Compliance Q&A: Branch Office Closures
Must CUs go through a specific process before permanently closing branch offices?
Q Are federally insured credit unions required to go through a specific process before permanently closing branch offices?
A No. Federally insured banks are required to go through such a process, but NCUA’s rules and regulations contain no such requirements for credit union branch closures.
However, credit unions will want to let members know about branch closures before they occur.
Credit unions often ask whether the Worker Adjustment and Retraining Notification (WARN) Act applies to branch closures. It requires employers to provide notification 60 calendar days in advance of “plant closings and mass layoffs.”
So, it’s unlikely that it would ever apply to credit union branch closings. And, there’s no reference to the WARN Act in NCUA's regulations or guidelines.
Next: NMLS administrators
Q Can a credit union designate a third-party service provider to act as the credit union’s account administrator on the Nationwide Mortgage Licensing System & Registry (NMLS)?
A No. Only a credit union employee can serve as an account administrator for purposes of compliance with the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act.
When creating an NMLS institution account, the credit union must identify two individuals as “NMLS Account Administrators.”
These account administrators will have primary responsibility for the credit union’s account on NMLS, are authorized to speak to the NMLS Call Center on behalf of the credit union, and can set up additional sub-users for the institution’s account.
Next: FCRA and negative loan information
Q Does the credit union have to provide a negative information notice each time a member is late with a payment on the same loan account?
A No. The credit union doesn’t have to provide the notice each time a member is late with a payment on the same loan account.
The Fair Credit Reporting Act only requires that the credit union provide the negative information notice to the member prior to, or no later than, 30 days after furnishing the negative information to a nationwide consumer reporting agency.
After providing the notice, the credit union may submit additional derogatory information to the credit bureau with respect to the same transaction, extension of credit, account, or individual without providing additional notice to the member.
Credit unions that provide the notice to members before furnishing the negative information to credit bureaus would disclose: “We may report information about your account to credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected in your credit report.”
Credit unions that provide the notice to members after furnishing the negative information to credit bureaus would disclose: “We have told a credit bureau about a late payment, missed payment, or other default on your account. This information may be reflected in your credit report.”
Next: Garnishment orders
Q Can a credit union charge a fee for costs related to garnishment orders involving federal benefit payments?
A It depends. The interim final rule on the garnishment of federal payments prohibits a credit union from charging a garnishment fee against protected funds in an account.
Protected payments under the rule include Social Security benefits, Supplemental Security Income benefits, Veterans Administration benefits, Federal Railroad Retirement benefits, and Federal Employee Retirement System benefits.
The credit union can’t charge a fee for garnishment processing if the only funds available in an account are from protected payments.
But the rule doesn’t prohibit the credit union from processing a fee against the unprotected funds that are in the account at the time.
For more information, visit CUNA’s e-Guide to Federal Laws and Regulations.