NCUA Gives Nod To 'Skip-A-Payment' Loans
NCUA said last week that so-called Skip-A-Payment loans are permissible for federal credit unions, as long as the credit union meets Truth In Lending disclosure requirements.
A credit union's addition of an option to defer or skip a payment to an open-end loan after giving certain disclosures may trigger additional disclosure requirements, the agency said in a new legal opinion letter. No additional disclosures are required if the credit union adds the feature within 30 days after providing the initial disclosures, and the finance charge is the same. The member must receive additional disclosures before using the option for the first time if the credit union adds the option after the 30 days, and it is not part of a renewal, resupply, or the original extension of credit.
Skip payment offers for closed-end credit after the initial loan do not require additional disclosures, NCUA said. A credit union is proposing a Skip-A-Payment program for members based on their credit and payment history and will charge a fee for it.