December 24, 2008
CUNA Unveils Comprehensive Due Diligence Guide
On December 9, 2008, the Credit Union National Association (CUNA) unveiled its comprehensive guide to help credit unions successfully negotiate the important and difficult territory of third-party vendor relationships.
The guide has three core functions: risk assessment and planning; a focus on due diligence and contract formation; and risk management monitoring and control.
The guide is the product of CUNA's Due Diligence Task Force, formed by CUNA Chairman Tom Dorety and the CUNA Board of Directors in response to regulatory concern over how to best meet credit unions' due diligence responsibilities involving third-party vendors without unnecessary duplication of effort. Third-party vendor relationships and strategic planning were identified in January by the National Credit Union Administration (NCUA) as a key credit union examination issue for 2008.
Task Force Chairman Henry Wirz, who is president/CEO of SAFE Credit Union in Sacramento, California, identified the following as the top two elements of the extensive due diligence guide:
- First, credit unions must look at their strategic plans and make sure whatever service they wish to offer through a third-party relationship is consistent with that plan
- Second, once a credit union has determined a new service is consistent with its plan, it must establish a process to manage that service just as it would monitor and evaluate any employee
The guide was developed by the task force and CUNA staff in consultation with federal and state regulators, credit unions and state leagues. The practices of other federal depository institution regulators were studied to provide a "360-degree view" of due diligence best practices, according to CUNA staff.
Application Period Extended for CU HARP
National Credit Union Administration (NCUA) is extending the application period for credit union participation in Credit Union Homeowners Affordability Relief Program (CU HARP) until December 29, 2008, at 12:00 p.m. EST.
Designed to lower monthly mortgage payments for struggling low-and moderate-income credit union members, CU HARP will help credit unions modify mortgage terms to assist delinquent borrowers or borrowers facing undue hardships. CU HARP gives credit unions six months to modify loans. NCUA estimates CU HARP will provide interest rate relief to 10,000 households.
A 2008 Compliance Reminder
The mandatory compliance deadline for the FACT Act and Red Flag Guidelines was November 1, 2008. Some of the requirements include: establishing a written program, obtaining board approval, training staff and reviewing service provider agreements. Under the rule, financial institutions are required to have ‘identity theft prevention programs’ to identify, detect and respond to activities that could indicate situations of potential identity theft.
There is some difference with regard to certain compliance deadline dates depending on whether a credit union is federally or state chartered:
- State-chartered credit unions, regulated by the Federal Trade Commission (FTC), have had their enforcement date extended until May 1, 2009 for the Red Flags requirements. There was no extension for the address discrepancy rules.
- Federally chartered credit unions, regulated by the National Credit Union Administration (NCUA), should have been in full compliance by November 1, 2008 for all facets of the regulation. NCUA did comment however that examiners can consider the credit union’s progress and compliance efforts to date when developing appropriate plans for corrective action.
Credit Union Center Holiday Schedule
The Credit Union Center will be closed for the Christmas holiday on Thursday, December 25 and Friday, December 26. The Credit Union Center will be also be closed New Year’s Day, Thursday, January 1, 2009.
The board of directors and staff of the League wish you and your families a happy and safe holiday!
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