NCUA Issues Three Rules in Response to the COVID-19 Pandemic

John Zasada, Compliance Consulting Director, Financial Institutions Group

On April 16, 2020, the National Credit Union Administration (NCUA) issued temporary, interim and final rules related to the COVID-19 pandemic. The temporary final rule is effective until at least Dec. 31, 2020.  NCUA raised the maximum aggregate amount of loan participations a federally insured credit union may purchase from a single originating lender to the greater of $5,000,000 or 200% of the federally insured credit union’s net worth. The organization also suspended limitations on the eligible obligations a federal credit union may purchase and hold, as well as the required timeframes for the occupancy or disposition of properties not being used for credit union business or that have been abandoned.

The NCUA’s interim final rule, similar to the interim final rule issued by the banking agencies, defers the requirement to obtain an appraisal or written estimate of market value for up to 120  days following the closing of a transaction for certain residential and commercial real estate transactions, excluding transactions for acquisition, development and construction of real estate. Credit union should still try to obtain an appraisal or written estimate before loan closing.

The NCUA’s final rule increases the threshold level below which appraisals are not required for residential real estate related transactions from $250,000 to $400,000. Instead of an appraisal, federally insured credit unions are required to obtain written estimates of the market value of the real estate collateral consistent with safe and sound practices

For additional guidance on credit union COVID-19 compliance issues, contact Doeren Mayhew’s compliance specialists.