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Four Hot Credit Union Topics
CliftonLarsonAllen LLP (CLA) is the nation’s leading auditor of credit unions with more than $40 million in assets, as reported by Callahan & Associates. CLA serves federally and state-charted credit unions, credit union service organizations, and industry leagues and associations nationwide. We continually talk to regulators and participate in industry organizations, staying up to date on trends and emerging topics. Please contact me at anndee.allen@cliftonlarsonallen.com for assistance with articles or interviews on these and other issues.
1. Deadline Approaches for SAFE Act Compliance
Aftershocks of the mortgage crisis continue as provisions of the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) surface once again. The latest wave is a provision requiring credit unions to complete an independent audit of their registration procedures and processes for mortgage loan originators (MLOs) by December 31, 2012. Under the SAFE Act, residential MLOs employed by credit unions must register with the Nationwide Mortgage Licensing System and Registry. To be a “registered loan originator,” a credit union employee who handles residential mortgage loan originations must undergo a criminal background check and be assigned a unique identifier for electronic tracking.
2. Current Risks in Business Lending & Risk Management Practices
As business lending continues to grow, credit union exposure to economic fluctuations that impact business loans will increasingly affect loan performance and risk in the credit union’s portfolio. More credit unions are becoming involved in this type of lending and many others are growing their portfolios. What are the risks involved with business lending and loan participation? What policies do boards of directors need to consider with regard to business lending? How should loan portfolios be managed to minimize risk?
3. Combining Mortgage Disclosures Presents Challenges
The Consumer Financial Protection Bureau (CFPB) has set in motion one the biggest consumer protection regulatory changes for credit unions in the past two decades. If implemented, the proposed changes would apply to most consumer mortgages, with few exceptions. CFPB proposes combining initial and closing disclosures under the Truth in Lending Act and the Real Estate Settlement Procedures Act. As credit unions sift and analyze the proposed changes, it becomes obvious that a clear understanding of the new rules will be essential to proper implementation. The final rule is expected in early 2013.
4. External Quality Assurance Reviews Can Help Improve Operations
Credit union operations have become more complex, with increased regulatory scrutiny, delivery channels, and services. Internal audit departments (IADs) have played a major role in helping ensure the strong capitalization, continuing profitability, asset quality, and operational efficiency of their credit unions. External quality assurance reviews are a cost-effective way to evaluate the operations of IADs. The steps to prepare for and complete an external review are straightforward.
About CliftonLarsonAllen
CliftonLarsonAllen is one of the nation’s top 10 certified public accounting and consulting firms. Structured to provide clients with highly specialized industry insight, the firm delivers its audit, accounting, tax, consulting, and advisory capabilities from industry-specific perspectives. CliftonLarsonAllen offers unprecedented emphasis on serving privately held businesses and their owners, as well as not-for-profits and governmental entities. The firm has a staff of more than 3,600 professionals, operating from more than 90 offices across the country. For more information about CliftonLarsonAllen, visitwww.cliftonlarsonallen.com.
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