Proposed Rule2026-03755
Purchase, Sale, and Pledge of Eligible Obligations
Primary source
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Published
February 25, 2026
Issuing agencies
National Credit Union Administration
Abstract
The NCUA Board (Board) solicits public comment on a proposal to streamline its regulations governing the purchase, sale, and pledge of eligible obligations. The Board proposes to remove the prescriptive lists of items that must be addressed in the written policies adopted by a federal credit union (FCU). Although FCUs would still be required to maintain written policies, removing the mandated items will enable a more efficient and principles-based approach. The Board also proposes to remove detailed requirements regarding conflicts of interest and compensation. These regulatory provisions are unnecessary since FCUs are already governed by broader conflict of interest provisions in their bylaws and by the fiduciary duties of their officials.
Full Text
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<title>Federal Register, Volume 91 Issue 37 (Wednesday, February 25, 2026)</title>
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[Federal Register Volume 91, Number 37 (Wednesday, February 25, 2026)]
[Proposed Rules]
[Pages 9188-9191]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-03755]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Parts 701 and 746
RIN 3133-AF95
Purchase, Sale, and Pledge of Eligible Obligations
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
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SUMMARY: The NCUA Board (Board) solicits public comment on a proposal
to streamline its regulations governing the purchase, sale, and pledge
of eligible obligations. The Board proposes to remove the prescriptive
lists of items that must be addressed in the written policies adopted
by a federal credit union (FCU). Although FCUs would still be required
to maintain written policies, removing the mandated items will enable a
more efficient and principles-based approach. The Board also proposes
to remove detailed requirements regarding conflicts of interest and
compensation. These regulatory provisions are unnecessary since FCUs
are already governed by broader conflict of interest provisions in
their bylaws and by the fiduciary duties of their officials.
DATES: Comments must be received by April 27, 2026.
ADDRESSES: Comments may be submitted in one of the following ways.
(Please send comments by one method only):
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
The docket number for this proposed rule is NCUA-2026-0432. Follow the
``Submit a comment'' instructions. If you are reading this document on
<a href="http://federalregister.gov">federalregister.gov</a>, you may use the green ``SUBMIT A PUBLIC COMMENT''
button beneath this rulemaking's title to submit a comment to the
<a href="http://regulations.gov">regulations.gov</a> docket. A plain language summary of the proposed rule
is also available on the docket website.
<bullet> Mail: Address to Melane Conyers-Ausbrooks, Secretary of
the Board, National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
<bullet> Hand Delivery/Courier: Same as mailing address.
Mailed and hand-delivered comments must be received by the close of
the comment period.
Public inspection: Please follow the search instructions on <a href="https://www.regulations.gov">https://www.regulations.gov</a> to view the public comments. Do not include any
personally identifiable information (such as name, address, or other
contact information) or confidential business information that you do
not want publicly disclosed. All comments are public records; they are
publicly displayed exactly as received and will not be deleted,
modified, or redacted. Comments may be submitted anonymously. If you
are unable to access public comments on the internet, you may contact
the NCUA for alternative access by calling (703) 518-6540 or emailing
<a href="/cdn-cgi/l/email-protection#29666e6a6448404569474a5c48074e465f"><span class="__cf_email__" data-cfemail="450a020608242c29052b2630246b222a33">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Ariel Pereira and John Brolin, Senior
Attorneys, Office of General Counsel, at (703) 518-6540, or at 1775
Duke Street, Alexandria, VA 22314.
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Background
In a final rule published on May 9, 1977, the NCUA established the
regulations currently codified in 12 CFR 701.23.\1\ Section 701.23
implements section 107(13) of the Federal Credit Union Act (FCU Act),
which authorizes CUs to purchase, sell, and pledge eligible obligations
to provide greater flexibility in meeting member demand and improving
liquidity.\2\ A 1981 final rule further enhanced this flexibility by
excluding adjustable-rate mortgage loans from certain asset limitations
and clarifying an FCU's right to enforce ``due on sale'' clauses,
thereby promoting safe and sound participation in the secondary
mortgage market.\3\ The regulations have been periodically amended
since then. Section 701.23 was most recently amended through a 2023
final rule that provided additional flexibility for federally insured
credit unions (FICUs) to use advanced technologies and opportunities
offered by the financial technology sector.\4\
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\1\ 44 FR 27071 (May 9, 1979). The regulation was originally
codified in Sec. 701.21-8 but was subsequently redesignated as
Sec. 701.23 as part of the Board's comprehensive 1984 revision of
its lending regulations (49 FR 30683, Aug. 1, 1984).
\2\ 12 U.S.C. 1757(13).
\3\ 46 FR 38678 (July 29, 1981).
