Loans to Members and Lines of Credit to Members, 39622-39626 [2018-17087]
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39622
Proposed Rules
Federal Register
Vol. 83, No. 155
Friday, August 10, 2018
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Part 701
[RIN 3133–AE88]
Loans to Members and Lines of Credit
to Members
National Credit Union
Administration (NCUA).
ACTION: Proposed rule.
AGENCY:
The NCUA Board (Board)
proposes to amend its regulations
regarding loans to members and lines of
credit to members. The proposal would
reduce regulatory burden by making
amendments to improve clarity and to
make compliance easier. Specifically,
the Board proposes to make the NCUA’s
loan maturity requirements more user
friendly by identifying in one section all
of the various maturity limits applicable
to federal credit union (FCU) loans. The
Board also proposes to make explicit in
its regulations that the maturity date for
a ‘‘new loan’’ under generally accepted
accounting principles (GAAP) is
calculated from the new date of
origination. Additionally, the Board
seeks comment on whether the agency
should provide longer maturity limits
for 1–4 family real estate loans and
other loans permitted by the Federal
Credit Union Act (FCU Act) such as
home improvement, mobile home, and
second mortgage loans. Finally, the
Board proposes to more clearly express
the limits for loans to a single borrower
or group of associated borrowers.
DATES: Comments must be received on
or before October 9, 2018.
ADDRESSES: You may submit comments
by any of the following methods (Please
send comments by one method only):
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• NCUA website: https://
www.ncua.gov/regulation-supervision/
Pages/rules/proposed.aspx. Follow the
instructions for submitting comments.
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SUMMARY:
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• Email: Address to regcomments@
ncua.gov. Include ‘‘[Your name]
Comments on Proposed Rule 701, Loans
to Members and Lines of Credit to
Members’’ in the email subject line.
• Fax: (703) 518–6319. Use the
subject line described above for email.
• Mail: Address to Gerard S. Poliquin,
Secretary of the Board, National Credit
Union Administration, 1775 Duke
Street, Alexandria, Virginia 22314–
3428.
• Hand Delivery/Courier: Same as
mail address.
Public Inspection: You may view all
public comments on the NCUA’s
website at https://www.ncua.gov/
regulation-supervision/Pages/rules/
proposed.aspx as submitted, except for
those we cannot post for technical
reasons. The NCUA will not edit or
remove any identifying or contact
information from the public comments
submitted. You may inspect paper
copies of comments in the NCUA’s law
library at 1775 Duke Street, Alexandria,
Virginia 22314, by appointment
weekdays between 9 a.m. and 3 p.m. To
make an appointment, call (703) 518–
6546 or send an email to OGCMail@
ncua.gov.
FOR FURTHER INFORMATION CONTACT:
Thomas I. Zells, Staff Attorney, Office of
General Counsel, at 1775 Duke Street,
Alexandria, VA 22314 or telephone:
(703) 548–2478.
SUPPLEMENTARY INFORMATION:
I. Background
II. Summary of the Proposed Rule
III. Section-by-Section Analysis
IV. Regulatory Procedures
I. Background
In August 2017, the Board published
and sought comment on the NCUA’s
regulatory reform agenda (Agenda).1
The Agenda identifies those regulations
the Board intends to amend or repeal
because they are outdated, ineffective,
or excessively burdensome.2
A number of the items in the Agenda
relate to the NCUA’s regulations on
loans to members and lines of credit to
members.3 In order to provide
1 82
FR 39702 (Aug. 22, 2017).
is consistent with the spirit of President
Trump’s regulatory reform agenda and Executive
Order 13777. Although the NCUA, as an
independent agency, is not required to comply with
Executive Order 13777, the Board has chosen to
comply with it in spirit and has reviewed all of the
NCUA’s regulations to that end.
3 12 CFR 701.21.
regulatory relief to credit unions, the
Board proposes to address in this
rulemaking the substance of several of
those items and request further public
comment on another. More specifically,
the Board proposes to make the NCUA’s
regulations on loans to members and
lines of credit to members more user
friendly by: (1) Identifying in one
section the various maturity limits
applicable to FCU loans; (2) clarifying
that the maturity for a lending action
that qualifies as a ‘‘new loan’’ under
GAAP is calculated from the new date
of origination; 4 (3) seeking comment on
whether the NCUA should provide for
longer, more flexible maturity limits on
certain loans; and (4) more clearly
expressing the limits in place for loans
to a single borrower or group of
associated borrowers.
II. Summary of the Proposed Rule
A. Loan Maturity Limits for Federal
Credit Unions
Section 107(5) of the FCU Act grants
FCUs the power ‘‘to make loans, the
maturities of which shall not exceed 15
years, except as otherwise provided
herein. . . .’’ 5 The NCUA implemented
this general maturity limit in
§ 701.21(c)(4) of its regulations. Section
107(5)(A)(i)–(iii) of the FCU Act provide
exceptions to the general 15-year
maturity limit, and have been
implemented in § 701.21(e) through (g)
of the NCUA’s regulations. Section
107(5)(A)(i) of the FCU Act,
implemented in § 701.21(g) of the
NCUA’s regulations, states that ‘‘a
residential real estate loan on a one-tofour-family dwelling, including an
individual cooperative unit, that is or
will be the principal residence of a
credit union member, and which is
secured by a first lien upon such
dwelling, may have a maturity not
exceeding thirty years or such other
limits as shall be set by the National
Credit Union Administration Board
(except that a loan on an individual
cooperative unit shall be adequately
secured as defined by the Board),
subject to the rules and regulations of
the Board[.]’’ 6 Pursuant to the authority
2 This
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4 GAAP is defined as generally accepted
accounting principles in the United States as set
forth in the Financial Accounting Standards Board’s
(FASB) Accounting Standards Codification (ASC).
5 12 U.S.C. 1757(5).
6 12 U.S.C. 1757(5)(A)(i) (emphasis added); 12
CFR 701.21(g).
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§ 107(5)(A)(i) of the FCU Act grants the
Board to set alternate maturities for
covered 1–4 family real estate loans, the
Board has established a 40-year
maximum maturity for such loans and
has provided that longer periods may be
permitted by the Board on a case-bycase basis.7 Section 107(5)(A)(ii) of the
FCU Act, implemented in § 701.21(f) of
the NCUA’s regulations, states that ‘‘a
loan to finance the purchase of a mobile
home, which shall be secured by a first
lien on such mobile home, to be used
by the credit union member as his
residence, a loan for the repair,
alteration, or improvement of a
residential dwelling which is the
residence of a credit union member, or
a second mortgage loan secured by a
residential dwelling which is the
residence of a credit union member,
shall have a maturity not to exceed 15
years or any longer term which the
Board may allow[.]’’ 8 Pursuant to the
authority section 107(5)(A)(ii) grants the
Board to set alternate maturities for
covered loans, the Board has established
a 20-year maximum maturity for such
loans.9 Finally, section 107(5)(A)(iii) of
the FCU Act, implemented in
§ 701.21(e) of the NCUA’s regulations,
states that ‘‘a loan secured by the
insurance or guarantee of, or with
advance commitment to purchase the
loan by, the Federal Government, a State
government, or any agency of either may
be made for the maturity and under the
terms and conditions specified in the
law under which such insurance,
guarantee, or commitment is
provided[.]’’ 10
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i. Identifying the Various Maturity
Limits in One Section
Presently, § 701.21 of the NCUA’s
regulations addresses various loan
maturity limits in paragraphs (c), (e), (f),
and (g). Paragraph (c) provides the
general rules applicable to all loans to
members and, where indicated, all lines
of credit (including credit cards) to
members, except as otherwise provided
in the remaining provisions of § 701.21.
