Removing Barriers Blog

NCUA Issues CUNA-Supported Appraisal Rule, Finalizes “Second Chance IRPS”
Posted November 21, 2019 by CUNA Advocacy

Today, the NCUA Board issued a proposal on real estate appraisals, adopted a final “Second Chance IRPS,” and received a briefing on the status of the Share Insurance Fund.

Proposed Rule – Real Estate Appraisals (Part 722)

The Board issued a proposed rule to increase the threshold below which appraisals would not be required for residential real estate-related transactions from $250,000 to $400,000. Transactions that fall below the threshold would require a written estimate of market value of the real estate collateral that is consistent with safe and sound banking practices.

Though ultimately voting in favor of the proposal, Board Member Harper expressed significant concerns regarding potential risk associated with the change, particularly in the face of a future economic downturn.

CUNA appreciates NCUA listening to our concerns on this issue. CUNA sent a letter early last month specifically seeking this change.

NCUA will accept public comments on the proposal for 60 days following publication in the Federal Register.

Final IRPS – “Second Chance IRPS” (IRPS 19-1)

The Board adopted a final “Second Chance IRPS” that expands the list of criminal offenses by a prospective credit union employee that do not require approval by the NCUA Board. Specifically, the IRPS does not require an application for certain insufficient funds checks, small dollar simple theft, false identification, simple drug possession, and isolated minor offenses committed by covered persons as young adults.

CUNA supported the proposed IRPS, as we believe this expansion will result in a reduction in regulatory burdens to credit unions, covered individuals, and the agency, while continuing to mitigate the risk to credit unions posed by convicted persons.

While the IRPS was adopted largely as proposed, to further streamline the application process, the final IRPS delegates authority from the Board to program offices to process, review, and act upon credit union-sponsored consent applications. However, the Board will retain authority to decide on individual applications, which tend to be more complex and fact-specific.

The final IRPS will be effective 30 days after publication in the Federal Register.

Quarterly Report – Share Insurance Fund

Today’s report on the Share Insurance Fund indicated total income of $80.1 million and net loss of $24 million for the quarter ending 9/30/2019. The balance sheet showed total liabilities and net position of $16.716 billion, a decrease of roughly $618 million from 6/30/2019. The Fund’s equity ratio stands at 1.33% as of the end of the last quarter. The number of CAMEL Code 4/5 credit unions decreased slightly from the preceding quarter to 200; CAMEL Code 3 credit unions decreased to 861. So far in 2019 there have been two credit union failures