NCUA Board Approves Regulatory Relief Measures in Response to COVID-19

April 2020
NCUA Board Approves Regulatory Relief Measures in Response to COVID-19

Board Action Bulletin

ALEXANDRIA, Va. (April 16, 2020) – The National Credit Union Administration Board held its third open meeting of 2020 today using a live audio webcast and approved three items:

  • A temporary final rule granting measures of regulatory relief to help ensure that federally insured credit unions remain operational and liquid during the COVID-19 pandemic.
  • An interim final rule that temporarily defers real estate-related appraisals and evaluations under the agency’s appraisal regulations because the public health crisis and social distancing directives have created difficulties for lenders to obtain required appraisals on a timely basis.
  • A final rule that increases the threshold level below which appraisals would not be required for residential real estate-related transactions from $250,000 to $400,000.

Additionally, staff from the Office of Examination and Insurance briefed the NCUA Board on regulatory changes to the Central Liquidity Facility that were approved on April 13.

Temporary Final Rule Provides Regulatory Relief

The NCUA Board unanimously approved an interim final rule that temporarily raises the maximum aggregate amount of loan participations that a federally insured credit union may purchase from a single originating lender without needing a waiver from an NCUA regional director. Under this final rule, the aggregate loan participation amount from a single originating lender will now be the greater of $5 million or 200 percent of a federally insured credit union’s net worth.

“This rule represents an additional step in our ongoing efforts to protect the safety and soundness of the credit union industry and to ensure the well-being of credit union member-owners during the COVID-19 crisis,” NCUA Chairman Rodney E. Hood said. The rule offers credit unions temporary regulatory relief during the response to the pandemic.”

The final rule also temporarily suspends limits on the types of eligible obligations that a federal credit union may purchase and hold. Under the rule, a federal credit union no longer has to refinance a purchased obligation so that it matches the types of loans the credit union is allowed to make.

The NCUA Board also is suspending the required timeframes for the occupancy or disposal of properties held by federal credit unions that are not being used to conduct business or that have been abandoned.

These temporary modifications are effective upon publication in the Federal Register and will be in place until December 31, 2020, unless extended by the NCUA Board.

Board Approves Deferment of Appraisal Requirements for 120 Days

The NCUA Board unanimously approved an interim final rule that allows a credit union to temporarily defer certain appraisals and evaluations for up to 120 days when other alternatives are not available and when the appraisal or evaluation would delay the closing of the residential or commercial real estate loan transaction. The interim final rule covers all real estate related transactions except those involving acquisition, development, and construction real estate loans are excluded from this interim rule.

A similar interim final rule was approved previously by the federal banking agencies.

These temporary provisions will expire on December 31, 2020, unless extended by the NCUA Board. The interim final rule is effective upon publication in the Federal Register, and has a 45-day comment period.

Board Raises the Real Estate Appraisal Threshold to $400,000

The NCUA Board approved, by a 2–1 vote, a final rule increasing the threshold level where an appraisal is not required for residential real-estate related transactions from $250,000 to $400,000. If the property involved in the transaction is below the threshold, federally insured credit unions will be required to obtain written estimates of the market value of the real estate, consistent with safe and sound practices.

“We recognize that the process of securing a loan and purchasing a home can be time-consuming and costly, particularly for middle- and working-class borrowers and those who live in underserved and rural areas,” Hood said. “This common sense adjustment to the appraisal threshold for residential real estate transactions is a timely regulatory reform that will serve lenders and borrowers well.”

The final rule explicitly incorporates the existing statutory requirement that appraisals be subject to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice. Additionally, the rule aligns the agency’s appraisal rule with the requirements of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.

The final rule is effective upon publication in the Federal Register.

Interim Rule Enhances the Central Liquidity Facility as a Liquidity Backstop

Staff from the Office of Examination and Insurance briefed the NCUA Board on the regulatory enhancements to the Central Liquidity Facility resulting from an interim final approved by the Board by notation vote on April 13.

The interim final rule enhances the agency’s Central Liquidity Facility regulations to supplement the legislative changes to the facility resulting from the Coronavirus Aid, Relief, and Economic Security Act. Specifically, the interim final rule:

  • Eliminates the six-month waiting period for a new member to receive a loan;
  • Makes temporary amendments to the waiting period for a credit union to terminate its membership;
  • Eases collateral requirements on some assets; and
  • Allows, temporarily, for an agent member to borrow for its own liquidity needs.

The interim final rule becomes effective upon publication in the Federal Register and will expire on December 31, 2020. There is also a 60-day comment period.

The NCUA tweets all open Board meetings live. Follow @TheNCUA on Twitter, and access Board Action Memorandums and NCUA rule changes at www.ncua.gov. The NCUA also live streams, archives and posts videos of open Board meetings online.

Last modified on
05/20/20