NCUA Emphasizes Importance of Responsibly Making Small Loans
“…on May 20, 2020, the NCUA and the federal banking agencies released the attached Interagency Lending Principles for Offering Responsible Small-Dollar Loans. The general principles described in the statement apply to all credit unions that make small-dollar loans. Credit unions should underwrite small-dollar loans based on prudent policies, offer these products in a manner consistent with safe and sound practices, comply with consumer protection and other applicable laws and regulations, and treat members fairly. Effectively managing the credit, operational, and compliance risks associated with these loans is also an important undertaking for credit unions.”
Credit unions will feel pressure to help members who are experiencing financial hardships with small loans to tide these members over. But, credit unions should never lose sight of making sure all loans are based on sound principles and policies.
TCT’s Risk-Based Loan Pricing tool assures loans are made that make economic sense for the credit union. TCT’s Credit Migration tool assures loan risk is managed appropriately in existing loan portfolios. TCT’s Regulatory Compliance and Policy Writing Services helps credit unions (especially small credit unions) remain regulatory compliant and keep their policies up to date.