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ALEXANDRIA, Va.-NCUA has provided credit unions with guidance regarding how examiners will review debt cancellation and suspension programs on the agency’s Web site. In a Letter to Credit Unions (03-CU-09), NCUA Chairman Dennis Dollar explained, “While debt cancellation is a form of self-insurance, credit insurance is a three-party contract in which an insurance company takes on the underwriting risk. DCS programs, therefore, can pose a greater potential risk.” Under Truth in Lending regulations, if the fees for a DCS program are not itemized as part of the finance charges, the lender is required to obtain a written statement that the DCS is not required by the creditor to obtain the loan; disclose the fee or premium and term of coverage in certain situations; and obtain a signed affirmative request for coverage. Dollar directed credit unions to the Office of the Comptroller of the Currency’s DCS rule for best practices on these programs. Additionally, credit unions should employ Generally Accepted Accounting Principles for DCS programs. These procedures can be complex, the chairman warned, and the credit union may want to hire an accountant for the job.

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