Paragraph (c)(4) implements the general
15-year maturity limit that section
7 12 CFR 701.21(g)(1) (stating that ‘‘[a] federal
credit union may make residential real estate loans
to members, including loans secured by
manufactured homes permanently affixed to the
land, with maturities of up to 40 years, or such
longer period as may be permitted by the NCUA
Board on a case-by-case basis, subject to the
conditions of this paragraph[.]’’).
8 12 U.S.C. 1757(5)(A)(ii) (emphasis added); 12
CFR 701.21(f).
9 12 CFR 701.21(f)(1) (stating that
‘‘[n]otwithstanding the general 15-year maturity
limit on loans to members, a federal credit union
may make loans with maturities of up to 20 years’’
for loans covered by this paragraph.).
10 12 U.S.C. 1757(5)(A)(iii); 12 CFR 701.21(e).
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107(5) of the FCU Act places on loans
to members. Paragraphs (e), (f), and (g)
of § 701.21 implement the three
exceptions to this general 15-year limit
that appear in section 107(5)(A)(i)–(iii)
of the FCU Act.
Having the various maturity limits
spread among numerous sections of the
NCUA’s regulations, often separated by
large amounts of regulatory text
unrelated to maturities, can be
confusing to the reader and makes it
more difficult to understand the lending
regulations. To remedy this, the Board
proposes to make the NCUA’s loan
maturity requirements more
understandable and user-friendly by
identifying in one section
(§ 701.21(c)(4)), including crosscitations, all of the maturity limits
applicable to FCU loans.
ii. The Treatment of Maturities for
Lending Actions That Qualify as ‘‘New
Loans’’ Under GAAP
The proposal also clarifies that in the
case of a lending action qualifying as a
‘‘new loan’’ under GAAP, the maturity
limit is calculated from the new date of
origination.11 The Board proposes to
accomplish this by adding language to
§ 701.21(c)(4), which articulates the
general 15-year maturity limit.
iii. Request for Comment on Providing
Longer Maturity Limits for Certain
Loans
The Board is considering providing
longer maturity limits for 1–4 family
real estate loans and other loans (such
as certain home improvement, mobile
home, and second mortgage loans) as
permitted by section 107(5)(A)(i)–(ii) of
the FCU Act and removing the case-bycase exception the Board can grant. As
discussed earlier, these maturity limits
are implemented in § 701.21(f) and (g) of
the NCUA’s regulations. The case-bycase exception is located in
§ 701.21(g)(1) of the NCUA’s regulations
and provides that the Board can permit
an FCU to make loans with maturities
that exceed the regulation’s 40-year
limit ‘‘on a case-by-case basis, subject to
the conditions of this paragraph (g).’’ 12
The Board believes that more input is
necessary to determine whether longer
maturity limits should be adopted and,
if so, the proper maturity lengths and
the reasons such longer maturities are
warranted. As such, the Board asks that
commenters provide detailed comments
addressing: (1) Whether the NCUA
should provide longer maturity limits
for certain lending actions permitted by
section 107(5)(A)(i)–(ii) of the FCU Act;
(2) the appropriate maturity limits for
such lending actions; (3) whether the
case-by-case Board exemption should be
retained and, if so, under what
circumstances would such exemptions
be appropriate; and (4) any other issues
stakeholders believe relevant. The Board
also requests that commenters consider
FCU Act limitations when requesting
relief and changes in this area.
B. Single Borrower and Group of
Associated Borrowers Limits
i. More Clearly Identifying the Various
Limits
Currently, three provisions of the
NCUA’s regulations address limits on
loans to a single borrower or group of
associated borrowers: (1) § 701.21(c)(5)
addresses the general limit; (2)
§ 701.22(b)(5)(iv) addresses the limit on
loan participations; and (3) § 723.4(c)
addresses the limit on commercial
loans. Because these provisions are
spread among several sections of the
NCUA’s regulations, some stakeholders
are not aware that there are multiple
limits that apply in different contexts.
To rectify this, the proposal makes clear
that all three of these limits exist. Rather
than move the loans to one borrower or
group of associated borrowers limits
that specifically apply to loan
participations and commercial loans
from their current regulatory sections to
the general limit section, the Board
proposes to include cross-citations to
the more specific loan participation and
commercial loan limits in the general
limit section (§ 701.21(c)(5)). The Board
believes that inserting cross-citations is
a more efficient and user friendly way
to identify that there are multiple
lending limits throughout the NCUA’s
regulations.
Section 701.21(c)(5), as part of the
general rules on loans and lines of credit
to members, imposes the FCU Act’s ten
percent limit on loans and lines of
credit to any member.13 Specifically,
§ 701.21(c)(5) requires that ‘‘[n]o loan or
line of credit advance may be made to
any member if such loan or advance
would cause that member to be indebted
to the Federal credit union upon loans
and advances made to the member in
the aggregate amount exceeding 10% of
the credit union’s total unimpaired
capital and surplus.’’ 14 Section
701.21(c)(5) also provides an outdated
cross-citation to part 723 for the specific
limit on commercial lending. The Board
proposes to remove this outdated crosscitation and provide updated references
to both the current loan participation
11 ASC
13 12
12 12
14 12
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CFR 701.21(g)(1).
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U.S.C. 1757(5)(A)(x).
CFR 701.21(c)(5).
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limit in § 701.22(b)(5) and the
commercial lending limit in § 723.4(c).
The NCUA also proposes to make
conforming amendments to update
cross-citations to the single borrower
and group of associated borrower limits
in §§ 701.20(c)(2) and 701.22(b)(1).
ii. Request for Comment Regarding the
Limits Applicable to Loan Participations
and Commercial Loans
In addition, the NCUA believes that
providing a universal standard limit for
loans to a single borrower or group of
associated borrowers, in lieu of the
current loan product specific standards,
may help facilitate compliance and
reduce regulatory burden. As such, the
agency seeks stakeholder input on
whether the agency should provide such
a universal standard limit. Currently, a
limit of 15 percent of a federally insured
credit union’s net worth exists for both
commercial loans and loan
participations that may be purchased
with respect to a single borrower or
group of associated borrowers. However,
a waiver is available in the case of the
loan participations limit and an
alternate limit is available for
commercial loans.
More specifically, the 15 percent limit
on the aggregate amount of loan
participations that may be purchased
with respect to a single borrower or
group of associated borrowers can be
waived by the appropriate regional
director, and, in the case of a federally
insured, state-chartered credit union,
with prior written concurrence of the
appropriate state supervisory
authority.15 The limit on commercial
loans does not provide for waiver.
