Under what condition regarding policy does a credit union not qualify for the small lender exception?

A credit union does not qualify for the small lender exception when it has a policy consistently requiring escrow. This is because the small lender exception is designed to reduce regulatory burden for smaller institutions that may not have the resources to manage complex compliance requirements, such as those related to escrow accounts. If a credit union mandates escrow as a standard practice, it indicates a level of operational sophistication and asset management that aligns more closely with larger institutions, thus disqualifying it from the small lender exception. This provision is meant to help maintain a level playing field, ensuring that smaller lenders can operate with less regulatory pressure while focusing on serving their members more efficiently.

Other conditions, such as operating nationwide or exceeding specific asset thresholds, reflect a scale of operation that may align more closely with larger lenders, while the requirement for a consistent escrow policy directly addresses the operational framework of the credit union and its capacity to manage associated compliance obligations.