Dear Board of Directors and Chief Executive Officer:
This letter responds to credit union officials who have asked NCUA to clarify the criteria for MBL waivers.
Enclosed is Supervisory Letter 13-01 recently issued to NCUA field staff to provide guidance for processing MBL waivers under Part 723 of NCUA’s Rules and Regulations. I am providing you with a copy of this Supervisory Letter so you can understand how NCUA approaches waivers of the various regulatory requirements for MBLs.
The Supervisory Letter incorporates feedback NCUA received during my Listening Sessions last year, as well as various requests for clarifications regarding when waivers are needed. In particular, the Supervisory Letter will help you better understand the following:
- What types of waivers are available under Part 723 of NCUA’s Rules and Regulations.
- When and how you can obtain a “blanket” waiver applicable to a broader range of member business lending conducted by your credit union.
- Under what circumstance waivers are not needed for actions related to managing existing loans. In particular, the letter clarifies waivers are not needed for activities not meeting the generally accepted accounting principles (GAAP) definition of a “new loan.”
- Which of the borrower’s principals are required to provide a personal guarantee and the type of guarantee required based on different ownership structures for the business. The letter also clarifies what constitutes an associated borrower.
- The documentation you will need to submit and standards you will need to meet to request and qualify for a waiver.
- New NCUA procedures intended to streamline the process for obtaining waivers for credit unions buying a participation interest in an MBL.
I appreciate hearing constructive views that help NCUA improve the clarity of our rules and guidance.
If your credit union makes or plans to make MBLs, I encourage you to review the attached supervisory guidance. It will not only help you understand the MBL waiver process, it also contains guidance on sound risk management practices that will aid you in maintaining a safe and sound MBL portfolio.
Adhering to these risk management principles will help you tailor loans to meet the specific needs and financial capabilities of your members with small businesses.
If you have any questions related to this letter, please contact NCUA’s Office of Examination and Insurance at 703-518-6360 or EIMail@ncua.gov.