Instead, it provides that ‘‘the aggregate
dollar amount of commercial loans to
any one borrower or group of associated
borrowers may not exceed the greater of
15 percent of the federally insured
credit union’s net worth or $100,000,
plus an additional 10 percent of the
credit union’s net worth if the amount
that exceeds the credit union’s 15
percent general limit is fully secured at
all times with a perfected security
interest by readily marketable collateral
as defined in § 723.2 of this part. Any
insured or guaranteed portion of a
commercial loan made 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, is excluded from this limit.’’ 16
The Board believes that more input is
necessary to determine whether a
universal limit would be beneficial and
should be adopted in place of the
current product specific limits. As such,
the Board asks that commenters provide
comments addressing: (1) Whether the
NCUA should provide a single universal
standard limit for commercial loans and
loan participations that may be
purchased with respect to a single
borrower or group of associated
borrowers; (2) if so, the appropriate
limit for such a standard; (3) if not, why
not; and (4) any other issues
stakeholders believe are relevant to this
determination. The Board also requests
that commenters consider FCU Act
limitations, specifically the general limit
on loans to a single borrower of ‘‘10 per
centum of the credit union’s unimpaired
capital and surplus’’ in section
107(5)(A)(x), when commenting.17
III. Section-by-Section Analysis
This proposed rule reduces regulatory
burden and makes the NCUA’s
regulations more user-friendly for credit
unions. As such, it is largely clarifying
and technical in nature and would
maintain most of the current language in
§ 701.21. The proposed changes to
§ 701.21 and the conforming
amendments to §§ 701.20 and 701.22 are
discussed in more detail below.18
Section 701.20 Suretyship and
Guaranty
The proposal would make minor
conforming amendments to § 701.20(c).
The proposal would make conforming
amendments to the section governing
requirements for suretyship or guaranty
agreements by removing outdated crosscitations to the loans to one borrower or
group of associated borrowers limit in
§§ 723.2 and 723.8 of the member
business lending regulation and adding
updated cross-citations to
701.22(b)(5)(iv) of the NCUA’s loan
participation regulation and 723.4(c) of
the NCUA’s member business lending
regulation.
Section 701.21
The proposal would divide current
§ 701.21(c)(4) into two new
subparagraphs. One paragraph,
§ 701.21(c)(4)(i), would state the general
rule that loans carry a 15-year maturity.
The other, § 701.21(c)(4)(ii), would
make more explicit that there are
exceptions to the general 15-year
maturity limit in § 701.21 (e) through (g)
for various types of credit union loans.
The proposal would maintain all of
current § 701.21(c)(4) in proposed
17 12
U.S.C. 1757(5)(A)(x).
citations to §§ 701.20, 701.21, 701.22, and
part 723 in this preamble section refer to the
NCUA’s regulations in 12 CFR chapter VII.
18 All
15 12
16 12
CFR 701.22(b)(5)(iv).
CFR 723.4(c).
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§ 701.21(c)(4)(i), which articulates the
general 15-year maturity limit that exists
on FCU loans. However, the proposal
also would add language to clarify that
the maturity for a lending action that
qualifies as a new loan under GAAP is
calculated from the new date of
origination.
Section 701.21(c)(4)(ii) of the proposal
would explicitly state, in three
subparagraphs, that three exceptions
exist to the general 15-year maturity
limit and cross-cite to §§ 701.21(e)–(g),
which detail them as follows:
Paragraph (c)(4)(ii)(A) of the proposal
would explicitly cross-cite to the
exception to the general 15-year
maturity limit that exists in § 701.21(e)
regarding covered loans secured, in full
or in part, by the insurance or guarantee
of, or with an advance commitment to
purchase the loan, in full or in part, by
the Federal Government, a State
government or any agency of either.
Paragraph (c)(4)(ii)(B) of the proposal
would explicitly cross-cite to the
exception to the general 15-year
maturity limit that exists in § 701.21(f)
regarding covered home improvement,
mobile home, and second mortgage
loans.
Paragraph (c)(4)(ii)(C) of the proposal
would explicitly cross-cite to the
exception to the general 15-year
maturity limit that exists in § 701.21(g)
regarding covered 1–4 family real estate
loans.
The proposal would revise
§ 701.21(c)(5) to add cross-citations to
the specific requirements that exist on
loans to a single borrower or group of
associated borrowers in the loan
participation rule, § 701.22(b)(5)(iv), and
member business lending rule,
§ 723.4(c).
The proposal would revise § 701.21(e)
to make more explicit that the maturity
limits applicable to loans covered by
paragraph (e) are notwithstanding the
general 15-year limit in paragraph (c)(4).
The proposal would also add a crosscitation to paragraph (c)(4).
The proposal would retain almost all
of current § 701.21(f), but would insert
some additional language to improve
clarity.
The proposal would revise
§ 701.21(f)(1) to make more explicit that
the maturity limit applicable to loans
covered by paragraph (f) is
notwithstanding the general 15-year
limit in paragraph (c)(4). The proposal
would also add a cross-citation to
paragraph (c)(4).
The proposal would retain almost all
of current § 701.21(g), but would insert
some additional language to improve
clarity.
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The proposal would revise
§ 701.21(g)(1) to make more explicit that
the maturity limit applicable to loans
covered by paragraph (g) is
notwithstanding the general 15-year
limit in paragraph (c)(4). The proposal
would also add a cross-citation to
paragraph (c)(4).
Section 701.22
As described in more detail below,
the proposal would make minor
conforming amendments to § 701.22(b)
regarding loan participations.
The proposal would update the crosscitation in § 701.22(b)(1), which
provides that for a federally insured
credit union to purchase a participation
interest in a loan, the loan must comply
with all regulatory requirements to the
same extent as if the purchasing
federally insured credit union had
originated the loan. Specifically, the
cross-reference in § 701.22(b)(1) is
outdated and would be changed from
§ 723.8 to § 723.4(c).
IV. Regulatory Procedures
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A. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
generally requires that, in connection
with a notice of proposed rulemaking,
an agency prepare and make available
for public comment an initial regulatory
flexibility analysis that describes the
impact of a proposed rule on small
entities. A regulatory flexibility analysis
is not required, however, if the agency
certifies that the rule will not have a
significant economic impact on a
substantial number of small entities
(defined for purposes of the RFA to
include credit unions with assets less
than $100 million) and publishes its
certification and a short, explanatory
statement in the Federal Register
together with the rule. The proposed
rule reduces regulatory burden through
clarifying and technical changes and
will not have an impact on small credit
unions. Accordingly, the NCUA certifies
that the proposed rule will not have a
significant economic impact on a
substantial number of small credit
unions.
B. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(PRA) applies to rulemakings in which
an agency creates new or amends
existing information collection
requirements.19 For purposes of the
PRA, an information collection
requirement may take the form of a
reporting, recordkeeping, or a thirdparty disclosure requirement. The
proposed rule does not contain
information collection requirements that
require approval by OMB under the
PRA.20 The proposed rule would only
make clarifying and technical changes.
■
C. Executive Order 13132
§ 701.21 Loans to members and lines of
credit to members.
Executive Order 13132 encourages
independent regulatory agencies to
consider the impact of their actions on
state and local interests. In adherence to
fundamental federalism principles, the
NCUA, an independent regulatory
agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the executive
order. This rulemaking will not have a
substantial direct effect on the states, on
the connection between the national
government and the states, or on the
distribution of power and
responsibilities among the various
levels of government. The NCUA has
determined that this proposal does not
constitute a policy that has federalism
implications for purposes of the
executive order.
