The NAFCU Journal July-August 2020 - 60

COMPLIANCE CENTRAL

Modifying Loans During
Hardship or Crisis
By Loran Jackson

C

redit unions have a long history of working to help their
members during hardships or
unexpected challenges, and the
current situation is no different. Some
credit unions already have policies that
outline particular programs that have
been used for past situations such as
individual member hardship, government shutdowns or natural disasters
like hurricanes. These kinds of policies
may include:
waiving account or overdraft fees;
lowering interest rates;
■	 skip-a-pay or other loan payment
deferment options; or
■	 loan workout or restructuring options.
■	
■	

There are a few important considerations
credit unions might make while incorporating some flexibility into lending policies
to assist members. These may arise in a
variety of situations, such as a member's
personal financial uncertainty or circumstances that affect an entire population of
membership. Credit unions may decide
to offer case-by-case modifications or to
modify terms for the entire membership.

Safety and Soundness

NCUA expects credit unions to operate
within safe and sound boundaries
that align with the credit union's
board-approved lending policy and
risk tolerances. This is the case even
when the credit union makes adjustments to work with members.
In addition to recent guidance, NCUA
has historically emphasized in its
60

Examiner's Guide that quality control
should include a system of safeguards
and checkpoints to ensure that all loans
are originated, processed, underwritten,
closed and serviced according to the
credit union's or secondary market's
requirements. Even if a credit union is
making an exception to allow a reduced
payment amount or a lower interest rate
in order to assist members, the expectations of safety, soundness and internal
controls still apply.
For example, a credit union may have
an internal policy that states one loan
officer must review each loan application,

and then another loan officer or analyst
must review the loan after a few months
to track and document its performance.
If the credit union agrees to modify a
member's loan to accommodate the
member's need for a lower payment, the
credit union may still need to employ
the processes of having one loan officer
review the application for modification
and another review performance of
the new loan after a few months. These
consistent processes may be critical
to a credit union's system of internal
controls, which are just as important for
loan modifications as they are for newly
originated loans.
THE NAFCU JOURNAL  JULY-AUGUST 2020



The NAFCU Journal July-August 2020

Table of Contents for the Digital Edition of The NAFCU Journal July-August 2020

The NAFCU Journal July-August 2020 - Cover1
The NAFCU Journal July-August 2020 - Cover2
The NAFCU Journal July-August 2020 - 1
The NAFCU Journal July-August 2020 - 2
The NAFCU Journal July-August 2020 - 3
The NAFCU Journal July-August 2020 - 4
The NAFCU Journal July-August 2020 - 5
The NAFCU Journal July-August 2020 - 6
The NAFCU Journal July-August 2020 - 7
The NAFCU Journal July-August 2020 - 8
The NAFCU Journal July-August 2020 - 9
The NAFCU Journal July-August 2020 - 10
The NAFCU Journal July-August 2020 - 11
The NAFCU Journal July-August 2020 - 12
The NAFCU Journal July-August 2020 - 13
The NAFCU Journal July-August 2020 - 14
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The NAFCU Journal July-August 2020 - 16
The NAFCU Journal July-August 2020 - 17
The NAFCU Journal July-August 2020 - 18
The NAFCU Journal July-August 2020 - 19
The NAFCU Journal July-August 2020 - 20
The NAFCU Journal July-August 2020 - 21
The NAFCU Journal July-August 2020 - 22
The NAFCU Journal July-August 2020 - 23
The NAFCU Journal July-August 2020 - 24
The NAFCU Journal July-August 2020 - 25
The NAFCU Journal July-August 2020 - 26
The NAFCU Journal July-August 2020 - 27
The NAFCU Journal July-August 2020 - 28
The NAFCU Journal July-August 2020 - 29
The NAFCU Journal July-August 2020 - 30
The NAFCU Journal July-August 2020 - 31
The NAFCU Journal July-August 2020 - 32
The NAFCU Journal July-August 2020 - 33
The NAFCU Journal July-August 2020 - 34
The NAFCU Journal July-August 2020 - 35
The NAFCU Journal July-August 2020 - 36
The NAFCU Journal July-August 2020 - 37
The NAFCU Journal July-August 2020 - 38
The NAFCU Journal July-August 2020 - 39
The NAFCU Journal July-August 2020 - 40
The NAFCU Journal July-August 2020 - 41
The NAFCU Journal July-August 2020 - 42
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The NAFCU Journal July-August 2020 - 44
The NAFCU Journal July-August 2020 - 45
The NAFCU Journal July-August 2020 - 46
The NAFCU Journal July-August 2020 - 47
The NAFCU Journal July-August 2020 - 48
The NAFCU Journal July-August 2020 - 49
The NAFCU Journal July-August 2020 - 50
The NAFCU Journal July-August 2020 - 51
The NAFCU Journal July-August 2020 - 52
The NAFCU Journal July-August 2020 - 53
The NAFCU Journal July-August 2020 - 54
The NAFCU Journal July-August 2020 - 55
The NAFCU Journal July-August 2020 - 56
The NAFCU Journal July-August 2020 - 57
The NAFCU Journal July-August 2020 - 58
The NAFCU Journal July-August 2020 - 59
The NAFCU Journal July-August 2020 - 60
The NAFCU Journal July-August 2020 - 61
The NAFCU Journal July-August 2020 - 62
The NAFCU Journal July-August 2020 - 63
The NAFCU Journal July-August 2020 - 64
The NAFCU Journal July-August 2020 - Cover3
The NAFCU Journal July-August 2020 - Cover4
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