Pending MBL rule changes
Credit unions will be more able to compete but still need to move with caution
The member business lending market for credit unions is on the cusp of change, with revisions to National Credit Union Administration regulations (NCUA 12, CFR Part 723) slated to take effect Jan. 1, 2017. Among the most impactful changes are removing loan-to-value limits, lifting aggregate limits on construction and development lending, and giving credit unions discretion in determining the necessity of personal guarantees.
According to Jim Devine, CEO of Hipereon Inc., Redmond, Wash., these changes level the playing field as credit unions go head to head with banks in a competitive, rate-driven environment. Devine leads CUES’ schools of business lending, including CUES Advanced School of Business Lending™: Commercial Real Estate Lending, slated for September in Santa Fe.
“Credit unions have felt [they were in] a disadvantageous position because they couldn’t previously book loans without getting waivers for LTV issues and personal guarantees,” he says. “Now these two issues are going to be removed.”
Even so, credit unions have begun to experience downward pressure on margins in the commercial real estate arena, driven by banks that have recovered from the recession and are offering refinance deals at highly aggressive rates.
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