D. Assessment of Federal Regulations
and Policies on Families
The NCUA has determined that this
final rule will not affect family wellbeing within the meaning of Section 654
of the Treasury and General
Government Appropriations Act,
1999.21
List of Subjects in 12 CFR Part 701
Credit, Credit unions, Reporting and
recordkeeping requirements.
By the National Credit Union
Administration Board on August 2, 2018.
Gerard Poliquin,
Secretary of the Board.
For the reasons discussed above, the
NCUA Board proposes to amend 12 CFR
part 701 as follows:
PART 701—ORGANIZATION AND
OPERATION OF FEDERAL CREDIT
UNIONS
1. The authority citation for part 701
continues to read as follows:
■
Authority: 12 U.S.C. 1752(5), 1755, 1756,
1757, 1758, 1759, 1761a, 1761b, 1766, 1767,
1782, 1784, 1785, 1786, 1787, 1788, 1789.
Section 701.6 is also authorized by 15 U.S.C.
3717. Section 701.31 is also authorized by 15
U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601–
3610. Section 701.35 is also authorized by 42
U.S.C. 4311–4312.
§ 701.20
U.S.C. 3507(d); 5 CFR part 1320.
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[Amended]
2. Amend § 701.20(c)(2) by removing
the citation ‘‘723.2 and 723.8’’ and
adding in its place ‘‘701.22(b)(5)(iv) and
723.4(c)’’.
■
20 44
19 44
39625
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Law 105–277, 112 Stat. 2681 (1998).
21 Public
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3. Amend § 701.21 by revising
paragraphs (c)(4) and (5), (e), (f)(1)
introductory text, and (g)(1) to read as
follows:
*
*
*
*
*
(c) * * *
(4) Maturity—(i) In general. The
maturity of a loan to a member may not
exceed 15 years. Lines of credit are not
subject to a statutory or regulatory
maturity limit. Amortization of line of
credit balances and the type and amount
of security on any line of credit shall be
as determined by contract between the
Federal credit union and the member/
borrower. In the case of a lending action
that qualifies as a ‘‘new loan’’ under
GAAP, the new loan’s maturity is
calculated from the new date of
origination.
(ii) Exceptions. Notwithstanding the
general 15-year maturity limit on loans
to members, a federal credit union may
make loans with maturities:
(A) As specified in the law,
regulations or program under which a
loan is secured, in full or in part, by the
insurance or guarantee of, or with an
advance commitment to purchase the
loan, in full or in part, by the Federal
Government, a State government or any
agency of either, as provided in
paragraph (e) of this section;
(B) Of up to 20 years or such longer
term as is provided in paragraph (f) of
this section; and
(C) Of up to 40 years or such longer
term as is provided in paragraph (g) of
this section.
(5) Ten percent limit. No loan or line
of credit advance may be made to any
member if such loan or advance would
cause that member to be indebted to the
Federal credit union upon loans and
advances made to the member in an
aggregate amount exceeding 10% of the
credit union’s total unimpaired capital
and surplus. In the case of loan
participations as defined in § 701.22(a)
of this part and commercial loans as
defined in § 723.2 of this chapter,
additional limitations apply as set forth
in § 701.22(b)(5)(iv) of this part and
§ 723.4(c) of this chapter.
*
*
*
*
*
(e) Insured, guaranteed and advance
commitment loans. Notwithstanding the
general 15-year maturity limit on loans
to members in paragraph (c)(4) of this
section, a loan secured, in full or in part,
by the insurance or guarantee of, or with
an advance commitment to purchase the
loan, in full or in part, by the Federal
Government, a State government or any
agency of either, may be made for the
maturity and under the terms and
E:\FR\FM\10AUP1.SGM
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39626
Federal Register / Vol. 83, No. 155 / Friday, August 10, 2018 / Proposed Rules
conditions, including rate of interest,
specified in the law, regulations or
program under which the insurance,
guarantee or commitment is provided.
(f) 20-year loans. (1) Notwithstanding
the general 15-year maturity limit on
loans to members in paragraph (c)(4) of
this section, a federal credit union may
make loans with maturities of up to 20
years in the case of:
*
*
*
*
*
(g) Long-term mortgage loans—(1)
Authority. Notwithstanding the general
15-year maturity limit on loans to
members in paragraph (c)(4) of this
section, a federal credit union may make
residential real estate loans to members,
including loans secured by
manufactured homes permanently
affixed to the land, with maturities of up
to 40 years, or such longer period as
may be permitted by the NCUA Board
on a case-by-case basis, subject to the
conditions of this paragraph (g).
*
*
*
*
*
We must receive comments on
this proposed AD by September 24,
2018.
DATES:
[FR Doc. 2018–17087 Filed 8–9–18; 8:45 am]
You may send comments,
using the procedures found in 14 CFR
11.43 and 11.45, by any of the following
methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
instructions for submitting comments.
• Fax: 202–493–2251.
• Mail: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590.
• Hand Delivery: Deliver to Mail
address above between 9 a.m. and 5
p.m., Monday through Friday, except
Federal holidays.
For service information identified in
this NPRM, contact Dassault Falcon Jet
Corporation, Teterboro Airport, P.O.
Box 2000, South Hackensack, NJ 07606;
telephone 201–440–6700; internet
https://www.dassaultfalcon.com. You
may view this service information at the
FAA, Transport Standards Branch, 2200
South 216th St., Des Moines, WA. For
information on the availability of this
material at the FAA, call 206–231–3195.
BILLING CODE 7535–01–P
Examining the AD Docket
§ 701.22
[Amended]
3. Amend § 701.22(b)(1) by removing
the citation ‘‘§ 723.8’’ and adding in its
place ‘‘§ 723.4’’.
■
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2018–0642; Product
Identifier 2018–NM–087–AD]
RIN 2120–AA64
Airworthiness Directives; Dassault
Aviation Airplanes
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking
(NPRM).
AGENCY:
We propose to adopt a new
airworthiness directive (AD) for all
Dassault Aviation Model Falcon 10
airplanes. This proposed AD was
prompted by a determination that more
restrictive maintenance requirements
and airworthiness limitations are
necessary. This proposed AD would
require revising the maintenance or
inspection program, as applicable, to
incorporate new or more restrictive
maintenance requirements and
airworthiness limitations. We are
proposing this AD to address the unsafe
condition on these products.
daltland on DSKBBV9HB2PROD with PROPOSALS
SUMMARY:
VerDate Sep<11>2014
16:24 Aug 09, 2018
Jkt 244001
ADDRESSES:
You may examine the AD docket on
the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2018–
0642; or in person at Docket Operations
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
The AD docket contains this NPRM, the
regulatory evaluation, any comments
received, and other information. The
street address for Docket Operations
(phone: 800–647–5527) is in the
ADDRESSES section. Comments will be
available in the AD docket shortly after
receipt.
FOR FURTHER INFORMATION CONTACT: Tom
Rodriguez, Aerospace Engineer,
International Section, Transport
Standards Branch, FAA, 2200 South
216th St., Des Moines, WA 98198;
telephone and fax 206–231–3226.
