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GAO Study on SCRA Compliance

On July 17, 2012, the Government Accountability Office (GAO) published a report entitled "Mortgage Foreclosures:  Regulatory Oversight of Compliance with Servicemembers Civil Relief Act (SCRA) Has Been Limited."  In this report, the GAO recommends that prudential regulators conduct more extensive loan file testing for SCRA compliance.  Additionally, the report recommends that “regulators and other agencies that oversee mortgage activities should also explore opportunities for information sharing on SCRA compliance oversight…”  To measure the extent to which each of the prudential regulators examined institutions with respect to SCRA compliance, the GAO selected a random sample of 160 depository institutions, including credit unions (40 from each of the four prudential regulators) and reviewed the workpapers for each of the examinations from 2007 through 2011 for most of these institutions.  The GAO’s sample included only institutions that hold mortgages in their loan portfolios and service those loans themselves or institutions that service mortgages for other institutions.  GAO analyzed the examination workpapers to estimate the percentage of institutions for which prudential regulators conducted SCRA compliance reviews and determine the frequencies with which different examination procedures were used for these reviews.  Of particular note, the GAO stated that of the four prudential regulators, the FDIC, the OCC and the Federal Reserve Board all examined higher percentages of institutions for SCRA compliance than did NCUA.  (See NCUA’s response to the GAO on page 81 and 82 of the report).  For the GAO’s “highlights” of this study, click here. As a result of this report, we expect NCUA will be stepping up its efforts to review compliance with SCRA requirements.