NCUA Rejects CUNA Overture on Subprime Work-Out Guidance

ALEXANDRIA, Va. – NCUA yesterday dismissed a call from CUNA to train examiners and set guidelines on subprime mortgage work-outs.
 
“We are disappointed that CUNA has called for more restrictive requirements concerning the restructuring of certain types of mortgage lending,” said NCUA Chairman JoAnn Johnson. “NCUA does not agree that examiner judgment should be substituted for that of credit union lending professionals, and we reject CUNA's suggestion to impose explicit prescriptions in this area.
 
“The strong and rigorous supervisory regime created by NCUA enables credit unions to manage their portfolios while maintaining a very high level of safety and soundness, and we intend to continue with prudent modifications as market conditions dictate,” said Johnson.
 
The NCUA Chairman was responding to a letter sent Monday by CUNA to all three NCUA Board members and to Congress urging that NCUA clarify how examiners will respond to credit unions’ efforts to restructure subprime mortgages or to refinance other types of non-traditional home loans.
 
The CUNA letter, signed by CUNA President Dan Mica, asks that NCUA provide guidance to examiners on July’s Letter to CUs urging regulators to favor work-outs and refinancings for troubled homeowners. “Guidelines and training information provided to examiners on this matter should be shared with credit unions as soon as possible,” said Mica.