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MBL waivers 2011 highlights in iNCUA Reporti
ALEXANDRIA, Va. (12/14/11)--National Credit Union Administration (NCUA) Chairman Debbie Matz in the latest edition of The NCUA Report said the past year has been productive for credit unions, with the corporates stabilizing, consumer credit unions recovering financially, and, overall, the credit union industry "turning a corner."

Credit unions can look forward to a future of increasing members and strengthening bottom lines, Matz added. The NCUA chairman also highlighted the agency's regulatory modernization initiative, adding that the agency will eliminate or streamline regulations that are "ineffective or overly burdensome" and modernize outdated or inefficient regulations.

Regulation was also a focus of NCUA Board Member Gigi Hyland's contribution to this month's NCUA Report, as Hyland noted that federally insured credit unions may apply for blanket waivers from member business loan (MBL) personal guarantee requirements. Hyland said the agency "strongly believes that obtaining a personal guarantee is a prudent practice and solidifies the personal commitment of the principal to the business enterprise." However, she said, credit unions may waive this personal guarantee requirement in instances where the credit union is not taking on undue risk.

NCUA regional director waivers may also be granted for a variety of limits, including appraisal requirements, aggregate construction and development loan limits, and loan-to-value ratio requirements for business loans, Hyland said.

Credit unions that wish to obtain a waiver should submit a request, and their business lending policy, supporting documents that show the credit unions' past MBL account management, to their regional NCUA director. Documentation addressing the credit union's history of loan losses and delinquencies, portfolio diversification, underwriting standards and practices, and other information should be provided as well.

Hyland said any information that would "demonstrate that [the credit union] can safely engage in the activity with a waiver in place" should also be included. She said a lack of sufficient documentation is the most common reason that waivers are denied, and added that "waivers are not likely to be approved if the documentation package as a whole does not demonstrate a well-constructed plan for the activity proposed."

The report also featured coverage of the NCUA's Office of Consumer Protection's work with the Consumer Financial Protection Bureau, recent NCUA actions, and other issues. For more of the December NCUA Report, use the resource link.
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