NCUA seeks to phase out home-based FCU ops

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Dec. 13, 2013 – NCUA’s board, voting 2-1, on Thursday proposed a rule to address examination-related concerns with respect to home-based federal credit unions, and which would bar such arrangements after two years.

The agency says 79 federal credit unions currently operate out of a home or on premises of a home address; they range in asset size from $34,000 to $12 million. NCUA Board Chairman Debbie Matz said the rule is required to address concerns for the security of examiners and privacy of credit union members' data.

The proposal is out for a 30-day comment period. NAFCU will closely review the proposal as well as feedback from its members.

Under the proposed rule, any supervisory meetings between federal credit union and NCUA staff would have to occur at an FCU’s offices or other alternative public location. Other rule provisions deal with the delivery of necessary records for the exam and access information (such as email address or phone number). These provisions would take effect 30 days after the rule’s effective date. "This [contact information] requirement is long overdue," Matz said.

Two years after the rule’s effective date, the rule would prohibit federal credit unions from operating out of homes or the storage of records at residential locations; and would require the institution to continue to require at least one method of contact.

The rule would not apply to federally insured, state-chartered credit unions, and NCUA Board Member Michael Fryzel questioned that. Staff said there are just 14 home-based FISCUs and that the agency would hope to be able to work with those institutions informally. Debate was extensive: Fryzel did not agree that this proposal is either desirable or within the agency's authority and cast the lone "no" vote on issuing it.

Board Member Rick Metsger shared some of Fryzel's concerns but said seeking comments seems prudent. He also said it might be worthwhile to contact state regulators. The objective, overall, is to "make sure all examiners have the same protections," he said.

The board on Thursday also approved a 2014 oversight budget of $4.525 million for the Temporary Corporate Credit Union Stabilization Fund, technical amendments to the corporate credit union rating system and a final rule on charitable donation accounts; and received a briefing on a supplemental appraisal rule.