Yes, the guidance requires all financial institutions, including credit unions, to focus on the following subjects and apply the relevant ones to their existing policies and procedures:

• Help borrowers understand ARM risks, including:

– Low initial payment;

– High or unlimited reset rate caps;

– Low or no documentation loans;

– Problems of frequent refinancing;

– Risk layering;

– Simultaneous second lien loans;

– Prepayment penalties;

– NCUA prohibited practices.

• Understand portfolio and risk management practices, including:

– Relationship between subprime lending and predatory lending;

– Risks of loans based on foreclosed or liquidation value;

– Problem of loan "flipping";

– Fraud detection;

– Use of qualifying standards;

– Maintenance of appropriate capital levels;

– Use of appropriate allowance for loan and lease loss levels;

– Risks of stated income loans.

• Underwriting standards.

• Workout arrangements.

• Consumer protection principles, including:

– Use of a summary disclosure form;

– Avoidance of steering borrowers to inappropriate products;

– Explanation of payment shock risk;

– Explanation of prepayment penalty;

– Explanation of balloon payment;

– Explanation of costs of low documentation or stated income loans;

– Compliance with the Truth in Lending Act and other federal requirements;

– Importance of good consumer communications in promotional materials and product descriptions;

– Explanation of borrower responsibility for taxes and insurance.

• Development and maintenance of strong internal controls, including:

– Management of deals with third-party originators;

– Management of secondary market risk;

– Effective management information and reporting;

– Use of stress testing and performance measures;

– Actual practices consistent with policies.

There may also be other subjects contained in the guidance that may be relevant to some credit unions.