FCU maturity limits

NAFCU’s compliance team receives questions from time to time about how long of a maturity limit may be permitted under certain circumstances. The maturity limits of loans often vary based on what may be appropriate for the type of credit being extended, especially the kind of collateral that may be securing a loan. Besides what might be a prudent lending practice, policymakers also can have an impact here. Maturity limits for loans can vary for state-chartered credit unions depending on their underlying state laws, but for federal credit unions (FCUs) the Federal Credit Union Act (FCU Act) has some limitations that can make competing challenging.

The FCU Act sets a general 15-year maturity limit, while carving out exceptions for some loans to have up to 20-year maturity limits, and an even narrower exception for other loans to have a 30-year term or longer. Section 1757(5) of the Act sets forth the general rule that an FCU may make loans to members or to other credit unions but the maturity limit “shall not exceed 15 years.” This limit also applies to loan participations.

A loan can be eligible for up to a 20-year maturity limit if:

 

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