More Minnesota Credit Unions Seeking Clarity on Construction Loan Definition

BLOOMINGTON, Minn. - Six Minnesota credit unions recently weighed in on their concerns with NCUA's proposed changes to the agency's member business lending rules. The credit unions got their say during a May 23 conference call with CUNA Senior Regulatory Counsel Catherine Orr. CUNA's deadline for feedback on its comment letter was June 3, while NCUA's deadline was June 20. The main issue with the MBL proposals were that they would cause credit unions to go over the 15% net worth capital cap, said Robbie Thompson, associate general counsel for the Minnesota Credit Union Network, who also participated in the conference call. "They're (also) searching for further clarity especially in the area of improvement and income producing," said Thompson. NCUA is aiming to amend the definition of construction or development loan to include loans for renovating or developing property owned by a borrower to produce income. It has also proposed to clarify what would be the minimum capital requirements a federally-insured corporate credit union must meet in order to make unsecured MBLs to non-member credit unions and corporate CUSOs. Within that same proposal, NCUA is also asking for feedback on how it can broaden its MBL rule to allow CUs to participate in other government guaranteed loan programs and revise the phrase, "net worth" used in the MBL rule to be consistent with the definition of that phrase found in the Federal Credit Union Act and in NCUA's prompt corrective action (PCA) regulation. "This is the time for feedback," Thompson said, adding MCUN will be submitting a comment letter to NCUA. -msamaad@cutimes.com