On compliance: Looking at commercial loans under MBL rule

With the NCUA’s new member business lending (MBL) rule is in effect, credit unions need to ensure they are in compliance and fully understand all of the new requirements. A recent entry in CUNA’s CompBlog takes a closer look at the guidance published in December by the NCUA, which provides more detail and sheds some light on examiner expectations.

Section 723.4 has been of particular concern for credit unions, as it requires all credit unions to adopt and implement a board-approved commercial loan policy and establish detailed commercial lending procedures.

The commercial loan policy should address, at a minimum:

  • Types of commercial loans permitted;
  • Trade area;
  • Portfolio concentration limits;
  • Single borrower limits;
  • Qualifications/experience requirements for lending staff;
  • Loan approval process;
  • Underwriting standards; and
  • Risk management processes.

The guidance also details expectations for underwriting standards, as the lending policy should address the financial analysis and depth of review to support the credit decision, including:

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