Developments Over The Weekend You Need To Know About

March 23, 2020 at 9:41 am 1 comment

There have been some important developments over the weekend that you need to know about.

First, state and federal banking regulators, including the NCUA, issued a joint statement yesterday encouraging financial institutions to work with borrowers “who are or may be unable to meet” payment obligations because “of the effects of the COVID-19”. In addition, the regulators conferred with the Financial Accounting Standards Board and confirmed that credit unions can take these steps without automatically characterizing them as Troubled Debt Restructurings (TDRs) for accounting purposes. According to the statement “regardless of whether modifications result in loans that are considered TDRs or are adversely classified, agency examiners will not criticize prudent efforts to modify the terms on existing loans to affected customers”. This is a good statement to keep in the files.

Second, common sense has prevailed. In response to an emergency declaration issued by President Trump on March 13th, NCUA issued this guidance allowing credit unions to conduct virtual annual meetings provided that certain conditions are met. It also reiterates that credit unions have the option of postponing the annual meeting. Incidentally, an earlier order issued by New York State also gives corporations and credit unions the explicit authority to conduct virtual, annual and special meetings.

Third, an Executive Order issued by New York’s Governor Cuomo clarified what the DFS expects financial institutions to do in response to the pandemic. The order also makes clear that this mandate only applies to state chartered and state licensed institutions. This means that a federal credit union is not subject to this order but its CUSO is. For those of you subject to New York law, the order stipulates that a financial institution that does not provide a 90-day mortgage forbearance to any person or business who has a financial hardship as a result of the COVID-19 pandemic where it would be prudent to do so shall be committing an unsafe and unsound business practice. This is not guidance. It is a mandate. When in doubt, grant the forbearance. The order also empowers DFS to regulate and restrict ATM fees, overdraft fees and credit card fees during this emergency. This will be done pursuant to emergency regulations.

Fourth, there are two other orders you may have missed that impact your credit union whether it is state of federally chartered. The first permits electronic notarization. This is a huge potential benefit to your members who are nervous about going into your branch. Secondly, New York State has suspended all statutes of limitations in civil actions. This means that even though the court system is all but shut down it will not prevent you from taking legal action against members from whom debts need to be collected or mortgages foreclosed on once the emergency period has ended.

Finally, my wife assures me that liquor stores are classified as essential services under New York’s stay-at-home-order. I don’t know about anyone else, but a couple of months of cabin fever combined with non-stop regulations is the perfect recipe for a five o’clock drink. Have a good day and stay safe.

Entry filed under: Compliance, New York State, Regulatory, technology. Tags: , , , , , , , .

Fed Gives Credit Unions Greater Flexibility To Comply With Regulation D New York State Releases Emergency Mortgage Regulations

1 Comment Add your own

  • 1. Anonymous  |  March 23, 2020 at 2:31 pm

    My step-daughter lives in Pittsburgh. She told us that in Pittsburgh the liquor stores are closed, deemed non-essential. This is one Ny got right.

    Reply

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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