Real Estate Appraisal Threshold Increase; ‘Second Chance IRPS’

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The National Credit Union Administration (NCUA) Board issued a proposed rule to increase the appraisal threshold level for residential real estate transactions from $250,000 to $400,000.

Credit unions would still be required to obtain written estimates of market value of the real estate collateral in lieu of an appraisal.

Though ultimately voting in favor of issuing the proposal, NCUA Board Member Todd Harper expressed concerns regarding potential risks associated with the change, particularly in the face of a future economic downturn.

NCUA will accept comments on the proposal for 60 days following publication in the Federal Register. The proposed rule will be available in PowerComment soon.

Final IRPS: “Second Chance IRPS” (IRPS 19-1)
The NCUA Board also updated guidance regarding prohibitions imposed by Section 205(d) of the Federal Credit Union Act. Section 205(d) prohibits, except with prior written consent of the board, any person who has been convicted of any criminal offense involving dishonesty or breach of trust from participating in the affairs of an insured credit union.

The NCUA Board adopted a final "Second Chance IRPS" (Interpretive Rulings and Policy Statements) expanding the current de minimis exceptions to reduce the scope and number of offenses that require an application to the board. Specifically, the IRPS does not require an application for certain offenses related to insufficient funds checks, small dollar simple theft, false identification used to obtain alcohol, simple drug possession, and isolated minor offenses committed by covered persons as young adults.

The board also delegated authority to approve/deny credit union-sponsored consent applications to NCUA regional directors and the NCUA director of the Office of National Examinations and Supervision. However, the board will retain authority to decide on individual applications. In either case, any denials may be appealed to the board.

As recommended by the California and Nevada Credit Union Leagues, the final IRPS makes clear that insured credit unions are under no obligation to hire or retain an employee with a criminal background and they retain their own discretion in hiring policies and decisions.

The final IRPS will be effective 30 days after publication in the Federal Register. 

Quarterly Report on Share Insurance Fund
The NCUA Board also received the quarterly report on the National Credit Union Share Insurance Fund (NCUSIF).

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