#2021-5, February 12, 2021

MBA Opposes NCUA Field of Membership Proposal

Earlier this week, the Association filed a comment letter strongly opposing the National Credit Union Administration’s (NCUA) proposed rule expanding the definition of “service facility” and eliminating the distinction between service to select groups and service to underserved areas as delineated in the Federal Credit Union Act.  The proposal is the latest effort by the NCUA to significantly expand the ability of credit unions to expand their membership, further weaken the “common bond” requirements and absolve the credit union industry from its Congressionally-mandated mission to serve individuals of “modest means.”

Our letter notes that the proposal contradicts Congressional intent to demand a heightened standard of in-person service for underserved communities.  In addition, the NCUA rule could lead to credit union websites or mobile banking application to be considered “service facilities,” allowing national online fields of membership in the future.

To read MBA’s letter, click here.

SBA Issues Notice on PPP Loan Error Codes

The Small Business Administration (SBA) recently released a procedural notice addressing hold codes and compliance check error messages some lenders have been receiving when they submit first- and second-draw Paycheck Protection Program (PPP) loan applications.  The updated procedures address second-draw PPP loan guaranty applications where there is a hold code on the borrower’s first-draw PPP Loan, and first-draw PPP loan guaranty applications and second-draw PPP Loan guaranty applications with compliance check error messages.

In the notice, SBA details how lenders may resolve hold codes and compliance check error messages. Depending on the error code, the lender may resolve the code through a certification process, which involves collecting documentation and information from the borrower.  The document also describes situations where hold codes may be resolved through SBA review.

To read the SBA notice, click here.

Fed Extends Reg. O Exemption for PPP Loans

In related news, the Federal Reserve announced that it is extending the temporary exemption from Regulation O to allow bank directors and shareholders to receive PPP loans from their related banks.

The exception, which applies only to PPP loans, is now effective through March 31. The Fed added that any PPP loans extended to bank directors and shareholders must conform to SBA’s guidance, which states that the eligible business must follow the same process as any similarly situated customer or account holder and must not receive favoritism from the bank.

To read more, click here.