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NCUA Extends Annual Meeting Relief, Issues Proposed Rule on Capitalization of Interest
michaelchristians • November 21, 2020
Yesterday, the National Credit Union Administration (NCUA) issued Letter to Federal Credit Unions 20-FCU-04 which extends certain meeting flexibilities during the COVID-19 pandemic.
The letter provides that a federal credit union may adopt, by a two-thirds vote of its board of directors, a bylaw amendment allowing it to hold the following meetings virtually without an in-person quorum:
- The annual meeting of its membership,
- Required in-person meetings of its board of directors, and
- Special member meetings for authorized purposes.
Certain conditions apply as outlined in the letter. You can access it here.
At its meeting on November 19 th , the NCUA issued a proposed rule that would remove the prohibition against the capitalization of interest in connection with loan workouts and modifications. The agency believes this change will provide credit unions even greater flexibility in working with borrowers experiencing economic hardship as a result of the Coronavirus pandemic.
While the proposed rule would remove the capitalization restriction currently found in Appendix B to Part 741, it retains a number of other requirements applicable to loan workouts and modifications. These include:
- The workout or modification must balance the best interests of the credit union and the borrower,
- The credit union may not engage in predatory type lending practices,
- The credit union must establish limits on the number of modifications allowed for any particular loan, and
- The decision to enter into a workout or modification agreement must be based on the borrower’s renewed willingness and ability to repay the loan.
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5438 South Prairie View Drive
West Des Moines, IA 50266
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319-325-1171
michael@mchristiansconsulting.com
Michael Christians Consulting, LLC
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