WASHINGTON (10/1/10)--With National Credit Union Administration (NCUA) Chairman Debbie Matz earlier this month saying that the NCUA would likely redesign some aspects of its examination process to better interact with the Consumer Financial Protection Bureau (CFPB), credit unions should be sure that they are up to date on NCUA examination practices. In an example given in this month’s Compliance Challenge, NCUA examiners are reviewing a credit union’s indirect lending program. According to the Compliance Challenge, high instances of first payment default, payment deferment, and account reaging, as well as weak loan documentation, would draw attention from examiners. Poorly executed dealer management programs and insufficient analysis of indirect loan portfolio performance are other “red flags” that would surely be noted by NCUA examiners. The NCUA’s recently released letter to credit unions No. 10-CU-15 covers due diligence for indirect lending programs, as well as some other steps that credit unions should take during the planning process. The letter also addresses what should be covered in vendor contracts and written agreements, what steps are necessary to detect and prevent fraud, and how to develop the processes needed to institute and manage indirect lending programs. For the Compliance Challenge and the NCUA’s letter to credit unions, use the resource links.