NCUA Says Officer Cant Earn Fees For Referring Denied Loans
ALEXANDRIA, Va. – NCUA said a director of lending who has disapproved member loans may not earn a fee by referring those members to a mortgage broker because it is a conflict of interest.
The directive in a new legal opinion posted yesterday notes that NCUA’s conflict of interest rule “ensures that employees and management make appropriate decisions regarding lending” that are not affected by personal financial considerations. “Loan officers must decide whether to grant or deny loan applications absent economic incentives that could influence decisions against the best interests of members,” said the agency.
The legal opinion was issued to Trenton NJ Police FCU, which had a relationship with a local mortgage broker and acts as a finder for members whose loan applications do not meet the credit union’s criteria. The credit union’s director of lending is responsible for reviewing loan applications and makes the decision to approve or deny the applications. The director of lending also receives compensation from the mortgage banker and has received a formal job offer from the broker.