At its Thursday meeting via live audio webcast, the NCUA’s board of directors approved a proposed rule to amend its regulations by removing the prohibition on the capitalization of interest in connection with loan workouts and modifications. The board also approved the reprogramming of unspent money in the 2020 travel budget.
The proposed rule on capitalization of interest removes the prohibition on the capitalization of interest in connection with loan workouts and modifications, according to the NCUA.
The board determined that the current prohibition on authorizing additional advances to finance unpaid interest could be overly burdensome or hamper good-faith efforts to engage in loan workouts with borrowers facing difficulty due to the COVID-19-related economic disruption, while advancing interest may avert the need for alternative actions that could be more harmful to borrowers.
The proposed rule would establish documentation requirements to help ensure that the addition of unpaid interest to the principal balance of a mortgage loan does not hinder a borrower’s ability to become current, with the proposed changes applying to workouts of all types of member loans, including commercial and business loans.
Comments are due 60 days from publication in the Federal Register.
Unspent travel budget
The board approved the reprogramming of $4.3 million from the agency’s projected unspent 2020 travel budget to fund pandemic response activities, which includes COVID-related renovations to the NCUA’s central office building.
It is estimated that at least $18 million – up from previous estimates of $13 million — in travel-related spending will remain unspent due to the COVID-19 pandemic, according to the NCUA.
Share Insurance Fund
The Share Insurance Fund reported $19.2 billion in assets as of the third quarter of 2020 and $46.6 million in net income year to date. Additional capitalization deposits of approximately $1.5 billion from insured credit unions were also reported after the NCUA invoiced for its semi-annual contributed capital adjustment for credit unions with $50 million or more in assets.
Credit Union Diversity Self-Assessment
A briefing about the 2019 Voluntary Credit Union Diversity Self-Assessment revealed an increase in credit union participation from 81 in 2018 to 118 in 2019. A majority of credit unions reported a leadership and organizational commitment to diversity, with 48 percent reportedly taking steps to implement employment practices that demonstrate their commitment to diversity, according to the briefing. The NCUA accepts self-assessments year-round, with the cut-off date for annual submissions Jan. 15 of the following year.