Compliance questions? Here’s what’s trending (plus answers)

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Does your credit union have compliance questions? If so, the New York Credit Union Association’s compliance department is here to help.

The following are some recent, recurring compliance questions from credit unions, and corresponding answers provided by the Association’s compliance department.

Q: Can our credit union’s Annual Meeting be held virtually due to COVID-19 in 2021?

A: Yes, it is permissible to hold Annual Meetings virtually due to COVID-19. The NCUA has issued a letter regarding Annual Meeting flexibility for further guidance.

Q: Is our credit union allowed to use the legend “Equal Housing Lender” for print/website advertising of home loans without the use of the “doghouse” logo? 

A: No, NCUA Part 701.31 provides that for print advertisements the logotype is required along with the legend.

Q: Are long term loans for the financing of a second home or investment property allowable under NCUA regulation?

A: Unless a loan meets a maturity limit exemption under NCUA Part 701.21, the maximum maturity limit allowed is 15 years.

The Federal Credit Union Act and NCUA Part 701.21 permit federal credit unions to make first-lien, long-term residential real estate loans with maturities of up to 40 years on a one-to-four-family dwelling “that is or will be the principal residence of the member-borrower”.

The NCUA has also reiterated this in a longstanding opinion letter. The NCUA has also held the position that the word “principal” is singular. By way of definition there cannot be a second “principal” home.

Consequently, a long-term loan to finance a member’s second home or investment property is not permissible.

Q: What is the difference between a joint owner and a joint member?

A: Joint owners and joint members both have equal ownership rights on an account.

A joint member is a member of the credit union. A joint owner is merely an owner of the funds in the account they are on, not a member of the credit union.

Joint members have voting rights, can take out loans and use credit union services. In contrast, joint owners do not have voting rights, cannot take out loans and are limited in the use of credit union services.

Q: Are there any additional rules or requirements when escheating a minor’s account?

A: Accounts for minors follow the same escheatment time schedule as other accounts. The NYS reporters of unclaimed funds handbook provides the following:

The dormancy period on accounts resulting from New York’s Uniform Gift to Minors Act (UGMA), or any other custodian or in-trust-for account not subject to a court order, is three years from the date of last customer contact.

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