WASHINGTON (7/23/12)--The Credit Union National Association (CUNA) has warned that the National Credit Union Administration (NCUA) could soon step up its efforts to review credit union compliance with the Servicemembers Civil Relief Act (SCRA).
The U.S. Government Accountability Office in a report issued last week recommended that the NCUA and other federal financial regulators "conduct more extensive loan file testing for SCRA compliance."
To determine the frequency of SCRA compliance examinations, the GAO selected a random sample of 160 depository institutions, including credit unions, and reviewed their own examination files. The GAO's sample included only institutions that hold mortgages in their loan portfolios and service those loans themselves, or institutions that service mortgages for other institutions.
Federal regulators' oversight of SCRA compliance has been limited, the GAO found. The GAO noted that the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Federal Reserve all examined higher percentages of institutions for SCRA compliance than did NCUA.
Overall, the GAO report estimated that federal financial regulators only examined 48% of the financial institutions they oversee for SCRA compliance between 2007 and 2011. And, the GAO added, around half of these examinations featured loan file reviews. The GAO also noted that these loan reviews only featured examinations of loans that the financial institution identified as involving servicemembers.
Independently selecting a statistical sample of loan files would have provided greater assurance of SCRA compliance, the GAO said.
The GAO report recommended that "regulators and other agencies that oversee mortgage activities should also explore opportunities for information sharing on SCRA compliance oversight."
The SCRA protects active duty members of the military from civil claims and default judgments.
Legislation that would make it easier for active-duty military personnel to claim SCRA protections, and extend foreclosure protections offered under the SCRA to the surviving sponsors of military members, was introduced earlier this year by Sen. Jack Reed (D-R.I.). The bill, known as the Servicemember Housing Protection Act (S. 3179), has been referred to the Senate Committee on Veterans' Affairs. Similar legislation has also been introduced in the U.S. House.