NCUA Report - June 2012

BOARD ACTIONS MAY 2012 (FROM PAGE 8)

FINAL RULE
AUTHORITY
FCUs MEETING
WELL–CAPITALIZED STANDARD
FCUs NOT MEETING
WELL–CAPITALIZED STANDARD

Borrowing-Repurchase Transaction*

May enter into Borrowing-Repurchase Transactions where the underlying investments mature later than the borrowing, provided the total amount of investments purchased do not exceed 100 percent of net worth.

May enter into Borrowing-Repurchase Transactions where the underlying investments mature no later than 30 days after the borrowing, provided the total amount of investments purchased do not exceed 100 percent of net worth. May request authority from regional director for longer maturity mismatch.

Private Label Commercial Mortgage Related Security (CMRS)*

Not restricted to purchasing only CMRS issued
by Fannie Mae or Freddie Mac. May purchase
Private Label CMRS if:
Similar flexibilities apply to all FCUs,
under the following conditions:
(i) the security is rated in one of the two highest
rating categories by at least one Nationally
Recognized Statistical Rating Organization;

Requirements (i)-(iii) would be the same as for well-capitalized FCUs.

(ii) it is a “mortgage related security” under the Securities Exchange Act of 1934 and §703.2;

(iii) the pool of loans underlying the CMRS
contains more than 50 loans with no one loan
representing more than 10 percent of the pool; and
The limit in requirement (iv) is 25 percent
of net worth. May request approval from
the regional director for higher limit, up
to 50 percent of net worth, if FCU has 3
consecutive years of effective CMRS
portfolio management and the ability to
evaluate key risk factors.

(iv) the FCU does not purchase an aggregate amount in excess of 50 percent of net worth.

Purchase of Eligible Obligations*

In addition to the authority in the current §701.23,
may buy loans from other federally insured credit
unions without regard to whether the loans are
obligations of the purchasing FCU’s members.
May also purchase nonmember student loans
and real estate loans without the need for purchase
to facilitate a secondary market pool package. Also
may purchase loans from a liquidating credit union
regardless of whether the loans were made to
liquidating credit union’s members, subject to the
aggregate cap on eligible obligations of 5 percent
of unimpaired capital and surplus.

These flexibilities may be extended if approved by regional director, otherwise limited to the other provisions of §701.23 for purchasing eligible obligations (subject to membership or pooling requirements).