Member Business Lending

Recent Activity

National Credit Union Administration Rulemakings

On August 10, 2018, the NCUA published a notice of proposed rulemaking regarding loans and lines of credit to members. Specifically, the NCUA sought comment on whether longer, more flexible maturity limits for certain loans are warranted. These loans include one-to-four family real estate loans, home improvement, mobile home, and second mortgage loans.

In March 2019, the NCUA finalized the loans to members rule as proposed, which went into effect on April 24, 2019. The rule does not make any substantive changes, but rather makes the regulation “friendlier” through clarifying and technical changes. The final rule (1) identifies in one section the various maturity limits currently applicable to federal credit union loans; (2) clarifies that the maturity for a ‘‘new loan’’ under generally accepted accounting principles (GAAP) is calculated from the new date of origination; and (3) more clearly expresses the limits in place for loans to a single borrower or group of associated borrowers. To learn more about the final rule, see NAFCU’s Final Regulation summary and analysis.

Legislative Developments

On May 24, 2018, the NAFCU-backed Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155) became law. The landmark regulatory relief bill included a provision excluding one-to-four family dwellings that are not the primary residence of a member from the member business lending (MBL) cap. As a result, on June 1, 2018, the NCUA approved a final rule amending its definition of an MBL in the Federal Credit Union Act to conform to S.2155. The rule became effective June 5, 2018.

On March 8, 2019, Representatives Lee Zeldin (R-NY) and Vicente Gonzalez (D-TX) introduced NAFCU-supported legislation, H.R. 1661, which would give the NCUA greater flexibility in setting loan maturity limits under the Federal Credit Union Act. NAFCU has long advocated for credit unions to have flexibility with respect to loan maturity limits. The current 15-year limit on certain loans is outdated and does not conform to maturities that are commonly accepted in the market today.

On April 12, 2019, Representatives Vicente Gonzalez (D-TX), Paul Cook (R-CA), Tulsi Gabbard (D-HI) and Don Young (R-AK) reintoduced NAFCU-supported legislation, H.R. 2305, that would exclude loans made to veterans from the statutory MBL cap. This bipartisan bill would improve veterans' access necessary capital by removing outdated regulatory barriers that hinder credit unions' ability to meet the financial needs of our nation's veterans.