WASHINGTON — CUNA and NAFCU both praised proposed guidelines on revising the appraisal process but each had suggestions for making them more friendly to credit unions.
The guidelines, which are being issued by the NCUA, the Office of Thrift Supervision, the Office of the Comptroller of the Currency and the FDIC, outline criteria for evaluating the real estate lending practices by credit unions and other financial institutions.
Examiners will consider criteria such as the size and nature of an institution's real estate-related activities, whether the assumptions and valuation conclusions are reasonable and whether the appraisal and evaluation complies with regulations and the institution's policies.
Each institution's policies should take steps that include providing for the independence of the person who orders, performs and reviews the appraisal or evaluation; establish criteria and procedures to evaluate and monitor the person who performs the appraisal or evaluation; and develop criteria to assess the validity of existing appraisals or evaluations to support future transactions.
CUNA Senior Assistant General Counsel Jeffrey Bloch wrote in a letter to the NCUA that the guidelines should clarify how much “appraisal” refers to interior inspections and how much they include exterior inspections. He also said the regulations should not mandate an institution discuss its needs and expectations with an appraiser. Bloch also said regulators should consider giving lenders more flexibility about whether an appraisal is needed for every loan modification.
NAFCU Associate Director of Regulatory Affairs Tessema Tefferi wrote the NCUA that it should train examiners and make changes to its Examiner's Guide to ensure the consideration of the size and complexity of each credit union when evaluating the effectiveness of their examination programs. He also urged the agency to broaden the allowed uses of the automated valuation model by credit unions. The proposed guidelines only allow its use in conjunction with a review by a loan officer or someone else with knowledge and training in the real estate market where the loan is being made. Tefferi said given credit unions' track record in lending, his association does “not believe that credit unions should be subject to any more stringent regulations on evaluation alternatives than other regulated lending institutions.”

NCUA Clarifies Rules on
Removal of Board Members

ALEXANDRIA, Va. — Board members of federal credit unions can only be removed by a vote of the full membership of a credit union, unless they are repeatedly absent from meetings, according to an NCUA legal opinion.
A board can declare a vacancy if a member has missed three consecutive meetings or four during a calendar year.
But credit union boards “cannot use the vacancy provision to circumvent the right of members to vote on a director's removal,” wrote NCUA Associate General Counsel Sheila A. Albin. The board's supervisory committee must unanimously vote to suspend a board member before the issue is brought to the full membership, she added.
Albin wrote the letter in response to a board member who had been removed from his board because of disputes with other board members. The board member's name and the name and region of the credit union were redacted from the version of the letter released to the public.

NCUA Includes Software Patch to
Fix Error in 5300 Call Reports

ALEXANDRIA, Va. — NCUA posted a notice on its 5300 Call Report Web page saying a software patch is needed to fix an error.
Instructions on how to download the patch are included. For more information, visit http://www.ncua.gov/data/5300/5300Tools.html. It affects page 5 of the December 2008 5300 Call Report.

Mica to Speak At MACUMA

WASHINGTON — CUNA President/CEO Dan Mica will discuss issues facing the credit union movement at the Feb. 9 meeting of the Metropolitan Area Credit Union Management Association.
Mica will respond to questions from Credit Union Times Editor-in-Chief Sarah Snell Cooke.
The meeting is at 6:30 p.m. at the Key Bridge Marriott in Arlington, Va.
MACUMA was established in 1958 and serves 71 credit unions in the Washington, D.C. area.
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