Those criteria would indicate to the agency that individuals in those communities have "sufficient interaction and/or common interests."
Once approved, the NCUA would regularly check to be sure the credit union is following through with its marketing plan to serve the area.
The proposed rules also define a rural district as a contiguous area in which more than 50% of the population lives in areas defined by the U.S. Census Bureau as rural and the area's population doesn't exceed 100,000 people.
In addition, the NCUA is also seeking comments on its definition of an underserved area because currently an area can have many depository institutions, but the majority of them have products and services geared mainly towards businesses and higher income individuals.
The proposed rules also define a credit union as "in danger of insolvency," and therefore, subject to an emergency merger as having any or all of these criteria: A net worth declining at a rate that will render it insolvent within 24 months or under 2% in 12 months or a net worth that is undercapitalized with no reasonable prospect of becoming adequately capitalized in the next 36 months.
The agency is proposing the rules change, for which there is a 60-day comment period to make the chartering process more objective and less time consuming.
NCUA Chairman Debbie Matz said the rules will make it easier for credit unions because "they won't have to spend the time or money to meet subjective standards" and remove much of the guesswork from the process.
In response to a question from Matz, NCUA Deputy General Counsel Michael McKenna said the application process, which currently can take as long as 18 months, will only take "a couple of months."
NCUA Board Member Michael Fryzel said the changes are "a long time in coming and long overdue." And NCUA Board Member Gigi Hyland said she was pleased with the results of a process that has been a "long, hard slog."
CUNA's and NAFCU's top regulatory officials praised the proposed rules but said they had some concerns.
"They are trying to improve the process and make it easier for credit unions," said CUNA Deputy General Counsel Mary Mitchell Dunn. "We especially want to look closely at the proposal on rural areas, though it's an improvement over the previous one."
NAFCU Senior Counsel and Director of Regulatory Affairs Carrie Hunt said the trade group was "pleased there is a process in place, but we will look at the rules closely to see to it that it benefits most of our members."
The board also gave final approval to a rule that would allow more flexibility to federal credit unions that participate on the Obama administration's program for rewriting and refinancing certain mortgages.
Federal credit unions would be allowed modify a second mortgage to match the first one, even if that mortgage extends beyond the 20 years allowed by the agency's lending rules. The rules place such a limit on second-mortgage loans secured by the borrower's primary residence.
NCUA Chief Financial Officer Mary Ann Woodson told the board that as a result of the sluggish economy, 5.63% of all insured shares are in credit unions with CAMEL 4 or 5 ratings, and there are 328 credit unions with such ratings.
By contrast, at the end of November 2008 there were 257 credit unions with those ratings.
In addition, there are 1,629 credit unions with CAMEL 3 ratings, compared with 1,591 at the end of last December.
There have been 24 credit union failures during the first 10 months of 2009, compared with 18 for all of last year.