hazards  lending & collections  NCUA 

Pending NCUA rulemaking of note includes:

Capitalization of Interest in Connection with Loan Workouts and Modifications

The NCUA intends to release a final rule to remove the prohibition against federally insured credit unions capitalization of interest in connection with loan workouts and modifications. The rule would require consumer protection and safety and soundness safeguards for credit unions engaging in the practice.

Risk-Based Net Worth – COVID-19 Regulatory Relief (Complex Credit Union Threshold)

The NCUA is finalizing amendments to provide that any risk-based net worth requirement will apply only to federally insured credit unions with quarter-end assets that exceed $500 million and a risk-based net worth requirement that exceeds 6%.

Loans in Areas Having Special Flood Hazards – Interagency FAQs

The NCUA, along with the other federal regulators, are updating the Flood Insurance FAQs. The FAQs are being updated to include questions and answers on private flood insurance, as well as escrowing of flood insurance premiums, the detached structure exemption, and force-placement procedures.

Transition to CECL

The NCUA intends to issue final rules to address the implementation of the new current expected credit losses (CECL) methodology by federally insured credit unions. The rule is intended to temporarily mitigate the adverse consequences of the day-one capital adjustments required by CECL.

CAMELS Rating

The NCUA plans on adding the “S” (sensitivity to market risk) to their CAMEL exam ratings. The S component will enhance transparency and allow the NCUA and federally insured credit unions to better distinguish between liquidity risk and sensitivity to market risk.

Source:  Excerpted from an article submitted by David Curtis CUCE, director compliance services, NWCUA

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