ARLINGTON, Va.–As CUToday.info reported earlier, the Biden Administration has announced it will extend the foreclosure moratorium and relief programs available through the federal government through June 30 as the coronavirus pandemic lasts longer than many had expected. It’s just the latest such extension and it raises the question—what happens when all those extensions and forbearance periods expire and CU members need to pay up on all that accumulated loan debt?
Ideally, various regulatory agencies and government entities will put in place rules that allow members to refinance those loans or reach other workout arrangements, said Carrie Hunt, EVP and general counsel with NAFCU.
Hunt noted that in the initial stages of the coronavirus many members who took advantage of some of the forbearance offers from their respective credit unions “reversed course” and began making payments again to bring their loans current.
“Credit unions are always going to work with their members,” said Hunt. “That’s why it’s so important credit unions have flexibility” to create workouts so members aren’t faced with an enormous balloon payment they can’t afford.
Hunt added it’s also the reason NAFCU has been pushing NCUA to adjust accounting rules to allow credit unions to put together packages that allow members to refinance debt accumulated during forbearance periods.
Other Issues Addressed
Hunt also touched on several other issues, including:
- The Necessity of an NCUSIF Premium. During last week’s NCUA board meeting, NCUA Chairman Todd Harper indicated the share insurance fund is likely to need to charge credit unions a premium in order to restore its net equity ratio to 1.3% (at year end it was at 1.26%). In response, Hunt repeated NAFCU’s position that no premium is necessary, as the declining ratio at year-end was due to the influx of member deposits and that NCUA sends invoices to credit unions the equity ratio will rise to at least 1.3% by mid-year.
And while NCUA board members Kyle Hauptman and Rodney Hood questioned the need for a premium assessment, Hunt noted their primary responsibility ultimately remains to the safety and soundness of the fund.
- With the CFPB’s new leadership saying it plans “vigorous oversight” and plans to hire more attorneys, Hunt said the Bureau’s more aggressive posture won’t change NAFCU’s position: it has always opposed the CFPB having oversight over credit unions.
“We support necessary regulation, not unnecessary regulation,” said Hunt. “We will continue to fight back.”