Title 12
SECTION 723.1
723.1 Purpose and scope.
§ 723.1 Purpose and scope. Link to an amendment published at 80 FR 66723, Oct. 29, 2015. This amendment was delayed until Jan. 1, 2020, at 83 FR 55467, Nov. 6, 2018. This amendment was further delayed until Jan. 1, 2022, at 84 FR 68781, Dec. 17, 2019.(a) Purpose. This part is intended to accomplish two broad objectives. First, it sets out policy and program responsibilities that a federally insured credit union must adopt and implement as part of a safe and sound commercial lending program. Second, it incorporates the statutory limit on the aggregate amount of member business loans that a federally insured credit union may make pursuant to Section 107A of the Federal Credit Union Act. The rule distinguishes between these two distinct objectives.
(b) Credit unions and loans covered by this part. (1) This part applies to federally insured natural person credit unions. However, a federally insured natural person credit union is not subject to §§ 723.3 and 723.4 of this part if it meets all of the following conditions:
(i) The credit union's total assets are less than $250 million.
(ii) The credit union's aggregate amount of outstanding commercial loan balances and unfunded commitments, plus any outstanding commercial loan balances and unfunded commitments of participations sold, plus any outstanding commercial loan balances and unfunded commitments sold and serviced by the credit union total less than 15 percent of the credit union's net worth.
(iii) In a given calendar year the amount of originated and sold commercial loans the credit union does not continue to service total less than 15 percent of the credit union's net worth.
(2) This part does not apply to loans:
(i) Made by a corporate credit union, as defined in part 704 of this chapter;
(ii) Made by a federally insured credit union to another federally insured credit union;
(iii) Made by a federally insured credit union to a credit union service organization, as defined in part 712 and § 741.222 of this chapter; or
(iv) Fully secured by a lien on a 1- to 4-family residential property that is a member's primary residence.
(c) Other regulations that apply. (1) For federal credit unions, the requirements of § 701.21(a) through (g) of this chapter apply to commercial loans granted by a federal credit union to the extent they are consistent with this part. As required by § 741.203 of this chapter, a federally insured state-chartered credit union must comply with § 701.21(c)(8) of this chapter concerning prohibited fees, and § 701.21(d)(5) of this chapter concerning non-preferential loans.
(2) If a Federal credit union makes a commercial loan through a program in which a federal or state agency (or its political subdivision) insures repayment, guarantees repayment, or provides an advance commitment to purchase the loan in full, and that program has requirements that are less restrictive than those required by this rule, then the Federal credit union may follow the loan requirements of the relevant guaranteed loan program. A federally insured state-chartered credit union that is subject to this part and that makes a commercial loan as part of a loan program in which a federal or state agency (or its political subdivision) insures repayment, guarantees repayment, or provides an advance commitment to purchase the loan in full, and that program has requirements that are less restrictive than those required by this rule, then the federally insured state-chartered credit union may follow the loan requirements of the relevant guaranteed loan program, provided that its state supervisory authority has determined that it has authority to do so under state law.
(3) The requirements of § 701.23 of this chapter apply to a Federal credit union's purchase, sale, or pledge of a commercial loan as an eligible obligation.
(4) The requirements of § 701.22 of this chapter apply to a federally insured credit union's purchase of a participation interest in a commercial loan.