Categories
spotloan loans payday loans online same day

Freezing Share records when Member is Delinquent on that loan

Freezing Share records when Member is Delinquent on that loan

Freezing Share records each time a known Member is Delinquent on that loan

Authored by Benjamin M. Litchfield, Regulatory Compliance Counsel

Greetings to all or any of you available to you in regulatory conformity land. In light associated with CFPB’s current permission purchase with Navy Federal Credit Union, we received some concerns asking under just exactly exactly what circumstances federal credit unions are allowed to freeze or limit acce up to a share account whenever a part is delinquent on that loan.

Article II, Section 4 of this Federal Credit Union Bylaws grant federal credit unions the authority to restrict solutions or acce to credit union facilities to a part that is troublesome to credit union operations. This is actually the section that is relevant of Bylaws:

ARTICLE II. SKILLS FOR MEMBERSHIP

Section 4. Continuation of account. When a known user becomes an associate that person may stay an associate through to the individual or company chooses to withdraw or perhaps is expelled relative to the Act and Article XIV of those bylaws. An associate who’s troublesome to credit union operations can be susceptible to limits on solutions and acce to credit union facilities. A credit union that desires to limit solutions to people not any longer in the industry of account should specify the limitations in this part. (Emphasis added).

The Office of General Counsel has interpreted this authority to include limiting services to members that have caused a lo to the credit union through various Legal Opinion Letters. The Office of General Counsel has required there to be some “logical relationship between the objectionable conduct and the services to be suspended” and that members receive notice of the policy in each case.