ALEXANDRIA, Va. - NCUA has sent a Letter to Credit Unions (08-CU-19) emphasizing how important it is to do proper due diligence in setting up and maintaining third-party relationships. Such third parties, said agency Chairman Michael Fryzel, include brokers and correspondents, and "can and will continue to play an important and ever-increasing role in how credit unions operate."
In the letter, NCUA reminds CUs should:
* Have board-established lending policies and procedures to fit the product-with risk tolerance levels based on management analysis, established regulatory thresholds, and sound business reasons.
* Ensure that loan growth is slow and controlled, with CUs using reasonable risk thresholds and avoiding a concentration in a particular loan type and/or in unfamiliar geographic areas.
* Should review broker and correspondent relationships and perform due-diligence commensurate with the risk and complexity of those activities, regardless of whether the third party has a credit union affiliation, such as being part of a credit union service organization.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/
