Compliance Q&A: Holiday Hours, FCRA

Valerie Moss
November 17, 2008 | COMMENTS

Question: Staff members often debate whether the credit union can close for more than three consecutive days during the holiday season. Is there any federal regulation limiting the number of consecutive days a federal credit union can remain closed?

Answer: No. No federal law or regulation prevents a federal credit union from being closed for more than three consecutive days. However, some states have laws dealing with "emergency closings," closing days, or holiday closings, and may limit state-chartered institutions from closing for more than three consecutive days.

State-chartered credit unions should check with their state credit union leagues concerning similar state statutes that could affect operating hours.

There are several things to keep in mind if you're planning a longer than usual closure during the holidays. From a safety and soundness perspective, federal regulators prefer that federal credit unions and national banks stay open for business long enough to provide sufficient service to members and customers, and to remain competitive with other local financial institutions.

Additionally, when these financial institutions are closed on days other than weekends or national holidays, they must consider the impact of other laws, such as the Uniform Commercial Code, state and federal labor laws, and access to the Federal Reserve Banks. When closed for a national holiday, the entire staff can be off.

However, when closed on a day that isn't a national holiday, at least some employees in back-office departments should be working to clear checks before the midnight deadline, deal with wire transfers, release funds availability holds on deposits, and perform other required functions.

Mortgage Denials and FCRA

Question: Will a credit union violate any law or regulation if it denies a mortgage solely because the applicant has a potentially terminal disease?

Answer: Yes. The credit union will violate Section 604 of the federal Fair Credit Reporting Act (FCRA) by taking into account the member's medical condition in determining credit eligibility.

FCRA Section 604(g) generally prohibits credit unions from obtaining and using medical information when determining members' eligibility (or continued eligibility) for credit.

However, these regulations allow credit unions to obtain and use medical information in this context, so long as they:

• Use this information routinely in making credit eligibility determinations, such as information relating to debts, expenses, income, benefits, assets, collateral, or loan purpose, including the use of loan proceeds
• Use the medical information in a manner that's no less favorable than they would use comparable information that isn't medical information in a credit transaction
• Don't take into account members' physical, mental, or behavioral health, condition or history, treatment, or prognosis as part of any determination

This "financial information exception" allows credit unions to consider members' medical debts and expenses in assessing their ability to repay the debt according to the loan terms. But taking a member's physical condition or prognosis into account in determining the person's eligibility for a mortgage violates FCRA.

Valerie Moss is director of compliance information for the Credit Union National Association. This story first appeared at www.creditunionmagazine.com and is reprinted with permission.