WASHINGTON -- CUNA, NAFCU and NASCUS all urged NCUA tostreamline the waiver process on member business loans.

Requiring state-charted credit unions to apply for waivers fromboth the federal and state regulators is "cumbersome" and "createsuncertainty for the credit unions while adding little to effectiveregulatory oversight," NASCUS Senior Vice President of RegulatoryAffairs Brian Knight wrote the agency.

CUNA Senior Vice President and Deputy General Counsel Mary Dunnalso criticized the dual approval rules and urged the agency not torequire credit unions that have already obtained waivers toresubmit all the documentation in subsequent applications.

NAFCU Senior Vice President of Government Affairs B. Dan Bergerurged the agency reduce the approval time from 45 calendar days to20 calendar days. He also recommended the agency create anexpedited application process for credit unions that meet RegFlexstandards and so are less likely to assume unreasonable risk.

NASCUS also urged the agency to change the rule requiring creditunions to have at least two years of lending experience beforedoing MBLs. Instead, the group urged NCUA to create a "commensurateexperience" standard that varies the experience based on thecomplexity of the MBL.

NASCUS, which represents state regulators, offered no opinion onwhether to alter the loan-to-value ratios (currently 80%) andchange borrower equity requirements.

But CUNA and NAFCU both said making a change would help creditunions be more competitive with other financial institutions.

"NCUA's regulation should provide more latitude generally tocredit unions to determine what the appropriate LTV should be forany MBL, based on the credit union's assessment of each borrower'scredit history, type of project being funded and other relevantinformation," Dunn wrote.

NCUA is reviewing rules in this area and is asking for inputfrom the financial services industry before issuing suggestedchanges.

Berger urged the agency to modify its rules on commercialvehicle loans so credit unions can make loans on up to fivevehicles (if the vehicles aren't used for revenue-generatingpurposes) without the loan being considered an MBL. Dunn expressedsimilar sentiments and both Berger and Dunn urged the agency tocreate more flexible standards for construction and developmentloans.

Berger also urged the agency to consider increasing the maturitylimit above the current 15 years. Such a move would give creditunions greater flexibility, including increasing their chances tosell them on the secondary market.

Dunn also used her letter to refute concerns raised by theAmerican Bankers Association and other banking groups in letters toregulators urging them to place more, not fewer, restrictions oncredit union lending.

"MBLs as of March 2008 are only 3.62% of credit unions' assetsand only 5.38% of all loans. More importantly, the delinquency rateis at 1.62%, compared to 4.24% for banks. As these figuresindicate, MBLs for federally insured credit unions are generallysafe and productive for the credit union as well for as the memberbusiness borrower," she wrote. "Further, as the agency is aware,concerns regarding MBLs have been isolated incidences and notsystemic as say, mortgage problems have been in the bankingsector."

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