Code of Massachusetts Regulations › 209 CMR - DIVISION OF BANKS AND LOAN AGENCIES › Title 209 CMR 50.00 - Parity with Federal Credit Unions › Section 50.05 - Application Process to Conduct Certain Activities

Current through Register 1525, July 5, 2024
(1)
General
. A
			 credit union that is well or adequately capitalized, and has not been notified
			 that it is in troubled condition, may engage in any activity listed under 209
			 CMR 50.05(3) by submitting an application to, and receiving approval from the
			 Commissioner before commencing the activity.
(2)
Application
. The
			 application must include a complete description of the credit union's proposed
			 activity, the credit union's investment in such activity, a description of the
			 business purpose as well as the anticipated financial and business impact, the
			 written policies required by
			 209 CMR
			 50.04(2), as well as a
			 representation and undertaking that the activity will be conducted in
			 accordance with Massachusetts and federal law. The application must also
			 provide any other information the Commissioner may require.
(3)
Activities Subject to
			 Application and Approval
. A credit union may engage in the
			 following activities pursuant to 209 CMR 50.05(1):
(a)
Temporary Branch
			 Offices
. A credit union may establish and operate a temporary
			 branch office, to be open for less than a year, or on an intermittent basis at
			 a designated site, subject to the investment limitations to purchase, hold and
			 lease real estate suitable for the transaction of business, found at M.G.L. c.
			 171, § 75.
(b)
Shared Branch Offices
.
1.
Authority
. A
			 credit union may establish and operate a branch office on a shared basis with
			 one or more credit unions or federal credit unions subject to the approval of
			 the commissioner under M.G.L. c. 171, § 8.
2.
Credit Union Service
			 Organizations
. Shared branch offices may be established through a
			 CUSO or by written agreement among two or more credit unions. Such CUSO shall
			 comply with
			 209 CMR
			 50.08.
3.
Mandatory
			 Safeguards
. Any such CUSO or agreement shall establish adequate
			 safeguards relative to credit union liability for employee breaches of member
			 confidentiality; loss against fraud or dishonesty; and any other risks
			 associated with the operation of a shared branch office.
4.
Maximum
			 Investment
. Shared branch offices shall be subject to the
			 investment limitations to purchase, hold and lease real estate suitable for the
			 transaction of business, found at M.G.L. c. 171, § 75 and
			 209 CMR
			 50.06(3)(e)  and
			 50.07(2)(i).
			 In the event of a conflict between the investment limitations of M.G.L. c. 171,
			 § 75 and the maximum investment limitations of
			 209 CMR
			 50.08(2)(a)1.a. and b.
			 governing CUSOs, the former provision shall control.
(c)
Community Development
			 Investments
.
1.
Investments in Community Development Credit Unions
. A
			 credit union may, individually or with other credit unions or federal credit
			 unions, make deposits in, invest in, or lend to, a state or federally chartered
			 credit union designated as a community development or low-income credit union
			 located in the Commonwealth. A credit union's total deposits, investments and
			 loans to all community development credit unions shall not exceed, in the
			 aggregate, 5% of its total paid in and unimpaired capital and surplus, as of
			 its last calendar year-end financial report.
2.
Community Development Loan
			 Pools
. A credit union may, with other state or federally-chartered
			 credit unions or banks, invest in, or lend to, a residential mortgage loan pool
			 designed to promote affordable housing for low to moderate income persons
			 residing in the Commonwealth for the purpose of meeting its obligations under
			 the Massachusetts Community Reinvestment Act, M.G.L. c. 167, § 14. Such
			 investments and loans shall not exceed, in the aggregate, 5% of the credit
			 union's total paid in and unimpaired capital and surplus, as of its last
			 calendar year-end financial report. Credit unions shall comply with the member
			 business lending provisions found in NCUA Rules and Regulations Part 723 when
			 lending to mortgage loan pools.
