Current through Reg. 49, No. 38; September 20, 2024
(a) Definitions.
For the purposes of this section, the following words and terms shall have the
following meanings, unless the context clearly indicates otherwise.
(1) First lien means any mortgage that takes
priority over any other lien or encumbrance on the same property and that must
be satisfied before other liens or encumbrances may share in proceeds from the
property's sale.
(2) Home loan
means a loan that is:
(A) made to one or more
individuals for personal, family, or household purposes; and
(B) secured in whole or part by:
(i) a manufactured home, as defined by
Finance Code §
RSA 347.002, used or
to be used as the borrower's principal residence; or
(ii) real property improved by a dwelling
designed for occupancy by four or fewer families and used or to be used as the
borrower's principal residence.
(3) Improved residential real estate means
residential real estate containing offsite improvements, such as access to
streets, curbs, and utility connections, sufficient to make the property ready
for residential construction, and real estate in the process of being improved
by a building.
(4) Other acceptable
collateral means any collateral in which the credit union has a perfected
security interest, that has a quantifiable value, and is accepted by the credit
union in accordance with safe and sound lending practices.
(5) Owner-occupied means that the owner of
the underlying real property occupies a dwelling unit of the real property as a
principal residence.
(6) Readily
marketable collateral means insured deposits, financial instruments, and
bullion in which the credit union has a perfected interest. Financial
instruments and bullion must be saleable under ordinary circumstances with
reasonable promptness at a fair market value determined by quotations based on
actual transactions, on an auction or similarly available daily bid and ask
price market.
(b)
Written Policies. Before engaging in any real estate lending, a credit union
shall adopt and maintain written policies that are appropriate for the size of
the credit union and the nature and scope of its operation. When formulating
the real estate lending policy, the credit union should consider both internal
and external factors, such as its size and condition, expertise of its lending
staff, avoidance of undue concentrations of risk, compliance with all real
estate laws and rules, and general market conditions. Each policy must be
consistent with safe and sound lending practices and establish appropriate
limits and standards for extensions of credit that are secured by liens on or
interests in real estate, or that are made for the purpose of financing
permanent improvements to real estate. The policies shall, in addition to the
general requirements of §
RSA
91.701(b) of this title
(relating to Lending Powers), address the following, as applicable:
(1) Title insurance;
(2) Escrow administration;
(3) Loan payoffs;
(4) Collection and foreclosure; and
(5) Servicing and participation
agreements.
(c) Loan to
Value Limitations.
(1) The board of directors
shall establish its own internal loan-to-value limits for real estate loans
based on type of loan. These internal limits, however, shall not exceed the
following regulatory limits:
(A) Unimproved
land held for investment/speculation--Loan to value limit 60%
(B) Construction and Development: commercial,
multifamily, and other nonresidential--Loan to value limit 75%
(C) Interim Construction: owner-occupied
residential real estate--Loan to value limit 90%
(D) Owner occupied residential real estate
(other than home equity)--Loan to value limit 95%
(E) Other residential real estate such as a
second or vacation home--Loan to value limit 90%
(F) Home equity--Loan to value limit
80%
(G) All Other--Loan to value
limit 80%
(2) The
regulatory loan-to-value limits should be applied to the underlying property
that collateralizes the loan. In determining the loan to-value ratio, a credit
union shall include the aggregate amount of all sums borrowed, including the
outstanding balances, plus any unfunded commitment or line of credit from all
sources on an item of collateral, divided by the market value of the collateral
used to secure the loan.
(d) Maximum Maturities. Notwithstanding the
general 15-year maturity limit on lending transactions to members, credit
unions engaged in real estate lending are expected to have loan policies that
establish prudent standards for loan structure including tenor and amortization
that are within the risk parameters approved by the board of directors and
consistent with the following regulatory limits:
(1) Improved residential real estate loans
(principal residence, first lien)--40 years
(2) Improved residential real estate loans
(secondary residence, first lien)--30 years
(3) Improved residential real estate loans
(investment property, first lien)--20 years
(4) Interim construction loans--18
months
(5) Manufactured home (first
lien)--20 years
(6) Home equity
loans--20 years (second lien)--30 years (first lien)
(7) Home improvement loans--20
years
(8) A loan secured 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 or any agency of the
Federal Government, may be made for the maturity specified in the law,
regulations or program under which the insurance, guarantee or commitment is
provided.
(e) Mortgage
Fraud Notice. A credit union must provide to each applicant for a home loan a
written notice at closing. The notice must be provided on a separate document,
be in at least 14-point type, and have the following or substantially similar
language: "Warning: Intentionally or knowingly making a materially false or
misleading written statement to obtain property or credit, including a mortgage
loan, is a violation of §
RSA
32.32, Texas Penal Code, and, depending on
the amount of the loan or value of the property, is punishable by imprisonment
for a term of 2 years to 99 years and a fine not to exceed $10,000. "I/we, the
undersigned home loan applicant(s), represent that I/we have received, read,
and understand this notice of penalties for making a materially false or
misleading written statement to obtain a home loan. "I/we represent that all
statements and representations contained in my/our written home loan
application, including statements or representations regarding my/our identity,
employment, annual income, and intent to occupy the residential real property
secured by the home loan, are true and correct as of the date of loan closing."
On receipt of the notice, the applicant shall verify the information and
execute the notice. A credit union must keep the signed notice on file with the
records required under §
RSA 91.701 of this
title.
(f) Excluded Transactions.
It is recognized that there are a number of lending situations in which other
factors significantly outweigh the need to apply the regulatory loan-to-value
limits. As a result, an exception to the loan-to-value limits is permissible
for the following loan categories:
(1) Loans
that are covered through appropriate credit enhancements in the form of readily
marketable collateral or other acceptable collateral.
(2) Loans guaranteed or insured by the U.S.
government or its agencies, provided that the amount of the guaranty or
insurance is at least equal to the portion of the loan that exceeds the
regulatory loan-to-value limit.
(3)
Loans guaranteed, insured, or otherwise backed by the full faith and credit of
the state, a municipality, a county government, or an agency thereof, provided
that the amount of the guaranty, insurance, or assurance is at least equal to
the portion of the loan that exceeds the regulatory loan-to-value
limit.
(4) Loans that are to be
sold promptly after origination, without recourse, to a financially responsible
third party.
(5) Loans that are
renewed, refinanced, or restructured without the advancement of new funds or an
increase in the line of credit (except for reasonable closing costs) where
consistent with safe and sound credit union practices and part of a clearly
defined and well-documented program to achieve orderly liquidation of the debt,
reduce risk of loss, or maximize recovery on the loan.
(6) Loans that facilitate the sale of real
estate acquired by the credit union in the ordinary course of collecting a debt
previously contracted in good faith.
(g) Loans to 100% of Value. A credit union
may make a loan in an amount up to 100% of the value of real property security
if that part of the loan that exceeds the regulatory loan-to-value limit is
guaranteed or insured by a private corporation, organization, or other entity.
The board of directors must ensure that the credit union exercises appropriate
due diligence to ensure that any such guarantor or insurer has the financial
capacity and willingness to perform under the terms of the guaranty or
insurance agreement.
(h)
Registration of residential mortgage loan originators. Title V of the Housing
and Economic Recovery Act of 2008 (Public Law 110-289) requires
employees of a credit union who engage in the business of a mortgage loan
originator to register with the Nationwide Mortgage Licensing System and
Registry and to obtain a unique identifier. A credit union must comply with the
requirements imposed by Part 761 of the NCUA Rules and Regulations.