\4\ 88 FR 67570 (Sept. 29, 2023).
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B. Legal Authority
The Board is issuing this proposed rule pursuant to its authority
under the FCU Act. Under the FCU Act, the NCUA is the chartering and
supervisory authority for FCUs and the federal supervisory authority
for FICUs. The FCU Act grants the NCUA a broad mandate to issue
regulations governing both FCUs and FICUs. Section 120 of the FCU Act
is a general grant of regulatory authority and authorizes the Board to
prescribe regulations for the administration of the FCU Act.\5\ Section
209 of the FCU Act is a plenary grant of regulatory authority to the
NCUA to issue regulations necessary or appropriate to carry out its
role as share insurer for all FICUs.\6\ The FCU Act also includes an
express grant of authority for the Board to subject federally chartered
central, or corporate, credit unions to such rules, regulations, and
orders as the Board deems appropriate.\7\
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\5\ 12 U.S.C. 1766(a).
\6\ 12 U.S.C. 1789.
\7\ 12 U.S.C. 1766(a).
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II. Proposed Rule
Section 701.23 governs the purchase of whole or partial loans from
various sources, including the eligible obligations of an FCU's own
members, student loans, and real estate-secured loans. It establishes
requirements for written policies, board approval, and limitations on
the aggregate amount of purchased obligations. While section 107(13) of
the FCU Act requires the Board to prescribe ``rules and regulations''
for the purchase, sale, and pledge of eligible obligations, the Board
has determined that several provisions of Sec. 701.23 are not
statutorily required and impose an unnecessary regulatory burden. The
Board is therefore
[[Page 9189]]
proposing to amend Sec. 701.23 by revising paragraphs (b)(6), (c), and
(d), and removing paragraph (g).
Paragraph (b)(6) provides that the purchases of eligible
obligations and notes of liquidating credit unions must comply with the
purchasing FCU's internal written purchase policies. The paragraph goes
on to mandate a detailed list of requirements for an FCU's internal
written purchase policies. These requirements, which cover due
diligence, risk management, underwriting, portfolio concentration
limits, and legal review, create a rigid, one-size-fits-all framework
that is unduly burdensome, particularly for smaller FCUs. The Board
believes that an FCU's board is in the best position to develop
policies that are appropriately scaled for its activities.
The Board proposes to revise Sec. 701.23(b)(6) by removing the
prescriptive list of items that must be addressed in the FCU's written
policies. Although FCUs would still be required to maintain written
policies, removing the mandated items would foster a more efficient,
principles-based approach, allowing boards to exercise their business
judgment while remaining accountable for safe and sound operations. The
FCU Act requires the Board to issue rules, but does not require the
Board to mandate a detailed framework for internal credit union
policies.
Paragraph (c) of Sec. 701.23 establishes similarly prescriptive
elements that must be addressed in an FCU's written policies on the
sale of eligible obligations. Paragraph (d) does the same for the
required written policy to address the pledging of eligible
obligations. The Board proposes to also amend these paragraphs for the
same reasons as those discussed regarding Sec. 701.23(b). Mandating
board approval and specific written agreement terms for these
transactions codifies what are already standard and prudent business
practices. Removing these provisions reduces administrative burden and
without lifting the requirement that FCUs manage their own operations
responsibly, tailoring their processes to their specific needs and risk
profiles, and subject to examiner oversight.
The Board also proposes to remove paragraph (g) of Sec. 701.23,
which establishes a detailed code of conduct regarding conflicts of
interest and compensation. The regulation's broad prohibition on
compensation, followed by a narrow list of exceptions, is inflexible
and may hinder legitimate incentive structures. FCUs are already
governed by broader conflict of interest provisions in their bylaws and
by the fiduciary duties of their officials. The FCU Act does not
require the Board to establish such a detailed compensation framework.
Removing this paragraph allows credit union boards to establish their
own reasonable policies, provided all transactions are conducted at
arm's length and in the best interest of the credit union.
As a result of the removal of the existing paragraph (g), current
Sec. 701.23(h) would be redesignated as Sec. 701.23(g). The proposed
rule would make a conforming change to the appeals procedures
regulation in 12 CFR part 746 to reflect this redesignation.
Specifically, the current reference to ``701.23(h)'' in Sec.
746.201(c) would be revised to read ``701.23(g).'' No substantive
effect is intended by this technical conforming amendment.
The Board invites public comments on the proposed amendments. The
Board specifically requests comment on whether removing these
prescriptive policy requirements, procedural mandates, and the expanded
authority process could create safety and soundness concerns or lead to
imprudent risk-taking by FCUs.
