WASHINGTON (7/10/13)--The full details of the National Credit Union Administration's final rule on loan participations, which was approved at the agency's June open board meeting, are laid out in a new Credit Union National Association final rule analysis.
The rule features many improvements suggested by CUNA even though CUNA did not support any new loan participation rule at this time.
The original effective date was July 25, but CUNA strongly urged the agency to address the effective date to give credit unions flexibility to adequately prepare for the rule's changes. The new effective date for the final rule is Sept. 23.
The final rule sets a limit on loans from one originator of 100% of a credit union's net worth. This is up from a proposed 25% of net worth cap. Also very significant, the federal regulator approved an expanded waiver process for the single-originator limit and limits to one borrower.
CUNA urged such changes and the CUNA board emphasized credit union concerns as it worked to make the rule more practicable.
The agency also approved a provision so that credit unions pushed over the limit by new rule can move their loans into line: such credit unions would not have to sell loans immediately to come into compliance but can bring their participation activity into line in the ordinary course of business or seek a waiver.
For the full CUNA analysis, use the resource link.