NCUA Offers Clarity on Commercial Vehicle Leases in MBL Rule
ALEXANDRIA, Va. - The member business lending rule, with some exceptions, applies to any loan, line of credit, or letter of credit where the borrower uses the proceeds for a commercial, corporate, or business purpose, NCUA recently clarified. Cary C. Boyden, an attorney with Sacramento-based Boyden, Cooluris, Livingston, & Saxe, P.C., asked if the MBL rule applies to a CU loan to finance a commercial vehicle lease. If the MBL rule applies, Boyden believed a loan to finance a commercial vehicle lease cannot meet the loan-to-value ratio (LTV) requirements of the rule. In a Feb. 3 opinion letter, NCUA Associate General Counsel Sheila Albin wrote "In these circumstances, we suggest a credit union can request a waiver for a loan or group of loans that cannot or does not meet the LTV requirements of the MBL rule." Albin said the information provided by Boyden indicated that its CU client wants to finance leases for fleets of vehicles used for commercial purposes, but considering the application of the requirements of both NCUA's leasing and MBL regulations and given the nature of loans to finance leases, borrowers cannot meet the LTV requirements of the MBL rule. Boyden also noted that the "full payout requirement" in the leasing rule serves a function similar to the LTV requirement in the MBL rule. Albin said his inquiry did not state if his client is a federal credit union (FCU) or a federally insured state-chartered credit union (FISCU). But while Part 723 of the MBL rule, applies to both FCUs and FISCUs, Part 714 applies to FCUs but not FISCUs, she pointed out.