Lynn Municipal Employees CU Cited for Unsafe and Unsound Practices

The National Credit Union Administration (NCUA) has entered into a Letter of Understanding and Agreement (LUA) with the Lynn Municipal Employees Credit Union of Lynn, Massachusetts and the Massachusetts Division of Banks.

The LUA requires the credit union to take steps to correct unsafe and unsound practices, including:

• Failure to comply with the requirements of previous enforcement actions.
• Operating without adequate supervision and direction by the credit union’s board of directors over senior management.
• Failure to maintain accurate books and records.
• Failure to establish appropriate internal controls.
• Engaging in unsafe and unsound underwriting standards and practices.

For example, the LUA states that that the credit union will make the following improvements to its loan underwriting process. It will ensure:

(i) credit reports reviewed during the underwriting process contain credit scores;
(ii) loan documentation includes discussion of why members with adverse credit are granted loans;
(iii) debt-to-income ratios are calculated correctly and include all debts from the member’s credit report and loan application; and
(iv) loan notes are completed accurately and ensure proper procedures are in place in the event that loan notes are changed.

Lynn Municipal CU has 398 members and almost $2.2 million in assets.

Read the press release.

Read the enforcement order.