Credit Risk Management

The NCUA continues to encourage credit unions to work with their members who were impacted by the COVID-19 pandemic. The NCUA reaffirms that examiners will not criticize credit unions’ efforts to provide prudent relief for borrowers, when such efforts are conducted in a reasonable manner with proper controls and management oversight.

Credit unions should continue to implement sound loan underwriting standards and credit risk management procedures. NCUA examiners will focus on any adjustments credit unions made to these programs to address borrowers facing financial hardship as a result of the COVID-19 pandemic.

Credit union policies should address the use of loan workout strategies, risk management practices, and new strategies implemented to provide funds to borrowers impacted by the COVID-19 pandemic, including new programs authorized through CARES Act. NCUA examiners will evaluate credit unions’ controls, reporting, and tracking of these programs. Credit unions must demonstrate they understand and are continually evaluating the credit risks that exists during a crisis.

Additionally, credit unions’ risk-monitoring practices should be commensurate with the level of complexity and nature of their lending activities, maintain safe and sound lending practices, and comply with consumer disclosure and regulatory reporting requirements.

Last updated on June 30, 2020