Volume 5, Issue 17
New MnCUN Website Design Introduced
Last week, The Minnesota Credit Union Network launched an updated website. Credit union professionals can use the same login information as the previous website. Designed for ease of navigation and usability, some information may be in a different place than before and individuals are encouraged to update any bookmark setting they have.
With questions, contact MnCUN Communications Specialist Laura Whittet by email or by phone at (651) 288-5503.
Minnesotans open 2,400 accounts with nearly $800,000 saved with WINcentive™
Since launching in January, nearly 2,400 Minnesotans have opened the prize-linked savings account WINcentive Savings.
Almost $800,000 has been saved in total; the median account balance being $130. The Statewide prize-pool has awarded $21,000 to date to 156 credit union members.
Five members have won $1,000 prizes in the first ever quarterly drawing last week. Winners were members of the following credit unions:
- Affinity Plus Federal Credit Union (Minneapolis branch)
- First Alliance Credit Union (Rochester)
- Mayo Employees Credit Union (Rochester)
- Mid-Minnesota Federal Credit Union (Brainerd/Baxter)
“I opened WINcentive because it sounded like a good program, and I am trying to keep up with my emergency savings fund,” said Denise C. of Minneapolis, a $1,000 quarterly prize winner. A member at Affinity Plus Federal Credit Union, Denise plans to use her winnings to pay down loans, or “do something fun for myself.”
The announcements of the quarterly prize winners and the success of the first three months of the program fit perfectly as Minnesota Credit Unions celebrate April’s Financial Literacy Month, spreading the saving message and urging consumers to begin a regular savings habit.
More information about WINcentive Savings can be found online or by contacting Kris Jacobsen.
April NCUA Report released, Chairman Matz’s farewell
NCUA issues April Board Bulletin
Upcoming VISA compliance date
NCUA issues proposed occupancy rule change for FCUs
View all Regulatory Compliance news stories
Can I Accept Late or Partial Payments Without Reinstating a Loan?
This is a recurring issue and one of the most frequent questions Tiede Grabarski PLLC receives from our Credit Union clients. The short answer is yes, you can accept those payments, but when you do you should take some simple steps to protect your Credit Union.
Broadly stated, the concern is that if you have accepted late or partial payments, your borrower might claim that he or she thought the loan had been restored to good standing in the Credit Union’s eyes and did not realize you were going to continue to treat it as in default. This risk is heightened where there has been a history between the parties of late or partial payments accepted, with no action by the Credit Union.
This risk is real. In Cobb v. Midwest Recovery Bureau et. al., 295 N.W.2d 232 (Minn. 1980) the Minnesota Supreme Court ruled that a secured lender who had repeatedly accepted late payments would be required to give the borrower a written a notice of its intention to change its practice and begin following the contract to the letter before it could start exercising collection remedies. The Court required this even though the loan documents contained the standard language that past waivers by the lender did not create a course of dealing for future waivers, and that the agreements could only be modified in writing. The Court nonetheless found Cobb's lender to have acted inappropriately when it commenced collection without warning, after a history of accepting late payments with no action taken. The essence of the Court's holding was that it was inequitable for the lender to change its practices without warning, no matter what the documents said.
Though the specifics of Cobb involved collateral collection, it is reasonable to expect courts to apply the same logic to any loan default. This gives rise to the question referenced above: "can I accept this late/partial payment without waiving the default?" The answer is yes, but you should document your decision.
if you are accepting a payment you could refuse, first you should decide whether you want to preserve a default.
If the payment two days past the grace period on an otherwise performing loan, maybe you don't care about the default. In that case, you might take the payment, and not send a letter. In that circumstance, you probably cannot rely on the tardiness of that payment if you decide to call default next month for another payment.
Say, however, that the payments have historically been late, and you have never called the loan. Now you want to call the note. But, you don’t want to pass up the money either. In that situation, we recommend you take the funds, not call the loan that month, but send a letter that no defaults are waived, and the Credit Union will henceforth insist on strict compliance. Then, if another late payment comes in, you will be free to call default. And, you can take that payment as well.
Accepting partial or late payments and still preserving your default is not difficult, so long as you follow the Supreme Court’s rule requiring that you keep the borrower informed of your intentions. Documentation in a letter sent, with a copy in your file to show a judge, should work in most circumstances.
Tiede Grabarski PLLC works with commercial and consumer credit, and provides a broad range of legal services. For more information about Tiede Grabarski PLLC, contact MnCUN Vice President – Network Service Corporation John Ferstl by email or at (651) 288-5505.
The contents of this article are intended to be informational, and not legal advice regarding any specific case or set of facts.