5 MBL Details Examiners Are Watching
CU Business Group LLC, a Portland, Ore.-based business lending and services CUSO, said it has discovered several member business lending issues that have drawn increased examiner scrutiny. The CUSO discovered the trend after meeting with NCUA officials, including Vin Vieten, the agency’s member business lending program officer, and after speaking with some of its 460 credit union clients.
“It’s not filtering through one examiner’s opinion on how a MBL loan program should run or how a loan should be underwritten,” said Larry Middleman, CUBG president/CEO. “We focus on those trends rather than just the one-off, realizing the direction of NCUA in addressing the complexities of commercial lending.”
1. Business owner living expenses
CUBG tackled the underwriting question of quantifying the ability of a borrower or guarantor to make payments on personal obligations. The CUSO came up with a method using the federal poverty line, which is adjusted on an annual basis by the federal government, said Jim Clark, CUBG senior vice president and chief credit officer.
2. Global cash flow calculations
The 1.25% debt service coverage ratio can’t be used to look at an individual’s business investment, income and salary and interest income on the same scales, said Jeff Stone, CUBG vice president and senior business services officer.
3. Taxi medallions
Based in New York, Mucilli said he is hearing examination feedback on taxi medallions.
4. Flood insurance coverage
There are new rules when it comes to flood insurance coverage, Clark said.
5. Loan Participations
Middleman said this is not necessarily a new thing, but the landscape has changed a bit due to new regulations that came out last September.