(d)
Employee Benefits Funded by
			 Impermissible Investments
. A credit union may provide employee
			 benefits, including retirement benefits, to its employees and officers,
			 individually or collectively with other credit unions, that are funded by
			 impermissible investments. The kind and amount of these benefits must be
			 reasonable given the credit union's size, financial condition, and the duties
			 of the employees. A credit union investment to fund an employee benefit plan
			 obligation is not subject to the investment limitations of M.G.L. c. 171 and
			 may purchase an investment that would otherwise be impermissible if the
			 investment is directly related to the credit union's obligation or potential
			 obligation under the employee benefit plan and the credit union holds the
			 investment only for as long as it has an actual or potential obligation under
			 the employee benefit plan. All activities under 209 CMR 50.05(3)(d) shall
			 conform to the procedural and substantive requirements of 12 CFR §
			 701.19.
(e)
Derivatives
			 Authority
. A credit union may engage in derivatives activities as
			 authorized pursuant to 12 CFR § 703, Subpart B. The credit union shall
			 meet the eligibility standards pursuant to 12 CFR § 703.108(a), and all
			 activities under 209 CMR 50.05(3)(e) shall conform to the procedural and
			 substantive requirements of 12 CFR § 703, Subpart B and 12 CFR §
			 741.219(b).
(f)
Pilot
			 Investment Program
. A credit union that is well capitalized and
			 has not been notified that it is in troubled condition may apply to and receive
			 written approval from the Commissioner to participate in a pilot investment
			 program. The application must address the items outlined in 12 CFR §
			 703.19(b)(1) through 703.19(b)(9). In approving a credit union's application
			 for participation in a pilot program, the Commissioner may impose such terms
			 and conditions as he or she deems necessary.
(g)
Secondary
			 Capital
. A credit union designated in writing as "low income" by
			 the Division of Banks and NCUA pursuant to 12 CFR § 741.204(b) may accept
			 secondary capital accounts in accordance with 12 CFR § 701.34(b). Before
			 accepting secondary capital, the low-income credit union must adopt a written
			 Secondary Capital Plan that addresses the criteria stated in
			 12
			 CFR 701.34(b)(1) and submit
			 the plan for approval to the Commissioner and NCUA. The credit union shall
			 conform to all other procedural and substantive requirements of 12 CFR §
			 701.34(b), 701.34(c), and 701.34(d).
(h)
Private Label
			 Investments
. A credit union may invest in private label
			 mortgage-related securities, as authorized pursuant to 12 CFR § 703.14(a).
			 All activities under 209 CMR 50.05(3)(h) shall conform to the procedural and
			 substantive requirements of 12 CFR § 703, Subpart A, and such investments
			 shall be made in accordance with a detailed written policy approved and
			 reviewed annually by the credit union's directors.
(i)
Additional
			 Powers
.
1.
General
. The authorities provided in 209 CMR
			 50.05(3)(i) are only for those activities listed. A credit union may engage in
			 other activities if they are permitted and determined by the NCUA to be
			 incidental powers pursuant 12 CFR § 721 pursuant to regulations,
			 guidelines or written opinions of the General Counsel of the NCUA only if the
			 Commissioner affirmatively determines by regulation or in writing that the
			 activity is reasonably related to an individual power set out in 209 CMR
			 50.05(3)(i).
2.
Permissible Activities
.
a.
Certain Correspondent
			 Services
.
i.
Internal Audits
. A credit union may perform internal
			 audits for other credit unions.
ii.
Other Services
. A credit union may provide the
			 following correspondent services to other credit unions: loan processing, loan
			 servicing, member check cashing services, disbursing share withdrawals and loan
			 proceeds, cashing andselling money orders, and automated teller machine deposit
			 services.
b.
Trustee or Custodial Services through Outside Vendors
.
			 A credit union may offer trustee or custodial services as defined at 12 CFR
			 § 721.3 either directly or through outside vendors.