National Association of Federal Credit Unions (NAFCU) President and CEO Dan Berger issued the following statement regarding today’s National Credit Union Administration (NCUA) Board meeting, during which the board finalized the rule to eliminate the member business lending (MBL) waiver process and allow credit unions to decide for themselves if a borrower should be exempt from a personal guarantee.
“NAFCU and our members appreciate NCUA heeding our call to allow credit unions the flexibility to serve the small businesses within their communities,” said Berger. “Removing the waiver process not only eases regulatory red tape, but it also provides credit unions the independence to safely and soundly address the needs of their small-business members. Today’s action ensures that credit unions can better meet the capital and liquidity needs of our nation’s small businesses, which are struggling to find such access from other lenders.”
By eliminating the waiver process, the final rule will allow credit unions to independently develop commercial underwriting standards commensurate with their own risk appetite. The final rule:
- updates the current requirements and limitations on collateral, security, equity and loans;
- removes explicit loan-to-value limits;
- lifts limits on construction and development loans; and
- clarifies that non-member loan participations do not count against the statutory MBL cap.
The rule goes into effect Jan. 1, 2017, but the personal guarantee requirement will be eliminated 60 days after the rule’s publication in the Federal Register.
NAFCU also continues to advocate for broader changes in the MBL rules through legislation that would allow an exemption from the MBL cap for more credit unions.
NCUA also indicated that it was too early to know if a NCUSIF premium would be required this year. NAFCU will continue to monitor the health of the fund and work with the agency to ensure that credit unions and their members are protected from any unnecessary assessments.