III. Regulatory Procedures
A. Providing Accountability Through Transparency Act of 2023
The Providing Accountability Through Transparency Act of 2023 \8\
(Act) requires that a notice of proposed rulemaking include the
internet address of a summary of not more than 100 words in length of a
proposed rule, in plain language, that shall be posted on the internet
website under section 206(d) of the E-Government Act of 2002 \9\
(commonly known as <a href="http://regulations.gov">regulations.gov</a>). The Act, under its terms, applies
to notices of proposed rulemaking and does not expressly include other
types of documents that the Board publishes voluntarily for public
comment, such as notices and interim-final rules that request comment
despite invoking ``good cause'' to forgo such notice and public
procedure. The Board, however, has elected to address the Act's
requirement in these types of documents in the interests of
administrative consistency and transparency.
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\8\ 5 U.S.C. 553(b)(4).
\9\ 44 U.S.C. 3501 note.
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The Board solicits public comments on a proposal to streamline its
regulations governing the purchase, sale, and pledge of eligible
obligations. The Board proposes to remove the prescriptive lists of
items that must be addressed in an FCU's written policies. Although
FCUs would still be required to maintain written policies, removing the
mandated items will enable a more efficient and principles-based
approach. The Board also proposes to remove detailed requirements
regarding conflicts of interest and compensation. FCUs are already
governed by broader conflict of interest provisions in their bylaws and
by the fiduciary duties of their officials.
The proposal and the required summary can be found at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
B. Executive Orders 12866, 13563, and 14192
Pursuant to Executive Order 12866 (``Regulatory Planning and
Review''), a determination must be made whether a regulatory action is
significant and therefore subject to review by the Office of Management
and Budget (OMB) in accordance with the requirements of the executive
order.\10\ Executive Order 13563 (``Improving Regulation and Regulatory
Review'') supplements and reaffirms the principles, structures, and
definitions governing contemporary regulatory review established in
Executive Order 12866.\11\ This proposed rule was drafted and reviewed
in accordance with Executive Order 12866 and Executive Order 13563. OMB
has determined that this proposed rule is not a ``significant
regulatory action'' as defined in section 3(f) of Executive Order
12866. Further, this proposed rule will reduce the burden of
prescriptive lists of items that must be addressed in FCU written
policies and is consistent with Executive Order 13563.
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\10\ 58 FR 51735 (Oct. 4, 1993).
\11\ 76 FR 3821 (Jan. 21, 2011).
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Executive Order 14192 (``Unleashing Prosperity Through
Deregulation'') requires that any new incremental costs associated with
new regulations shall, to the extent permitted by law, be offset by the
elimination of existing costs associated with at least 10 prior
regulations.\12\ This proposed rule is expected to be a deregulatory
action for purposes of Executive Order 14192.
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\12\ 90 FR 9065 (Feb. 6, 2025).
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C. The Regulatory Flexibility Act
The Regulatory Flexibility Act \13\ generally requires an agency to
conduct a regulatory flexibility analysis of any rule subject to notice
and comment rulemaking requirements, unless the agency certifies that
the rule will not have a significant economic impact on a substantial
number of small entities. If the agency makes such a certification, it
shall publish the certification at the
[[Page 9190]]
time of publication of either the proposed rule or the final rule,
along with a statement providing the factual basis for such
certification.\14\ For purposes of this analysis, the NCUA considers
small credit unions to be those having under $100 million in
assets.\15\ The Board fully considered the potential economic impacts
of the regulatory amendments on small credit unions.
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\13\ 5 U.S.C. 601 et seq.
\14\ 5 U.S.C. 605(b).
\15\ 80 FR 57512 (Sept. 24, 2015).
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The Board proposes to remove the prescriptive lists of items that
must be addressed in an FCU's written policies regarding the sale,
purchase, and pledge of eligible obligations. While the current
requirement to maintain written policies might impose some economic
costs on FCUs, they are unlikely significant. Although FCUs would still
be required to maintain these written policies, they would no longer be
subject to any additional costs they may have incurred in addressing
the items currently specified in the regulations. Given that the
economic costs of maintaining the current written policies is
insignificant, the economic impact of removing the prescribed lists is
equally unlikely to have a significant economic impact.
The Board also proposes to remove detailed requirements regarding
conflicts of interest and compensation. The permissibility of incentive
structures currently prohibited under the current regulations may have
some economic impact. However, the Board does not anticipate that such
impacts would be significant because FCUs will remain governed by
broader conflict of interest provisions in their bylaws and by the
fiduciary duties of their officials.
Accordingly, the NCUA certifies the proposed rule would not have a
significant economic impact on a substantial number of small credit
unions.