SUPPLEMENTARY INFORMATION:
Comments Invited
We invite you to send any written
relevant data, views, or arguments about
this proposal. Send your comments to
an address listed under the ADDRESSES
section. Include ‘‘Docket No. FAA–
2018–0642; Product Identifier 2018–
NM–087–AD’’ at the beginning of your
comments. We specifically invite
comments on the overall regulatory,
economic, environmental, and energy
aspects of this NPRM. We will consider
PO 00000
Frm 00005
Fmt 4702
Sfmt 4702
all comments received by the closing
date and may amend this NPRM
because of those comments.
We will post all comments we
receive, without change, to https://
www.regulations.gov, including any
personal information you provide. We
will also post a report summarizing each
substantive verbal contact we receive
about this NPRM.
Discussion
The European Aviation Safety Agency
(EASA), which is the Technical Agent
for the Member States of the European
Union, has issued EASA AD 2018–0078,
dated April 9, 2018 (referred to after this
as the Mandatory Continuing
Airworthiness Information, or ‘‘the
MCAI’’), to correct an unsafe condition
for all Dassault Aviation Model Falcon
10 airplanes. The MCAI states:
The airworthiness limitations and
certification maintenance instructions for the
Dassault Falcon 10 aeroplanes, which are
approved by EASA, are currently defined and
published in the Dassault Falcon 10
[Airplane Maintenance Manual] AMM,
Chapter 5–40. These instructions have been
identified as mandatory for continued
airworthiness.
Failure to accomplish these instructions
could result in an unsafe condition [fatigue
cracking and damage in principal structural
elements, which could result in reduced
structural integrity of the airplane.]
Previously, EASA issued AD 2008–0221 to
require accomplishment of the maintenance
tasks, and implementation of the
airworthiness limitations, as specified in the
Dassault Falcon 10 AMM, Chapter 5–40, at
Revision 8.
Since that [EASA] AD was issued, Dassault
issued the [Airworthiness Limitations
Section] ALS, which introduces new and
more restrictive maintenance requirements
and/or airworthiness limitations.
For the reason described above, this
[EASA] AD takes over the requirements for
Falcon 10 aeroplanes from EASA AD 2008–
0221, and requires accomplishment of the
actions specified in the ALS.
You may examine the MCAI in the
AD docket on the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2018–
0642.
Related Service Information Under 1
CFR Part 51
Dassault has issued Falcon 10
Maintenance Manual, Airworthiness
Limitations, Chapter 5–40–00, Revision
13, dated July 2017. This service
information describes repetitive
mandatory maintenance tasks. This
service information is reasonably
available because the interested parties
have access to it through their normal
course of business or by the means
identified in the ADDRESSES section.
E:\FR\FM\10AUP1.SGM
10AUP1
]]>Agencies
[Federal Register Volume 83, Number 155 (Friday, August 10, 2018)]
[Proposed Rules]
[Pages 39622-39626]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17087]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 83, No. 155 / Friday, August 10, 2018 /
Proposed Rules
[[Page 39622]]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
[RIN 3133-AE88]
Loans to Members and Lines of Credit to Members
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The NCUA Board (Board) proposes to amend its regulations
regarding loans to members and lines of credit to members. The proposal
would reduce regulatory burden by making amendments to improve clarity
and to make compliance easier. Specifically, the Board proposes to make
the NCUA's loan maturity requirements more user friendly by identifying
in one section all of the various maturity limits applicable to federal
credit union (FCU) loans. The Board also proposes to make explicit in
its regulations that the maturity date for a ``new loan'' under
generally accepted accounting principles (GAAP) is calculated from the
new date of origination. Additionally, the Board seeks comment on
whether the agency should provide longer maturity limits for 1-4 family
real estate loans and other loans permitted by the Federal Credit Union
Act (FCU Act) such as home improvement, mobile home, and second
mortgage loans. Finally, the Board proposes to more clearly express the
limits for loans to a single borrower or group of associated borrowers.
DATES: Comments must be received on or before October 9, 2018.
ADDRESSES: You may submit comments by any of the following methods
(Please send comments by one method only):
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
NCUA website: https://www.ncua.gov/regulation-supervision/Pages/rules/proposed.aspx. Follow the instructions for submitting
comments.
Email: Address to [email protected]. Include ``[Your
name] Comments on Proposed Rule 701, Loans to Members and Lines of
Credit to Members'' in the email subject line.
Fax: (703) 518-6319. Use the subject line described above
for email.
Mail: Address to Gerard S. Poliquin, Secretary of the
Board, National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
Hand Delivery/Courier: Same as mail address.
Public Inspection: You may view all public comments on the NCUA's
website at https://www.ncua.gov/regulation-supervision/Pages/rules/proposed.aspx as submitted, except for those we cannot post for
technical reasons. The NCUA will not edit or remove any identifying or
contact information from the public comments submitted. You may inspect
paper copies of comments in the NCUA's law library at 1775 Duke Street,
Alexandria, Virginia 22314, by appointment weekdays between 9 a.m. and
3 p.m. To make an appointment, call (703) 518-6546 or send an email to
[email protected].
FOR FURTHER INFORMATION CONTACT: Thomas I. Zells, Staff Attorney,
Office of General Counsel, at 1775 Duke Street, Alexandria, VA 22314 or
telephone: (703) 548-2478.
SUPPLEMENTARY INFORMATION:
I. Background
II. Summary of the Proposed Rule
III. Section-by-Section Analysis
IV. Regulatory Procedures
I. Background
In August 2017, the Board published and sought comment on the
NCUA's regulatory reform agenda (Agenda).\1\ The Agenda identifies
those regulations the Board intends to amend or repeal because they are
outdated, ineffective, or excessively burdensome.\2\
---------------------------------------------------------------------------
\1\ 82 FR 39702 (Aug. 22, 2017).
\2\ This is consistent with the spirit of President Trump's
regulatory reform agenda and Executive Order 13777. Although the
NCUA, as an independent agency, is not required to comply with
Executive Order 13777, the Board has chosen to comply with it in
spirit and has reviewed all of the NCUA's regulations to that end.
---------------------------------------------------------------------------
A number of the items in the Agenda relate to the NCUA's
regulations on loans to members and lines of credit to members.\3\ In
order to provide regulatory relief to credit unions, the Board proposes
to address in this rulemaking the substance of several of those items
and request further public comment on another. More specifically, the
Board proposes to make the NCUA's regulations on loans to members and
lines of credit to members more user friendly by: (1) Identifying in
one section the various maturity limits applicable to FCU loans; (2)
clarifying that the maturity for a lending action that qualifies as a
``new loan'' under GAAP is calculated from the new date of origination;
\4\ (3) seeking comment on whether the NCUA should provide for longer,
more flexible maturity limits on certain loans; and (4) more clearly
expressing the limits in place for loans to a single borrower or group
of associated borrowers.
---------------------------------------------------------------------------
\3\ 12 CFR 701.21.
\4\ GAAP is defined as generally accepted accounting principles
in the United States as set forth in the Financial Accounting
Standards Board's (FASB) Accounting Standards Codification (ASC).
