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Credit Union Residential Loan Parity Act Introduced in the Senate

Mon, Apr 10, 2017

Columbia, Maryland

Sen. Ron Wyden (D-OR)), along with Sens. Markey (D-MA), Warren (D-MA) and Murkowski (R-AK) introduced S. 836 Credit Union Residential Loan Parity a Senate version of the MBL billthat would exempt credit union loans made for commercial purposes to 1-4 unit dwellings from the FCUA lending cap. The bill creates parity for certain residential loans made by both banks and credit unions. CUNA has written a letter in support of the bill.

As it stands today, when a bank makes a loan to purchase a 1-4 unit non-owner occupied residential dwelling, the loan is classified as a real estate loan; however, if a credit union were to make the same loan, it would be classified as a business loan and therefore would be subject to the cap on member business lending under the Federal Credit Union Act.  S. 836 would amend the Federal Credit Union Act to provide an exclusion from the cap for these loans.

S. 836 would amend the Federal Credit Union Act to provide an exclusion from the cap for these loans. This exclusion would be consistent with the treatment of these loans proposed under the NCUA’s risk-based capital regulation. In addition, the bill would authorize the NCUA to apply strict underwriting and servicing requirements for the loans.