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NCUA updates supervisory priorities to reflect coronavirus challenges

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With the second half of 2020 underway and financial institutions dealing with a global pandemic, the National Credit Union Administration has updated its supervisory priorities to better reflect changes that have taken place since March.

In a letter to credit union boards and CEOs, the agency emphasized its focus is on areas “that pose an elevated risk to the credit union industry and the National Credit Union Share Insurance Fund given the current environment.”

Among the changes are ensuring credit unions are making good faith efforts to comply with obligations outlined in the Coronavirus Aid, Relief and Economic Security Act, signed into law in late March. Those include providing up to 360 days of forbearance for residential mortgages held by members experiencing COVID-19-related hardships, prohibiting foreclosures on some single-family federally backed mortgages, new requirements regarding reporting loan modifications and more.

The agency said examiners will be watching credit union risk management tactics and monitoring loss allowances, including reviewing policies regarding use of loan workout strategies and measures put in place to assist borrowers impacted by the pandemic.

“In particular, examiners will evaluate a credit union’s controls, reporting, and tracking of these programs. Examiners will also ensure credit unions have evaluated the impact of COVID-19 pandemic decisions on their capital position and financial stability,” the agency said.

NCUA also announced modifications to its consumer compliance reviews to reflect regulatory changes enacted since the pandemic began, including evaluating practices regarding Reg E and truth in lending.

Lastly, the agency noted that due to the pandemic it will be delaying the broader rollout of its new MERIT examination tool, which entered a pilot program last September, until the second half of 2021. Examiners will continue to use the portal in a limited capacity.

The full update is available here.

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