---------------------------------------------------------------------------
II. Summary of the Proposed Rule
A. Loan Maturity Limits for Federal Credit Unions
Section 107(5) of the FCU Act grants FCUs the power ``to make
loans, the maturities of which shall not exceed 15 years, except as
otherwise provided herein. . . .'' \5\ The NCUA implemented this
general maturity limit in Sec. 701.21(c)(4) of its regulations.
Section 107(5)(A)(i)-(iii) of the FCU Act provide exceptions to the
general 15-year maturity limit, and have been implemented in Sec.
701.21(e) through (g) of the NCUA's regulations. Section 107(5)(A)(i)
of the FCU Act, implemented in Sec. 701.21(g) of the NCUA's
regulations, states that ``a residential real estate loan on a one-to-
four-family dwelling, including an individual cooperative unit, that is
or will be the principal residence of a credit union member, and which
is secured by a first lien upon such dwelling, may have a maturity not
exceeding thirty years or such other limits as shall be set by the
National Credit Union Administration Board (except that a loan on an
individual cooperative unit shall be adequately secured as defined by
the Board), subject to the rules and regulations of the Board[.]'' \6\
Pursuant to the authority
[[Page 39623]]
Sec. 107(5)(A)(i) of the FCU Act grants the Board to set alternate
maturities for covered 1-4 family real estate loans, the Board has
established a 40-year maximum maturity for such loans and has provided
that longer periods may be permitted by the Board on a case-by-case
basis.\7\ Section 107(5)(A)(ii) of the FCU Act, implemented in Sec.
701.21(f) of the NCUA's regulations, states that ``a loan to finance
the purchase of a mobile home, which shall be secured by a first lien
on such mobile home, to be used by the credit union member as his
residence, a loan for the repair, alteration, or improvement of a
residential dwelling which is the residence of a credit union member,
or a second mortgage loan secured by a residential dwelling which is
the residence of a credit union member, shall have a maturity not to
exceed 15 years or any longer term which the Board may allow[.]'' \8\
Pursuant to the authority section 107(5)(A)(ii) grants the Board to set
alternate maturities for covered loans, the Board has established a 20-
year maximum maturity for such loans.\9\ Finally, section
107(5)(A)(iii) of the FCU Act, implemented in Sec. 701.21(e) of the
NCUA's regulations, states that ``a loan secured by the insurance or
guarantee of, or with advance commitment to purchase the loan by, the
Federal Government, a State government, or any agency of either may be
made for the maturity and under the terms and conditions specified in
the law under which such insurance, guarantee, or commitment is
provided[.]'' \10\
---------------------------------------------------------------------------
\5\ 12 U.S.C. 1757(5).
\6\ 12 U.S.C. 1757(5)(A)(i) (emphasis added); 12 CFR 701.21(g).
\7\ 12 CFR 701.21(g)(1) (stating that ``[a] federal credit union
may make residential real estate loans to members, including loans
secured by manufactured homes permanently affixed to the land, with
maturities of up to 40 years, or such longer period as may be
permitted by the NCUA Board on a case-by-case basis, subject to the
conditions of this paragraph[.]'').
\8\ 12 U.S.C. 1757(5)(A)(ii) (emphasis added); 12 CFR 701.21(f).
\9\ 12 CFR 701.21(f)(1) (stating that ``[n]otwithstanding the
general 15-year maturity limit on loans to members, a federal credit
union may make loans with maturities of up to 20 years'' for loans
covered by this paragraph.).
\10\ 12 U.S.C. 1757(5)(A)(iii); 12 CFR 701.21(e).
---------------------------------------------------------------------------
i. Identifying the Various Maturity Limits in One Section
Presently, Sec. 701.21 of the NCUA's regulations addresses various
loan maturity limits in paragraphs (c), (e), (f), and (g). Paragraph
(c) provides the general rules applicable to all loans to members and,
where indicated, all lines of credit (including credit cards) to
members, except as otherwise provided in the remaining provisions of
Sec. 701.21. Paragraph (c)(4) implements the general 15-year maturity
limit that section 107(5) of the FCU Act places on loans to members.
Paragraphs (e), (f), and (g) of Sec. 701.21 implement the three
exceptions to this general 15-year limit that appear in section
107(5)(A)(i)-(iii) of the FCU Act.
Having the various maturity limits spread among numerous sections
of the NCUA's regulations, often separated by large amounts of
regulatory text unrelated to maturities, can be confusing to the reader
and makes it more difficult to understand the lending regulations. To
remedy this, the Board proposes to make the NCUA's loan maturity
requirements more understandable and user-friendly by identifying in
one section (Sec. 701.21(c)(4)), including cross-citations, all of the
maturity limits applicable to FCU loans.
ii. The Treatment of Maturities for Lending Actions That Qualify as
``New Loans'' Under GAAP
The proposal also clarifies that in the case of a lending action
qualifying as a ``new loan'' under GAAP, the maturity limit is
calculated from the new date of origination.\11\ The Board proposes to
accomplish this by adding language to Sec. 701.21(c)(4), which
articulates the general 15-year maturity limit.
---------------------------------------------------------------------------
\11\ ASC 310-20-35-9 & 10.
---------------------------------------------------------------------------
iii. Request for Comment on Providing Longer Maturity Limits for
Certain Loans
The Board is considering providing longer maturity limits for 1-4
family real estate loans and other loans (such as certain home
improvement, mobile home, and second mortgage loans) as permitted by
section 107(5)(A)(i)-(ii) of the FCU Act and removing the case-by-case
exception the Board can grant. As discussed earlier, these maturity
limits are implemented in Sec. 701.21(f) and (g) of the NCUA's
regulations. The case-by-case exception is located in Sec.
701.21(g)(1) of the NCUA's regulations and provides that the Board can
permit an FCU to make loans with maturities that exceed the
regulation's 40-year limit ``on a case-by-case basis, subject to the
conditions of this paragraph (g).'' \12\ The Board believes that more
input is necessary to determine whether longer maturity limits should
be adopted and, if so, the proper maturity lengths and the reasons such
longer maturities are warranted. As such, the Board asks that
commenters provide detailed comments addressing: (1) Whether the NCUA
should provide longer maturity limits for certain lending actions
permitted by section 107(5)(A)(i)-(ii) of the FCU Act; (2) the
appropriate maturity limits for such lending actions; (3) whether the
case-by-case Board exemption should be retained and, if so, under what
circumstances would such exemptions be appropriate; and (4) any other
issues stakeholders believe relevant. The Board also requests that
commenters consider FCU Act limitations when requesting relief and
changes in this area.
---------------------------------------------------------------------------
\12\ 12 CFR 701.21(g)(1).
---------------------------------------------------------------------------
B. Single Borrower and Group of Associated Borrowers Limits
i. More Clearly Identifying the Various Limits
Currently, three provisions of the NCUA's regulations address
limits on loans to a single borrower or group of associated borrowers:
(1) Sec. 701.21(c)(5) addresses the general limit; (2) Sec.
