We are at our wits end here. The topics listed here mainly surround credit cards and LOC's, however, there are other aspects to MFOEL that goes beyond just those two types of accounts (or subaccounts in this case). We are having trouble revising our policies because we can't seem to get a straight answer to some questions. I will post some here now as we are up in there right now on them and hopefully someone can give some insight on them:

1. "Verify credit information such as income and employment" - The commentary on 226.2(a)(20) says we can verify the information but not use it as a condition of granting an advance. What does verify mean? Can we ask for current paystubs? Can we pull new credit?

2. How would we process a new car loan request under the newly defined MFOEL?

3. If the original "plan" was individual and the member wants to establish a joint LOC (and only the LOC), how can we do that if we can't "underwrite" any new advance request?

These are only for starters...we are very confuzzled atm.

BUMP and quick clarification:

We currently offer vehicle loans under a MFOEL program (that may change given the changes) so it is understandable of noone has a n answer to this but any response would be helpful.

Thanks

This is our interpretation and only our interpretation.

1. Yes, you can request paystubs. Yes, you can get a new credit report. No, you cannot request either in connection with an advance request.

2. You can underwrite the collateral - not your member.

3. I believe you can request those items in connection with the new applicant (member) not with the existing.

In summary - if every year say on July 1 you want to request new credit reports and paystubs on all your MFOEL accounts, you can do that. But it has to be independent on any advance request.

So, if you make open ended car loans, you are free to underwrite the collateral - not your member except at a pre-set time.

This is why many credit unions (us included) now write car loans under closed end paper not open ended. We were not comfortable with not having the ability to credit qualify the borrowers at the time of a new advance.

Having said that - why are you writing car loans open ended? We used to because of the signature issue - we didn't want to repeatedly get signatures on car loans. But signatures are not a regulatory issue. It's a legal/document issue.

We actually switched car loans to closed end (thank goodness) Thanks for your response nonetheless, it helps in clarifying our policy.