NCUA Board Member Michael Fryzel, left, Chairman Debbie Matz, and Board Member Gigi Hyland listen to a staff presentation on CDRLF changes during Thursday's open board meeting. President Barack Obama last week announced his intention to nominate Carla León-Decker to join the board. León-Decker, if confirmed, would take the spot of Hyland, whose term officially ended in August. (CUNA Photo)
ALEXANDRIA, Va. (10/28/11)--The process by which the National Credit Union Administration (NCUA) solicits, receives, evaluates, and acts on credit union applications for loans and technical assistance grants from the Community Development Revolving Loan Fund (CDRLF) will be changed under a final rule that was approved by the agency yesterday.
The agency will no longer require community needs plans to be filed with CDRLF applications and will increase the maximum amount of a single loan to more than $300,000 in some circumstances. The NCUA will also offer flexible repayment options for CDRLF loans and may offer lower interest rates in some cases.
The NCUA rule will also change the CDRLF rule's low-income credit union (LICU) designation criteria.
The final rule is similar to a proposed rule that was issued earlier this year. However, a proposed requirement regarding financial projections was not included in the final rule. The Credit Union National Association did not support this financial projection requirement, and encouraged the NCUA to remove the requirement from the final rule in a summer comment letter.
The changes are intended to increase transparency and improve the CDRLF's organization, structure, and ease of use by credit unions. The NCUA in a release said the rule changes "will result in increased loan demand due to reduced burdens on participating credit unions, thereby enhancing the provision of financial services for low-income households."
NCUA staff during the meeting said some forms, including loan applications and Notices of Funding Opportunity, would need to be amended to reflect the changes. These changes would be completed before the rule comes into effect.
The final rule is scheduled to become effective 30 days after it is published in the Federal Register.
During the customary report on the NCUA's financial status, Chief Financial Officer Mary Ann Woodson said the National Credit Union Share Insurance Fund's equity ratio remained at 1.31% in September. The same number was reported last month, and NCUA Chairman Debbie Matz last month requested that her staff provide the board with their "best possible estimate" of the year-end ratio of the NCUSIF at the upcoming November board meeting.
The NCUA CFO reported there are currently 384 CAMEL 4 and 5 credit unions, which represent 3.88% of insured shares, or approximately $30 billion. Woodson also noted that there are 1,777 CAMEL 3 credit unions, which represent 16.59% of insured shares, or $130 billion.
Insured shares in CAMEL 3, 4, and 5 credit unions represented around 20% of total insured shares in September, with the number of CAMEL 3 credit unions decreasing slightly and the number of CAMEL 4 and 5 credit unions increasing slightly during that month. A total of $160 billion in shares are held in CAMEL 3, 4 and 5 credit unions.
The NCUSIF held $1 billion in reserves and the Temporary Corporate Credit Union Stabilization Fund recorded $1.97 billion in total earned revenues for the month of September. These revenues were due to the NCUA's recent TCCUSF assessment, Woodson said.
For more on the board meeting, use the resource link.