701.22(b)(5)(iv) addresses the limit on loan participations; and (3)
Sec. 723.4(c) addresses the limit on commercial loans. Because these
provisions are spread among several sections of the NCUA's regulations,
some stakeholders are not aware that there are multiple limits that
apply in different contexts. To rectify this, the proposal makes clear
that all three of these limits exist. Rather than move the loans to one
borrower or group of associated borrowers limits that specifically
apply to loan participations and commercial loans from their current
regulatory sections to the general limit section, the Board proposes to
include cross-citations to the more specific loan participation and
commercial loan limits in the general limit section (Sec.
701.21(c)(5)). The Board believes that inserting cross-citations is a
more efficient and user friendly way to identify that there are
multiple lending limits throughout the NCUA's regulations.
Section 701.21(c)(5), as part of the general rules on loans and
lines of credit to members, imposes the FCU Act's ten percent limit on
loans and lines of credit to any member.\13\ Specifically, Sec.
701.21(c)(5) requires that ``[n]o loan or line of credit advance may be
made to any member if such loan or advance would cause that member to
be indebted to the Federal credit union upon loans and advances made to
the member in the aggregate amount exceeding 10% of the credit union's
total unimpaired capital and surplus.'' \14\ Section 701.21(c)(5) also
provides an outdated cross-citation to part 723 for the specific limit
on commercial lending. The Board proposes to remove this outdated
cross-citation and provide updated references to both the current loan
participation
[[Page 39624]]
limit in Sec. 701.22(b)(5) and the commercial lending limit in Sec.
723.4(c).
---------------------------------------------------------------------------
\13\ 12 U.S.C. 1757(5)(A)(x).
\14\ 12 CFR 701.21(c)(5).
---------------------------------------------------------------------------
The NCUA also proposes to make conforming amendments to update
cross-citations to the single borrower and group of associated borrower
limits in Sec. Sec. 701.20(c)(2) and 701.22(b)(1).
ii. Request for Comment Regarding the Limits Applicable to Loan
Participations and Commercial Loans
In addition, the NCUA believes that providing a universal standard
limit for loans to a single borrower or group of associated borrowers,
in lieu of the current loan product specific standards, may help
facilitate compliance and reduce regulatory burden. As such, the agency
seeks stakeholder input on whether the agency should provide such a
universal standard limit. Currently, a limit of 15 percent of a
federally insured credit union's net worth exists for both commercial
loans and loan participations that may be purchased with respect to a
single borrower or group of associated borrowers. However, a waiver is
available in the case of the loan participations limit and an alternate
limit is available for commercial loans.
More specifically, the 15 percent limit on the aggregate amount of
loan participations that may be purchased with respect to a single
borrower or group of associated borrowers can be waived by the
appropriate regional director, and, in the case of a federally insured,
state-chartered credit union, with prior written concurrence of the
appropriate state supervisory authority.\15\ The limit on commercial
loans does not provide for waiver. Instead, it provides that ``the
aggregate dollar amount of commercial loans to any one borrower or
group of associated borrowers may not exceed the greater of 15 percent
of the federally insured credit union's net worth or $100,000, plus an
additional 10 percent of the credit union's net worth if the amount
that exceeds the credit union's 15 percent general limit is fully
secured at all times with a perfected security interest by readily
marketable collateral as defined in Sec. 723.2 of this part. Any
insured or guaranteed portion of a commercial loan made 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, is excluded from this
limit.'' \16\
---------------------------------------------------------------------------
\15\ 12 CFR 701.22(b)(5)(iv).
\16\ 12 CFR 723.4(c).
---------------------------------------------------------------------------
The Board believes that more input is necessary to determine
whether a universal limit would be beneficial and should be adopted in
place of the current product specific limits. As such, the Board asks
that commenters provide comments addressing: (1) Whether the NCUA
should provide a single universal standard limit for commercial loans
and loan participations that may be purchased with respect to a single
borrower or group of associated borrowers; (2) if so, the appropriate
limit for such a standard; (3) if not, why not; and (4) any other
issues stakeholders believe are relevant to this determination. The
Board also requests that commenters consider FCU Act limitations,
specifically the general limit on loans to a single borrower of ``10
per centum of the credit union's unimpaired capital and surplus'' in
section 107(5)(A)(x), when commenting.\17\
---------------------------------------------------------------------------
\17\ 12 U.S.C. 1757(5)(A)(x).
---------------------------------------------------------------------------
III. Section-by-Section Analysis
This proposed rule reduces regulatory burden and makes the NCUA's
regulations more user-friendly for credit unions. As such, it is
largely clarifying and technical in nature and would maintain most of
the current language in Sec. 701.21. The proposed changes to Sec.
701.21 and the conforming amendments to Sec. Sec. 701.20 and 701.22
are discussed in more detail below.\18\
---------------------------------------------------------------------------
\18\ All citations to Sec. Sec. 701.20, 701.21, 701.22, and
part 723 in this preamble section refer to the NCUA's regulations in
12 CFR chapter VII.
---------------------------------------------------------------------------
Section 701.20 Suretyship and Guaranty
The proposal would make minor conforming amendments to Sec.
701.20(c).
The proposal would make conforming amendments to the section
governing requirements for suretyship or guaranty agreements by
removing outdated cross-citations to the loans to one borrower or group
of associated borrowers limit in Sec. Sec. 723.2 and 723.8 of the
member business lending regulation and adding updated cross-citations
to 701.22(b)(5)(iv) of the NCUA's loan participation regulation and
723.4(c) of the NCUA's member business lending regulation.
Section 701.21
The proposal would divide current Sec. 701.21(c)(4) into two new
subparagraphs. One paragraph, Sec. 701.21(c)(4)(i), would state the
general rule that loans carry a 15-year maturity. The other, Sec.
701.21(c)(4)(ii), would make more explicit that there are exceptions to
the general 15-year maturity limit in Sec. 701.21 (e) through (g) for
various types of credit union loans.
The proposal would maintain all of current Sec. 701.21(c)(4) in
proposed Sec. 701.21(c)(4)(i), which articulates the general 15-year
maturity limit that exists on FCU loans. However, the proposal also
would add language to clarify that the maturity for a lending action
that qualifies as a new loan under GAAP is calculated from the new date
of origination.
Section 701.21(c)(4)(ii) of the proposal would explicitly state, in
three subparagraphs, that three exceptions exist to the general 15-year
maturity limit and cross-cite to Sec. Sec. 701.21(e)-(g), which detail
them as follows:
Paragraph (c)(4)(ii)(A) of the proposal would explicitly cross-cite
to the exception to the general 15-year maturity limit that exists in
Sec. 701.21(e) regarding covered loans secured, in full or in part, by
the insurance or guarantee of, or with an advance commitment to
purchase the loan, in full or in part, by the Federal Government, a
State government or any agency of either.
Paragraph (c)(4)(ii)(B) of the proposal would explicitly cross-cite
to the exception to the general 15-year maturity limit that exists in
Sec. 701.21(f) regarding covered home improvement, mobile home, and
second mortgage loans.
Paragraph (c)(4)(ii)(C) of the proposal would explicitly cross-cite
to the exception to the general 15-year maturity limit that exists in
Sec. 701.21(g) regarding covered 1-4 family real estate loans.
The proposal would revise Sec. 701.21(c)(5) to add cross-citations
to the specific requirements that exist on loans to a single borrower
or group of associated borrowers in the loan participation rule, Sec.
