The Final Member Business Loans (MBL) rule was published in
the Federal
Register this week. NCUA approved the
rule at its February open Board meeting.
The rule has an effective date of January 1, 2017, but the elimination
of the personal guarantee requirement becomes effective May 13, 2016, which is
60 days after publication in the Federal Register.
The final rule eliminates most of the current rule’s prescriptive
limitations, such as collateral and security requirements, equity requirements
and loan limits, and uses what NCUA calls a “broad principles-based regulatory
approach” for safety and soundness. NCUA
states that this rule has eliminated most regulatory requirements from the MBL
regulation, leaving mostly just Federal Credit Union Act (FCUA) requirements in
place.
The final rule also eliminates waiver processes, as most of the
requirements needing waivers have been eliminated.
We expect NCUA to quickly provide guidance to credit unions detailing examination
requirements and other expectations for compliance with the new rule.