As of October 1, 2012, each federally insured credit union had to adopt written policies addressing loan workouts. A credit unions loan workout policy and practices should be commensurate with the credit union’s size and complexity and coincide with the credit union’s risk mitigation strategies. Seems simple enough; however, questions were still lingering for both the credit unions and the Examiners on this new rule.
After soliciting feedback from credit union officials and accounting professionals, NCUA prepared and released new loan workout, nonaccrual and TDR guidance for the Examiners to follow (Letter 13-CU-03). Although this guidance is directed at field staff, it provides credit unions with valuable insight on what to expect when your Examiner inquires about your loan workout policies and procedures.
If you haven’t had a chance to review the letter yet, I would strongly encourage you to take some time in the coming days to review to ensure your loan workout program will meet examiner expectations. A little due diligence now can save you time later dealing with unwanted Examiner Finding or Document of Resolution items related to this area.