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Concentration risk has been a major contributor to industry failures in recent years, and some of those failures were tied to heavy real estate portfolio concentrations, NCUA speakers in a NAFCU webcast told credit unions Wednesday.

Both NCUA Director of Risk Management Wendy Angus and Loss Risk Analysis Officer Christine Bryant suggested that credit unions review NCUA Letter to Credit Unions 10-CU-03 to see how examiners will focus on concentration risk.

Bryant said credit union management should report issues related to concentration risk to their boards. She also urged that credit unions plan for what happens once they've hit their concentration risk limit. Agency examiners will view simply raising the limit as a red flag, she added.

NCUA is anticipating higher losses from member business lending portfolios this year, Bryant noted. Examiners will be looking at whether credit union employees assigned to MBL understand underwriting such loans, she added.

The agency is also seeing a 22 percent default rate for mortgage loan modifications, according to Bryant. She said NCUA examiners will be closely eyeing such modifications to see whether they are geared toward helping members versus delaying eventual charge-offs.

Angus, referring to material loss reviews of last year's credit union failures, cited risk concentrations and several costly fraud cases among the reasons for the failures. She said credit unions will see an increase in administrative enforcement actions. Angus explained that these actions will not be enforced from a "gotcha" perspective but with the intention of helping credit unions.

Wednesday's webcast will be archived for six months.