NCUA Proposals Offer Securitization Parity: Onsite Coverage
The NCUA Board approved three new proposed rules at its monthly meeting on Thursday, including a rule that would give credit unions greater parity with banks when it comes to securitizing assets.
According to the board action memorandum, a new proposed asset securitization rule “clarifies that a federal credit union is authorized to securitize loans that it has originated, as an activity incidental to the business for which a federal credit union is chartered, provided the transaction meets certain requirements.”
A second proposed rule would retain the safe harbor for financial assets transferred in connection with securitizations.
“The safe harbor proposal is really the second half of the securitization rule,” NCUA Chairman Debbie Matz told CU Times.
“With the securitization rule we’re permitting certain credit unions under certain circumstances to securitize the loans on their books, but in order for them to be marketable, we needed to propose a safe harbor provision, which indicates if the credit union that securitized the loans is liquidated or conserved the investors would not lose their money. So it was really important – it matches the way the FDIC treats securitizations with banks,” she added.
The NCUA also approved a proposed appraisals rule that would revise some of the agency’s current regulations.
The proposal would “eliminate the now duplicative requirement that federal credit unions make available, to any requesting member/applicant, a copy of the appraisal used in connection with that member’s application for a loan secured by a first lien on a dwelling.”
NAFCU said it supports the proposal since it would ease the regulatory burden on credit unions.
“We also support NCUA’s proposal to reduce some of the burden associated with the agency’s appraisal rules. Credit unions are currently subject to two overlapping rules from CFPB and NCUA for providing copies of appraisal reports to members, and we welcome the agency’s proposal to eliminate this redundancy,” Hunt said.
“The proposed rule on appraisals also provides credit unions some relief from the requirement to obtain an appraisal for certain transactions, which NAFCU welcomes.”
The board also green-lighted a final voluntary liquidations rule and a request to convert the $355 million Mainstreet Credit Union’s charter from state to federal.
The final rule allows liquidating federal credit unions to publish required creditor notices in either newspapers or electronic media and distribute member share payouts electronically, via mail or personal delivery.
“NAFCU supports the NCUA board’s adoption of technical amendments to the voluntary liquidations rule to reflect technological advances at credit unions,” said Carrie Hunt, NAFCU senior vice president of government affairs and general counsel, in a statement following the meeting. “We will continue to encourage the agency to also look at advertising rule changes that would accommodate the rise of social media and mobile banking.”