Article written by:
Scott Runyan, CPA
Director, Credit Union Services
As a result of COVID-19, the National Credit Union Administration (NCUA) has discussed edits to many of its rules at their administrative board meetings. Regulatory relief was provided in these final rule changes which were approved recently.
On April 16, 2020, the NCUA Administration Board approved three items:
- A temporary final rule providing regulatory relief by:
- Temporarily raising the maximum aggregate amount of loan participations that a federally insured credit union may purchase from a single originating lender without needing a waiver from an NCUA regional director to the greater of $5 million or 200% of a federally insured credit union’s net worth.
- Temporarily suspending limits on the types of eligible obligations that a federal credit union may purchase and hold.
- Suspending the required timeframes for the occupancy or disposal of properties held by federal credit unions that are not being used to conduct business or that have been abandoned.
- An interim final rule that allows a credit union to temporarily defer certain appraisals and evaluations for up to 120 days when other alternatives are not available, and when the appraisal or evaluation would delay the closing of the residential or commercial real estate loan transaction.
- A final rule increasing the threshold level where an appraisal is not required for residential real estate-related transactions from $250,000 to $400,000. Federally insured credit unions will be able to obtain written estimates of the market value of the real estate for properties below that threshold.
To view the press release in its entirety, click here.
On April 22, 2020, the NCUA Administration Board unanimously approved an interim rule that amends the agency’s capital adequacy and member business loans and commercial lending regulations.
- The CARES Act created the SBA Paycheck Protection Program (PPP loans). The PPP loans receive a 0% risk weighting under the NCUA’s risk-based capital requirements. The interim final rule amends the NCUA’s capital adequacy regulation so the PPP loans did receive the 0% weight in the risk-based net worth requirement.
- If a loan is pledged as collateral for a non-recourse loan provided through the Federal Reserve System’s PPP Lending Facility, the covered loan can be excluded from a credit union’s calculation of total assets for the purposes of calculating its net worth ratio.
- The PPP loans are excluded from the definition of a commercial loan in the NCUA’s member business loans and commercial lending rule.
The full press release can be viewed by clicking here.
GBQ’s Credit Union Services team is here to help you during these challenging times. For assistance or to discuss this information further, please contact us today.