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ALEXANDRIA, Va.-NCUA Associate General Counsel Sheila Albin wrote in a recent legal opinion letter that credit unions must apply share-secured loans toward the 10% loans-to-one-borrower ceiling. Albin pointed out that the definition of a loan-to-one-borrower prohibits loans that would cause the member to be indebted to the credit union in excess of 10% of the credit union’s unimpaired capital and surplus. The term “shares” was mistakenly substituted for “capital” in the definition printed by the Government Printing Office and NCUA, which caused some confusion and has been corrected in the most recent version of the rule. For clarification, Albin wrote that unimpaired capital and surplus means shares plus post-closing, undivided earnings. The 10% limit also applies to member business loans that are fully secured by shares. “There are no exceptions in our act or our rules based on the purpose of the loan or on how the loans is secured,” she wrote.

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