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NCUA Legal opinion on lending experience rule

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ALEXANDRIA, Va. (2/20/08)—Credit unions may use different approaches to satisfy a federal requirement that it retain an employee with at least two years experience before launching a member business lending (MBL) program, according to a recent National Credit Union Administration (NCUA) legal opinion letter. The opinion letter was inspired by an inquiry asking whether a credit union must always use the services of a third-party underwriter to satisfy the NCUA’s member business lending (MBL) rule’s two-years-of-direct-experience requirement. NCUA Associate General Counsel Sheila Albin responded that while a credit union may use the services of an outside party, it is not required to do so. It also may use the direct experience of its own employees. Further, wrote Albin, a credit union is not required to hire an individual who has the requisite experience at the time of hiring. It may satisfy the direct experience requirement instead with an employee who has developed the requisite experience over time. However, if a credit union chooses to take the latter course of action, it is subject to certain regulatory limitations. For instance, to qualify an existing employee must be familiar with such things as the proper underwriting, analysis, and origination of MBLs in order to understand their complexity and risk exposure. Use the resource link below to read the NCUA’s entire opinion letter.

Inside Washington (02/19/2008)

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* WASHINGTON (2/20/08)--The Federal Housing Administration (FHA) may ease some of its FHASecure requirements to help more mortgage borrowers (American Banker Feb. 19). Currently, only 6% of the total $136 billion adjustable-rate mortgages are eligible. The FHA has received 229,597 applications from current borrowers and 5,638 applications from delinquent borrowers, said Bill Glavin, special assistant to Brian Montgomery, FHA commissioner. About 1,487 borrowers have been helped so far. Last month, the American Securitization Forum said if the program were expanded, it could help 607,000 borrowers, or 68% of delinquencies. Glavin noted that the recently approved $168 billion economic stimulus package could help FHASecure by raising FHA, Fannie Mae and Freddie Mac loan limits to $729,750, though the loan limits expire at the end of this year ... * WASHINGTON (2/20/08)--National banks will pay roughly 2.5% lower assessment fees effective March 31, the Office of the Comptroller of the Currency (OCC) announced yesterday. OCC will reduce rates in each assessment bracket, and add two new brackets for the largest banks. The new framework replaces the existing top bracket, which applies to the portion of assets held by a national bank exceeding $40 billion. The two new brackets will be for assets between $40 billion and $250 billion, and assets exceeding $250 billion ...