NCUA Letter to Credit Unions – Loan Participations
Sept. 23 was the effective date of the NCUA’s revised loan Participation Rule. To provide credit unions with further information, the NCUA published a letter to all federally insured credit unions (13-CU-07).
Some revisions to Part 701 and Part 741 of the NCUA rules include:
- A concentration limit on the aggregate amount of loan participations that may be purchased from any one originating lender, not to exceed the greater of $5 million or 100 percent of net worth.
- Another limit on the aggregate amount of loan participations purchased with respect to a single borrower or group of associated borrowers, which is not to exceed 15% of the credit union’s net worth.
- Both of these limits can be waived by the NCUA with proper approval.
The letter to credit unions also provided a link to supervisory guidance on loan participation waivers.
The letter provides information on loan participation waivers, expectations of examiner review of waivers and overall compliance with the NCUA Rules and Regulations.
Also contained in the Supervisory Letter are requirements for a Loan Participation Policy and components of a Loan Participation Master Agreement. Credit unions should take the time to review these publications to ensure their participation program is compliant with the new requirements.
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. Bryan Laviolette is the editor of Monitor. Contact him by email
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