[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]


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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.

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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.

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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):
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> NCUA website: https://www.ncua.gov/regulation-supervision/Pages/rules/proposed.aspx. Follow the instructions for submitting 
comments.
    <bullet> Email: Address to <a href="/cdn-cgi/l/email-protection#93e1f6f4f0fcfefef6fde7e0d3fdf0e6f2bdf4fce5"><span class="__cf_email__" data-cfemail="8efcebe9ede1e3e3ebe0fafdcee0edfbefa0e9e1f8">[email protected]</span></a>. Include ``[Your 
name] Comments on Proposed Rule 701, Loans to Members and Lines of 
Credit to Members'' in the email subject line.
    <bullet> Fax: (703) 518-6319. Use the subject line described above 
for email.
    <bullet> Mail: Address to Gerard S. Poliquin, Secretary of the 
Board, National Credit Union Administration, 1775 Duke Street, 
Alexandria, Virginia 22314-3428.
    <bullet> 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 
<a href="/cdn-cgi/l/email-protection#3b747c78765a52577b55584e5a155c544d"><span class="__cf_email__" data-cfemail="82cdc5c1cfe3ebeec2ece1f7e3ace5edf4">[email protected]</span></a>.

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\
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    \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.
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    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.
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    \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).
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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\
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    \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).
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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.
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    \11\ ASC 310-20-35-9 & 10.
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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.
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    \12\ 12 CFR 701.21(g)(1).
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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).
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    \13\ 12 U.S.C. 1757(5)(A)(x).
    \14\ 12 CFR 701.21(c)(5).
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    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\
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    \15\ 12 CFR 701.22(b)(5)(iv).
    \16\ 12 CFR 723.4(c).
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    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\
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    \17\ 12 U.S.C. 1757(5)(A)(x).
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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\
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    \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.
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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


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