Press
NAFCU letter to House of Representatives urging support for H.R. 1422, the Credit Union Residential Loan Parity Act
The Honorable John Boehner
Speaker
U.S. House of Representatives
Washington, D.C. 20515
The Honorable Nancy Pelosi
Minority Leader
U.S. House of Representatives
Washington, D.C. 20515
Re: Support H.R. 1422, the Credit Union Residential Loan Parity Act
Dear Speaker Boehner and Leader Pelosi:
On behalf of the National Association Federal Credit Unions (NAFCU), the only national trade association that exclusively represents the interests of our nation’s federal credit unions, I write today to urge your support for H.R. 1422, the Credit Union Residential Loan Parity Act. This bipartisan legislation was introduced by Representatives Ed Royce and Jared Huffman to correct a discrepancy on how certain real estate loans are classified for credit unions.
Currently, loans made for non-owner occupied 1-4 unit housing count against the arbitrary credit union member business lending cap because they are classified as a member business loan. However, at other financial institutions they are classified as residential real estate loans. While the banking trades argue against this legislation because they do not want their members to have increased competition on the business loan side, they forget to mention that a 2011 study commissioned by the Small Business Administration’s (SBA) Office of Advocacy found that bank business lending was largely unaffected by changes in credit unions’ business lending, and credit unions’ business lending can actually help offset declines in bank business lending during a recession (James A. Wilcox, The Increasing Importance of Credit Unions in Small Business Lending, Small Business Research Summary, SBA Office of Advocacy, No. 387 (Sept. 2011)). The study indicates that during the 2007-2010 financial crisis, while banks’ small business lending decreased, credit union business lending increased in terms of the percentage of their assets both before and during the crisis. While the banking trades would have you believe that credit unions should not be making business loans, the truth is that credit unions are making loans to small businesses when banks do not want to help.
Counting credit union loans made for non-owner occupied 1-4 unit housing against a credit union’s arbitrary member business lending cap reduces a credit union’s ability to lend to small businesses to help them grow and create jobs. Additionally, since these loans count against the cap, some credit unions may be forced to turn down loans of this nature they might otherwise make. These loans are often used by military families who may want to buy a home in one community, but end up stationed for a period of time in another community where they would like to own the home they are living in. Currently, a credit union serving such a military family would have to treat the non-owner occupied loan as a business loan and count it toward its member business lending cap. This legislation would address this discrepancy by exempting these loans from the credit union member business lending cap.
The relief this legislation would give to credit unions could help to both increase the amount of available credit to our nation’s small businesses and increase the availability of credit in the recovering but fragile housing market. We urge you and your colleagues to support this important legislation.
If you have any questions or need any assistance, please don’t hesitate to contact me or NAFCU’s Associate Director of Legislative Affairs, Quincy Enoch, at 703-842-2261 or qenoch@nafcu.org.
Sincerely,
Brad Thaler
Vice President of Legislative Affairs
cc: Members of the U.S. House of Representatives