NCUA board passes appraisals rule, receives MERIT briefing

September 17, 2020

The NCUA board passed a final real estate appraisals rule, approved an exemption from the Bank Secrecy Act’s Customer Identification Program and heard a briefing on the new MERIT Examination system at its Thursday meeting.

The appraisals final rule adopts the interim final rule approved by the board in June without change. It  defers the requirement to obtain an appraisal or written estimate of market value for up to 120 days following the closing of certain residential and commercial real estate transactions, excluding transactions for acquisition, development and construction of real estate.

It will be effective as soon as it is published in the Federal Register and remain in effect through Dec. 31.

CIP Exemption

The board also authorized an order granting an exemption from the BSA CIP requirements for certain loans to facilitate purchases of property and casualty insurance policies. This is a joint order together with the other federal financial regulators expanding a related order issued in September 2018.

MERIT scheduled for 2021 rollout

The briefing on the MERIT, Modern Examination and Risk Identification Tool, demonstrated several benefits, including providing users the ability to:

  • Securely transfer documents to an examiner;
  • Securely access and download examination reports;
  • Provide status updates on findings; and
  • Request due date changes.

The second release of MERIT was deployed to pilot users in July, but wider rollout was postponed due to the pandemic. Instead, NCUA began an expanded pilot this month with over 100 additional NCUA and state supervisory agency users and 17 credit unions to gain additional feedback.

Quarterly update on share insurance fund

The National Credit Union Share Insurance Fund reported a net income of $20.5 million and $17.7 billion in assets for the second quarter of 2020. The fund also reported $72.1 million in total income for the second quarter of 2020.

The equity ratio of the Share Insurance Fund, as of June 30, is 1.22 percent, which is below the Board-approved normal operating level of 1.38 percent. The primary driver for this change was the rapid growth in insured shares, which increased nearly 13 percent from December 2019.

Additional analysis of the meeting can be found on CUNA’s Removing Barriers Blog and CompBlog.