As NCUA begins carrying out examinations under the revised member business lending (MBL) rule, credit unions need to ensure their lending operations meet all of the rule's criteria.
Jared Ihrig, CUNA’s chief compliance officer, recently led the approximately 180 students at CUNA’s Business Lending Certification School through NCUA's 101 pages of guidance about the new rule. He calls the guidance a “road map” of what to expect when it’s time for examiners to come into your credit union and review your commercial and member business lending operations.
“This will point you in the right direction and show you how it’s laid out,” Ihrig says. “It’s a road map of what examiners are expecting from you and what they’ll do procedurally along the way.”
The guidance, which NCUA released in November 2016, gives credit unions lists of definitions, responsibilities, requirements, and the elements their policies and procedures must include. Frequently, the items include a set of bullet points that specify examiners' priorities. Ihrig says to take those bullet points into consideration when preparing for an examination.
“Follow the bullets and you’ll be in good shape,” he says.
While a hefty chunk of the guidance deals with the specifics of the new rule, Ihrig says the final 10 pages delve into the exam processes and will give credit unions an idea of what to expect during an exam.
This section lays out the exam content, pre-exam requirements, details on the loan review process, the written plans, policies and procedures that will be covered, and a list of 17 “on the radar” items that examiners could target in a loan review.
Ihrig urges credit union staff to pay close attention to the information included in the guidance.
“From a lender’s point of view, it’s boring,” Ihrig says. “Dealing with regulatory compliance is sometimes like chewing on cardboard, but it’ll keep your tails out of trouble when the regulators come in.”