The NCUA Board issued a proposal Thursday allowing credit unions to capitalize interest in connection with loan modifications. CUNA has strongly pushed the agency for this change in recent months, including in three letters to NCUA Chairman Rodney Hood.
“We thank NCUA for issuing this proposal which gives credit unions a more member-friendly option to make a loan modification. CUNA strongly supports this option as the pandemic effects will be felt for months and years to come,” said CUNA President/CEO Jim Nussle. “We hope that NCUA will quickly finalize this proposed rule so that needed pandemic relief is not further delayed.”
Specifically, the rule would establish documentation requirements to help ensure that the addition of unpaid interest to the principal balance of a mortgage loan does not hinder the borrower’s ability to become current on the loan.
The proposed change would apply to workouts of all types of member loans, including commercial and business loans.
Agency staff provided the board with an update on the 2020 budget. NCUA anticipates $18 million will be left over due to a reduction in travel. Agency staff recommended reallocating $4.32 million for COVID-related costs and opportunities, leaving the surplus at $14.7 million.
Approximately $3 million would be used for renovations to the agency’s central office; allowing the $3 million planned for the 2021 Capital Budget to be eliminated.
Board members agreed to reprogramming of part of the 2020 budget, but board members Todd Harper and J. Mark McWatters expressed concern with the 2021-2022 budget and indicted they are unlikely to support it as proposed.
Finally, the board received its quarterly update on the share insurance fund, showing a total income of $69.3 million and net loss of $26.1 million for the quarter ending Sept. 30.
Staff noted that as of Wednesday, 99.6% of the amount invoiced to credit unions for a “true up” has been collected.
Additional details on the meeting can be found on CUNA’s Removing Barriers Blog.