“We need to provide that protection, not only to our federal examiners at our federal credit unions but when they go into state-chartered credit unions, along with the examiners from the states going into them, that they are fully protected, that they can take the exam outside the house,” Fryzel said after Thursday's meeting.

“They don't have to be concerned about going in. If they have to go in, they go in with the understanding that they're protected,” he said.

Fryzel noted that many credit unions started in homes.

“Some of these credit unions that are still located in homes, they don't want to grow. They don't want to get any bigger. They don't want to take in any new members. They're serving a distinct field of membership and their members apparently are very happy with it,” he said.

“For us to say to them, 'Now take this and put this in a commercial store' is wrong. If they are safe and sound, if they're operating as a financial institution should operate, we should have no problem with that.”

NCUA Board Chairman Debbie Matz told Credit Union Times that the time has come for home-based credit unions to move out of their homes.

“I don't believe that examiners should be going into somebody's private residence to examine their books. We've had examiners who have been bitten by dogs. We've had examiners working in conditions where they can't control the thermostat so it's very cold in winter, very hot in summer. In some cases, they're not allowed to use the restroom at the home,” she said.

“I would not want to work under those conditions. I don't know anybody else who would and we shouldn't impose those conditions on our examiners,” she said. “So there are two very distinct reasons why I think it's time for home-based credit unions to move out of their homes and move into accessible commercial facilities.”

Fryzel said some home-based credit unions that cannot afford to move to a commercial space could be forced to merge or liquidate.

“It's a decision the credit unions will have to make if it becomes final. I'm hoping that there will be significant changes or at least that the general council will be able to see that perhaps we don't have that authority and we should leave well-enough alone,” he said.

Fryzel also told Credit Union Times that he expects the risk-based capital rule to come before the board in the first quarter of 2014.

Watch the full interview with Fryzel above.