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ALEXANDRIA, Va.-In a brief session last week, the NCUA Board passed a final regulation on loan guarantees and maturities and received the year-end insurance fund report for 2004. At its Feb. 17 board meeting, NCUA approved a final rule amending certain subsections of its lending rule (701.21). The modifications to the regulation explain the conditions for loans secured by mobile homes, recreational vehicles, house trailers, and boats. It also clarifies that loans secured by manufactured homes may be considered residential real estate loans. Additionally, it states that loans with a partial government guarantee, insurance, or advance commitment to purchase a portion of a loan fall within the rule. The final rule codifies a number of recent legal interpretations issued by the agency’s Office of General Counsel on permissible maturities and the effect of partial government guarantees. It becomes effective 30 days after publication in the Federal Register. The proposed regulation was initially issued in November 2004. “The NCUA Board is making these changes because it believes it is helpful to federal credit unions (FCUs) and others that may consult NCUA regulations to incorporate these interpretations as part of the rule itself rather than having them stated separately in OGC legal opinions,” NCUA’s Board Action Memorandum read. In subsection (e) of the rule, it states that loans secured in full or in part by the federal or state government may be made for the maturity under the terms and conditions under which the commitment is provided. Subsection (f) reads that federal credit unions may make loans with maturities up to 20 years if it is to finance a mobile home, for a second mortgage, or for home improvements. Under this subsection, recreational vehicles, house trailers, and boats are considered mobile homes. Finally, the rule states in subsection (g) that a federal credit union may make residential real estate loans, including manufactured homes permanently affixed to the land, up to 40 years or longer as permitted by the agency. The NCUA Board was also presented with the 2004 year-end insurance fund report at the meeting. The National Credit Union Share Insurance Fund went beyond breaking even on insurance loss expenses, which dropped to negative $3 million in 2004 from a positive $38 million in 2003. Twenty-one credit unions failed in 2004, up from 13 the year before. Additionally, the number of CAMEL 4 and 5 credit unions was up to 255 from 217 in 2003, but the level is still relatively low. The troubled credit unions represent 0.87% of insured shares, which is up from 2000′s 0.40% but below the 1% level it reached in 1998. Net income for the NCUSIF came in well above what was budgeted. The agency expected about $19.9 million in net income but got $47.4 million. Even though gross income was a bit lower than expected, operating expenses were more than $10 million less than budgeted and loss expenses nearly $18 million less. [email protected]

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