Compliance Blog

Consumer Lending Jan 15, 2008

NCUA Issues Legal Opinion Letter

NCUA recently issued a legal opinion letter, which states that a federal credit union can replace credit life existing insurance with debt cancellation programs if state law and its lending contract permit the credit union to make the change.  Read a NAFCU Today article about it here.  (You can also access the legal opinion letter from the article.)  Here's a link to the letter itself.

Here's my take on the letter.  It does a good job of driving home three points:

  1. State insurance laws can affect federal credit unions;
  2. You almost always need to consult Reg Z for questions related to lending; and
  3. Contracts that give you flexibility are worth their weight in gold.  (Gold, Jerry. Gold.)