D. The Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) generally provides that
an agency may not conduct or sponsor, and not withstanding any other
provision of law, a person is not required to respond to, a collection
of information, unless it displays a currently valid Office of
Management and Budget (OMB) control number. The PRA applies to
rulemakings in which an agency creates a new or amends existing
information collection requirements. For purposes of the PRA, an
information-collection requirement may take the form of a reporting,
recordkeeping, or a third-party disclosure requirement. The information
collection requirements contained in part 701.23 are approved by OMB
under OMB Control Number 3133-0127 with a current expiration date of
February 28, 2027.
The proposed rule would revise the following information collection
requirement(s): Detailed code of conduct regarding conflicts of
interest and compensation--701.23(g).
Upon the publication of the final rule in the Federal Register, as
applicable, the NCUA will submit a request to OMB to revise OMB Control
Number 3133-0127. The proposed rescission of these regulations, along
with the information collection requirement(s) contained therein and
the revision of OMB Control Number 3133-0127, would reduce public
information collection burden by an estimated 686 annual burden hours.
If you want to comment on the proposed rescission of the
information collection requirements that would result from this
proposed rule, please send your comments and suggestions on this
proposed action as previously described in the DATES and ADDRESSES
sections.
E. Executive Order 13132 on Federalism
Executive Order 13132 encourages certain agencies to consider the
impact of their actions on state and local interests.\16\ The NCUA, an
agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the
executive order to adhere to fundamental federalism principles. This
proposed rule applies solely to FCUs and therefore would not have a
substantial direct effect on the states, the relationship between the
national government and the states, or on the distribution of power and
responsibilities among the various levels of government.
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\16\ ``Federalism,'' E.O. 13132 (Aug. 10, 1999).
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F. Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this proposed rule would not affect
family well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999.\17\ The regulatory
requirements that are the subject of this proposed rule are exclusively
concerned with FCU policies regarding the sale, purchase, and pledge of
eligible obligations. The potential positive effect on family well-
being, including financial well-being is, at most, indirect.
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\17\ Public Law 105-277, 112 Stat. 2681 (1998).
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List of Subjects
12 CFR Part 701
Advertising, Aged, Civil rights, Credit, Credit unions, Fair
housing, Individuals with disabilities, Insurance, Marital status
discrimination, Mortgages, Religious discrimination, Reporting and
recordkeeping requirements, Sex discrimination, Signs and symbols,
Surety bonds.
12 CFR Part 746
Administrative practice and procedure, Claims, Credit unions,
Investigations.
By the National Credit Union Administration Board, this 20th day
of February, 2026.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons stated in the preamble, the NCUA Board proposes to
amend 12 CFR parts 701 and 746, as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
0
1. The authority citation for part 701 continues to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759,
1761a, 1761b, 1766, 1767, 1782, 1784, 1785, 1786, 1787, 1788, 1789.
Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.31
is also authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and
3601-3610. Section 701.35 is also authorized by 42 U.S.C. 4311-4312.
0
2. Amend Sec. 701.23 by:
0
a. Revising paragraphs (b)(6), (c), and (d)(1);
0
b. Removing paragraph (g); and
0
c. Redesignating paragraph (h) as paragraph (g), to read as follows:
Sec. 701.23 Purchase, sale, and pledge of eligible obligations.
* * * * *
(b) * * *
(6) Written purchase policies. Purchases of eligible obligations
and notes of liquidating credit unions must comply with the purchasing
Federal credit union's internal written purchase policies.
(c) Sale. A Federal credit union may sell, in whole or in part, to
any source, eligible obligations of its members, eligible obligations
purchased in accordance with paragraph (b)(1)(ii) of this section,
student loans purchased in accordance with paragraph (b)(1)(iii) of
this section, and real estate loans purchased in accordance with
paragraph (b)(1)(iv) of this section, within the limitations of the
board of directors' written sale policies.
(d) Pledge. (1) A Federal credit union may pledge, in whole or in
part, to any source, eligible obligations of its members, eligible
obligations purchased in accordance with paragraph (b)(1)(ii)
[[Page 9191]]
of this section, student loans purchased in accordance with paragraph
(b)(1)(iii) of this section, and real estate loans purchased in
accordance with paragraph (b)(1)(iv) of this section, within the
limitations of the board of directors' written pledge policies.
* * * * *
PART 746--APPEALS PROCEDURES
0
3. The authority citation for part 746 continues to read as follows:
Authority: 12 U.S.C. 1766, 1787, and 1789.
Sec. 746.201 [Amended]
0
4. In Sec. 746.201, revise the reference to ``701.23(h)(3)'' to read
``701.23(g)(3).''
[FR Doc. 2026-03755 Filed 2-24-26; 8:45 am]
BILLING CODE 7535-01-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.