Credit unions that exceed the NCUA's new loan participation rule concentration limits have until the endof today to make new purchases.

According to a letter to credit unions and supervisory guidanceposted Thursday on the NCUA's website, once the rule takes effectMonday, credit unions that exceed either the single originatinglender limit or single borrower concentration cap may not purchaseadditional loan participations until existing balances aregrandfathered into compliance.

The rule applies to all credit unions that purchaseparticipation interested in loans made by a third party, NCUAChairman Debbie Matz wrote in the letter.

Credit unions will now have to abide by a concentration cap that limits participation loans from singleoriginators to 100% of net worth or $5 million, whichever isgreater. And, purchases of loan participations made to any oneborrower or group of associated borrowers cannot exceed 15% of thepurchasing credit union's net worth.

Limits on both requirements can be exceeded with approvedwaivers. One-time waivers will be granted primarily to creditunions that exceed the single borrower limit, and could includeloans following natural disasters affecting a service area. Blanketwaivers would predominantly allow a credit union to conductparticipation loan activities above the single originator cap.

In the supervisory guidance document, the NCUA detailebd allinformation required for a waiver application and factors itconsiders when approving or denying the waiver request.

Both one-time and blanket waivers should be obtained in advanceof a pending loan or situation-specific event to facilitate timelyprocessing of loan applications, the NCUA said.

The NCUA will also require originating lenders that are federalcredit unions to retain at least 10% of the loan. State-charteredcredit unions, CUSOs and banks that originate participation loansmust retain 5%.

Written loan participation agreements between originators andborrowers will also be required, as will formal loan participationpolicies for purchasers that include self-imposed limits on loantypes and single borrower concentrations.

Matz also said NCUA examiners received supervisory guidance onthe rule, including the waiver process.

The NCUA Board approved the rule at its June board meeting andoriginally set a compliance date in July. However, upon requestfrom credit unions and trade groups, the regulator extended the effective date to Sept. 23.