Participation Rule Eased by the NCUA
Eighteen months after it proposed a controversial loan participation rule that would have capped purchases from single originators to just 25% of net worth, the NCUA Board approved a final rule June 20 that significantly relaxed the provision.
That concentration limit was increased significantly in the final rule, to 100% of net worth or $5 million, whichever is greater.
The rule also requires originators to participate in the transaction for the life of the loan and restricts federally insured credit unions to participations in which the borrower is already a member of a participating credit union at the time of the purchase.
The rule will be effective 30 days after it is published in the Federal Register; Staff Attorney Pamela Yu told the board she estimates the effective date will be around August 1.