Voglio sapere a riguardo di…

jbell on DSKJLSW7X2PROD with RULES

Federal Register / Vol. 86, No. 123 / Wednesday, June 30, 2021 / Rules and Regulations experience or level of use with interest capitalization before the agency prohibited the practice in 2012. Of those that answered the question, one FICU
stated that it did not allow the use of this mortgage modification tool. Others stated that it was beneficial, including one who said it was frequently used, particularly during the last financial crisis. One FICU stated that its program enjoyed an 85 percent success rate from 2010 to 2012 and included approximately 170 workouts representing about $22 million in mortgage loans that were saved from foreclosure.
The NCUA also asked how likely FICUs would be to use interest capitalization if the prohibition is lifted.
All FICUs that answered the question stated that they would use the tool to varying degrees largely dependent on its suitability for individual borrowers.
The NCUA asked what risks might arise either to the FICU or the borrower in a mortgage modification that includes capitalization of interest. Of those that answered the question, one commenter stated that the risks would include a lack of understanding on the members part of what interest capitalization means for their loan and there could be risk to the FICU if interest is capitalized on loans that already have high loan-tovalue ratios. This commenter noted, however, that such risks could be effectively mitigated by the FICU
providing clear communication to its members and reviewing its members ability to repay the modified loan. Some stated that the consumer protection guardrails in the proposed rule would help mitigate any consumer protection risks. Others noted that the risk of not permitting interest capitalization needed to be weighed against any potential risk in permitting the practice.
Some commenters noted that they evaluate each members situation individually and did not anticipate any risks to the FICU or the member.
The NCUA asked how the limitations imposed by the GSEs on the use of interest capitalization would impact a credit unions use of this mortgage modification tool. Those that answered this question stated that the impact would be minimal. One FICU stated that they already underwrite to Fannie Mae guidelines and are aware of the limitations. One commenter stated that loans that feature interest capitalization would not be loans that it would sell on the secondary market. Another stated that its recent sales to the GSEs were all newly originated and that a loan requesting forbearance between origination date and sale date is
VerDate Sep<11>2014

16:21 Jun 29, 2021

Jkt 253001

expected to occur so infrequently that it would be of no concern.
NCUA Response. The NCUA
appreciates the thoughtful comments submitted in response to the first four questions posed in the preamble to the December 4, 2020, proposed rule. The comments indicate that interest capitalization was used prior to the 2012 change in policy, and that it will likely again be used following the issuance of this final rule. Accordingly, the Board continues to believe that the capitalization of interest, when used prudently, can be a helpful loan modification tool in the best interests of members and FICUs. In response to the commenters concerned the change may raise risks for consumers, the Board reiterates that the consumer protection measures that currently apply to FICU
loan workout policies also apply to loan workouts involving the capitalization of interest. In addition, as provided in the proposed rule, the Board is adding several consumer protection requirements that will apply to loan workouts involving the capitalization of interest.
Comment: Consumer Protection Guardrails. NCUA question 5 asked commenters to provide their feedback on the consumer protection guardrails and documentation requirements in the proposed rule. The proposed rule states that capitalization of interest is not an appropriate solution in all cases and, as Appendix B currently provides, a FICU
should consider and balance the best interests of the FICU and the borrower.
The Board proposed adding several consumer protection and safety and soundness requirements to the Appendix for FICUs that capitalize interest in connection with loan workouts. At a minimum, if a FICUs loan modification policy permits capitalization of unpaid interest, under the proposed rule, the policy would have to require documentation that reflects a borrowers ability to repay, a borrowers sources of repayment, and when appropriate, compliance with the FICUs valuation policies at the time the modification is approved.
Of the commenters that referenced the documentation requirements, 17 stated that they support them. Some of these commenters, however, asked for clarification or suggested changes to certain aspects of the requirements. For example, one of the commenters suggested additional consumer guardrails to prohibit changes in loan terms such as interest rates or punitive fees established in the existing loan contract. Another commenter asked for clarification as to whether the proposed consumer protections would apply to all
PO 00000

Frm 00009

Fmt 4700

Sfmt 4700

34613

loan types, including business and commercial, or just consumer loans.
Another commented that NCUA should strive for balance so that administrative burdens do not outweigh member benefits and noted that temporary income impairment may prevent a member from providing the documentary proof that examiners traditionally expect. Finally, one of these commenters added that NCUA
examiners should refrain from adding documentation requirements beyond those in the proposed rule and, absent a safety and soundness issue, should also defer to the judgment of the FICU
and its understanding of a borrowers ability to repay the loan.
Four commenters stated that existing consumer protection measures are sufficient to protect and inform members, including two whose specific comments are set forth below. One commenter stated that the requirement to document a borrowers ability to repay would be problematic with COVID-related loans due to the enormous volume of members requesting COVID-related assistance.
For example, if the FICU is capitalizing interest it would be increasing the current loan amount to avoid delays and unnecessary paperwork. Furthermore, if the new loan amount does not exceed 110 percent of the original loan amount then the FICU does not need to verify income or request a new appraisal. In these situations, a certification from the borrower that his/her income has not decreased from the time the loan was originally approved should suffice.
Therefore, the NCUA should waive the ability-to-repay documentation requirements in these instances.
The second commenter stated that the revisions required of a FICUs modification policy are so burdensome that they will deter many FICUs from offering interest capitalization because the requirements effectively require FICUs to complete a full underwriting of a modified loan multiple times. The commenter stated that the NCUAs existing rule already requires credit unions to make loan workout decisions based on a borrowers renewed willingness and ability to repay the loan and if a loan workout is granted then the credit union must document the determination that the borrower is willing and able to repay the loan. This existing requirement thus fulfils the ability to repay and documentation requirements while recognizing the need for flexibility.
The commenter stated that the existing rule also enables FICUs to respond to large-scale, short-term financial challenges arising, for
E:FRFM30JNR1.SGM

30JNR1