701.22(b)(5)(iv), and member business lending rule, Sec. 723.4(c).
The proposal would revise Sec. 701.21(e) to make more explicit
that the maturity limits applicable to loans covered by paragraph (e)
are notwithstanding the general 15-year limit in paragraph (c)(4). The
proposal would also add a cross-citation to paragraph (c)(4).
The proposal would retain almost all of current Sec. 701.21(f),
but would insert some additional language to improve clarity.
The proposal would revise Sec. 701.21(f)(1) to make more explicit
that the maturity limit applicable to loans covered by paragraph (f) is
notwithstanding the general 15-year limit in paragraph (c)(4). The
proposal would also add a cross-citation to paragraph (c)(4).
The proposal would retain almost all of current Sec. 701.21(g),
but would insert some additional language to improve clarity.
[[Page 39625]]
The proposal would revise Sec. 701.21(g)(1) to make more explicit
that the maturity limit applicable to loans covered by paragraph (g) is
notwithstanding the general 15-year limit in paragraph (c)(4). The
proposal would also add a cross-citation to paragraph (c)(4).
Section 701.22
As described in more detail below, the proposal would make minor
conforming amendments to Sec. 701.22(b) regarding loan participations.
The proposal would update the cross-citation in Sec. 701.22(b)(1),
which provides that for a federally insured credit union to purchase a
participation interest in a loan, the loan must comply with all
regulatory requirements to the same extent as if the purchasing
federally insured credit union had originated the loan. Specifically,
the cross-reference in Sec. 701.22(b)(1) is outdated and would be
changed from Sec. 723.8 to Sec. 723.4(c).
IV. Regulatory Procedures
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires that, in
connection with a notice of proposed rulemaking, an agency prepare and
make available for public comment an initial regulatory flexibility
analysis that describes the impact of a proposed rule on small
entities. A regulatory flexibility analysis is not required, however,
if the agency certifies that the rule will not have a significant
economic impact on a substantial number of small entities (defined for
purposes of the RFA to include credit unions with assets less than $100
million) and publishes its certification and a short, explanatory
statement in the Federal Register together with the rule. The proposed
rule reduces regulatory burden through clarifying and technical changes
and will not have an impact on small credit unions. Accordingly, the
NCUA certifies that the proposed rule will not have a significant
economic impact on a substantial number of small credit unions.
B. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in
which an agency creates new or amends existing information collection
requirements.\19\ For purposes of the PRA, an information collection
requirement may take the form of a reporting, recordkeeping, or a
third-party disclosure requirement. The proposed rule does not contain
information collection requirements that require approval by OMB under
the PRA.\20\ The proposed rule would only make clarifying and technical
changes.
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\19\ 44 U.S.C. 3507(d); 5 CFR part 1320.
\20\ 44 U.S.C. chap. 35.
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C. Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, the NCUA, an
independent regulatory agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the executive order. This rulemaking will not
have a substantial direct effect on the states, on the connection
between the national government and the states, or on the distribution
of power and responsibilities among the various levels of government.
The NCUA has determined that this proposal does not constitute a policy
that has federalism implications for purposes of the executive order.
D. Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this final rule will not affect family
well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999.\21\
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\21\ Public Law 105-277, 112 Stat. 2681 (1998).
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List of Subjects in 12 CFR Part 701
Credit, Credit unions, Reporting and recordkeeping requirements.
By the National Credit Union Administration Board on August 2,
2018.
Gerard Poliquin,
Secretary of the Board.
For the reasons discussed above, the NCUA Board proposes to amend
12 CFR part 701 as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
0
1. The authority citation for part 701 continues to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759,
1761a, 1761b, 1766, 1767, 1782, 1784, 1785, 1786, 1787, 1788, 1789.
Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.31
is also authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and
3601-3610. Section 701.35 is also authorized by 42 U.S.C. 4311-4312.
Sec. 701.20 [Amended]
0
2. Amend Sec. 701.20(c)(2) by removing the citation ``723.2 and
723.8'' and adding in its place ``701.22(b)(5)(iv) and 723.4(c)''.
0
3. Amend Sec. 701.21 by revising paragraphs (c)(4) and (5), (e),
(f)(1) introductory text, and (g)(1) to read as follows:
Sec. 701.21 Loans to members and lines of credit to members.
* * * * *
(c) * * *
(4) Maturity--(i) In general. The maturity of a loan to a member
may not exceed 15 years. Lines of credit are not subject to a statutory
or regulatory maturity limit. Amortization of line of credit balances
and the type and amount of security on any line of credit shall be as
determined by contract between the Federal credit union and the member/
borrower. In the case of a lending action that qualifies as a ``new
loan'' under GAAP, the new loan's maturity is calculated from the new
date of origination.
(ii) Exceptions. Notwithstanding the general 15-year maturity limit
on loans to members, a federal credit union may make loans with
maturities:
(A) As specified in the law, regulations or program under which a
loan is secured, in full or in part, by the insurance or guarantee of,
or with an advance commitment to purchase the loan, in full or in part,
by the Federal Government, a State government or any agency of either,
as provided in paragraph (e) of this section;
(B) Of up to 20 years or such longer term as is provided in
paragraph (f) of this section; and
(C) Of up to 40 years or such longer term as is provided in
paragraph (g) of this section.
(5) Ten percent limit. No loan or line of credit advance may be
made to any member if such loan or advance would cause that member to
be indebted to the Federal credit union upon loans and advances made to
the member in an aggregate amount exceeding 10% of the credit union's
total unimpaired capital and surplus. In the case of loan
participations as defined in Sec. 701.22(a) of this part and
commercial loans as defined in Sec. 723.2 of this chapter, additional
limitations apply as set forth in Sec. 701.22(b)(5)(iv) of this part
and Sec. 723.4(c) of this chapter.
* * * * *
(e) Insured, guaranteed and advance commitment loans.
Notwithstanding the general 15-year maturity limit on loans to members
in paragraph (c)(4) of this section, a loan secured, in full or in
part, by the insurance or guarantee of, or with an advance commitment
to purchase the loan, in full or in part, by the Federal Government, a
State government or any agency of either, may be made for the maturity
and under the terms and
[[Page 39626]]
conditions, including rate of interest, specified in the law,
regulations or program under which the insurance, guarantee or
commitment is provided.
(f) 20-year loans. (1) Notwithstanding the general 15-year maturity
limit on loans to members in paragraph (c)(4) of this section, a
federal credit union may make loans with maturities of up to 20 years
in the case of:
* * * * *
(g) Long-term mortgage loans--(1) Authority. Notwithstanding the
general 15-year maturity limit on loans to members in paragraph (c)(4)
of this section, a federal credit union may make residential real
estate loans to members, including loans secured by manufactured homes
permanently affixed to the land, with maturities of up to 40 years, or
such longer period as may be permitted by the NCUA Board on a case-by-
case basis, subject to the conditions of this paragraph (g).
* * * * *
Sec. 701.22 [Amended]
0
3. Amend Sec. 701.22(b)(1) by removing the citation ``Sec. 723.8''
and adding in its place ``Sec. 723.4''.
[FR Doc. 2018-17087 Filed 8-9-18; 8:45 am]
BILLING CODE 7535-01-P
