Outsource for Success: How Property Tax Monitoring Can Help Credit Unions Pass NCUA Exams and Streamline Operations

By Brian Carmody, Director, Marketing & Communications

The National Credit Union Association (NCUA) audit is a critical evaluation for credit unions, assessing financial health, IT procedures, cybersecurity protocols, and compliance with consumer protection laws. Conducted approximately every two years for large, federally insured credit unions and at least every five years for smaller, state-chartered ones, these exams are pivotal. Failing an NCUA exam can result in financial penalties, resource strain, or even loss of operational authority. Outsourcing property tax monitoring and escrow payment processing to experts like LERETA can streamline compliance, reduce risks, and enhance operational efficiency, ensuring credit unions are well-prepared for these high-stakes audits.

The Importance of NCUA Exams

NCUA exams ensure credit unions adhere to applicable laws and regulations, safeguarding members and maintaining operational integrity. Examiners use several tools to flag violations:

• Supplemental Finding: Identifies specific strengths and weaknesses in the organization.
• Finding: Indicates a violation of a law, rule, or regulation.
• Document of Resolution: Specifies unacceptable risks, outlining a corrective plan, timeline, and responsible parties.
• Memorandum of Understanding: A formal agreement detailing corrective actions, with failure to comply potentially leading to NCUA intervention or takeover.

Preparation requires robust risk management, updated security protocols, compliance checks, and ongoing consumer protection policy evaluations. Outsourcing property tax monitoring can significantly ease this burden.

Why Outsource Property Tax Monitoring?

Property tax management is complex, involving over 24,000 taxing agencies across the U.S., each with unique billing, payment, and exception-handling processes. Credit unions, particularly smaller and mid-sized ones, often lack the specialized expertise to manage this task efficiently. Outsourcing to a property tax specialist like LERETA offers multiple benefits:

1. Enhanced Compliance

• Ensures adherence to local and federal tax laws, a critical factor in passing NCUA exams.
• Removes the burden of tracking ever-changing tax regulations from credit union staff.

2. Improved Accuracy and Timeliness

• Guarantees on-time tax payments, avoiding costly penalties and delinquencies.
• Reduces errors in tax bill processing and payment allocation.

3. Time and Cost Savings

• Frees staff to focus on core activities like revenue generation, account growth, and customer care.
• Increases productivity by outsourcing a time-intensive task to experts.

4. NCUA Recognition

• The NCUA itself recommends outsourcing tax monitoring, as seen in the case of a Pennsylvania-based credit union. Initially issued a Supplemental Finding for tax monitoring issues, the credit union faced a Document of Resolution in a subsequent exam for failing to outsource within the agreed timeline.

LERETA’s Tailored Solutions for Credit Unions

LERETA partners with credit unions of all sizes and asset classes to streamline property tax monitoring and payment processes, supporting both exam preparation and ongoing operations. Services include:

• Turn-Key Outsourcing: Comprehensive monitoring and on-time payment issuance, reducing the credit union’s workload.
• Monitoring and Reporting: Regular updates on tax data, enabling credit unions to stay informed without managing the process directly.
• Expertise Across Jurisdictions: Navigating the complexities of over 24,000 taxing agencies to ensure accuracy and compliance.

By outsourcing to LERETA, credit unions benefit from a partner dedicated to property tax management, minimizing risks and ensuring audit readiness.

Real-World Impact: A Credit Union’s Perspective

The value of outsourcing is echoed by industry leaders. The Director of Mortgage Servicing at Lake Michigan Credit Union, one of the top 25 credit unions in the U.S., shared:

“As the largest mortgage originator in the state of Michigan, and one of the top 25 credit unions in the nation, Lake Michigan Credit Union knows our success is a direct result of our dedicated staff and strong relationships with vendors that provide impeccable service. LERETA is one of those valued partners. They always are responsive and are personally vested in the service they provide…even the President of LERETA stays connected with quarterly touch-base calls with each customer. I would highly recommend LERETA to anyone looking for an incredible property tax and flood partner.”

Key Benefits of Outsourcing with LERETA

Outsourcing property tax monitoring to LERETA delivers:

• Audit Readiness: Ensures compliance with tax-related regulations, reducing the risk of NCUA findings.
• Operational Efficiency: Saves time and resources, allowing staff to focus on member-centric tasks.
• Risk Mitigation: Prevents penalties and delinquencies through accurate, timely tax payments.
• Personalized Service: Offers dedicated support, including executive-level engagement, to meet each credit union’s needs.

With the complexity of property tax management and the high stakes of NCUA exams, partnering with a specialized provider like LERETA is a strategic move for credit unions seeking to streamline operations and ensure compliance.

For more information on how LERETA can support your credit union’s property tax and flood servicing needs, contact sales@LERETA.com.