WASHINGTON—In response to a request from the chairman of the Senate Banking Committee, the Defense Credit Union Council has sent a letter to NCUA offering ways the agency can make statutory changes to “promote lending and mitigate the economic impact of COVID-19 for consumers and businesses.”
Recommendations Made
DCUC offered several recommendations:
- Temporary removal of member business lending caps.
- Exempt credit unions from Military Lending Act Restrictions
- Inclusion of APO/FPO addresses in low-income credit union designation
- Borrowing by credit unions
“While these are nothing new, we hope these recommendations are helpful in removing obstacles and providing more tools for our credit unions to use in the current crisis,” stated DCUC president and CEO Anthony Hernandez. “Now is the perfect time to advocate for these changes. Our members need our help. If not now, when would be the better time?”
Hernandez added that removing these obstacles “sends a clear signal that our nation recognizes our credit union industry’s impact in fostering entrepreneurship in successfully rebuilding the American economy for our working families and communities.”
Second Letter to NCUA
DCUC sent a second letter to NCUA expressing the group’s support for H.R. 2305, legislation that would exempt business loans made to veterans from current business lending caps.
“Prior to ongoing COVID-19 challenges, the SBA’s 7(a) program has grown in recent years. Yet, SBA guaranteed loans have benefited veterans far less than non-veterans (48% growth compared to 82%),” wrote Hernandez. “...As any veteran knowns, prolonged military service comes with unique stressors, such as frequent relocations and deployments which complicate the process. With additional COVID-19 challenges, our fear is that military borrowers will continue to be marginalized. This is where the National Credit Union Administration can help. We hope the NCUA will include enactment of H.R. 2305 as one of their recommendations in helping the Senate identify statutory changes needed to promote lending and mitigate the economic impact of COVID-19 for consumers and businesses.”
Letter to Treasury
Separately, DCUC has sent a letter to the heads of the Treasury and the Department of Housing and Urban Development, expressing concerns over the impact of mortgage forbearances on credit unions.
“A crucial aspect of the MBS Guaranty program is that investors will receive payments of principal and interest on time and in full. When this does not happen, the impact on credit union mortgage servicers creates increasing liquidity issues over the next year,” stated Hernandez. “When you don’t have liquidity, you cannot make loans.”
“There are reports that nearly 37% of military spouses report having lost their jobs or having their hours reduced, and 28% of veterans responding to the poll report the same. As such, there is already discussion on the military spouse blogs about military families NOT paying their rent and mortgages to compensate for the loss in family income. Our concern is this will directly impact our members as the effects ripple through the system,” wrote Hernandez.