North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-20 - Participation Loans › Section 13-03-20-02 - Authorization

Current through Supplement No. 393, July, 2024
1. Subject to the
				provisions of this section, any state-chartered credit union may participate in
				making loans with eligible organizations within the limitations of the board of
				directors' written participation loan policies, provided it meets the
				requirements of this subsection.
a. The
				purchase complies with all regulatory requirements to the same extent as if the
				purchasing credit union had originated the loan, including the loans to one
				borrower provisions in  12 CFR 723.
b. A written master participation agreement
				shall be properly executed, acted upon by the state-chartered credit union's
				board of directors, or if the board has so delegated in its policy, the
				investment committee, loan committee, or senior management officials and
				retained in the state-chartered credit union's office. The master agreement
				shall :
(1) Be properly executed by authorized
				representatives of all parties under applicable law;
(2) Be properly authorized by the credit
				union's board of directors or, if the board has so delegated in its policy, a
				designated committee or senior management official, under the federally insured
				credit union's bylaws and applicable law; and
(3) The original and copies be retained in
				the credit union's office.
c. Prior to purchase, the identification of
				the specific loan participation being purchased, either directly in the
				agreement or through a document that is incorporated by reference into the
				agreement, shall state:
(1) The interest the
				originating lender will retain in the loan to be participated. The retained
				interest must be at least ten percent of the outstanding balance of the loan
				through the life of the loan;
(2)
				The location and custodian for original loan documents;
(3) An explanation of the conditions under
				which parties to the agreement can gain access to financial and other
				performance information about a loan, the borrower, and the servicer so the
				parties can monitor the loan;
(4)
				An explanation of the duties and responsibilities of the originating lender,
				servicer, and participants with respect to all aspects of the participation,
				including servicing, default, foreclosure, collection, and other matters
				involving the ongoing administration of the loan; and
(5) Circumstances and conditions under which
				participants may replace the servicer.
d. The board establishes a limit on the
				aggregate amount of loan participations that may be purchased from any one
				originating lender.
e. The board
				establishes limits on the amount of loan participations that may be purchased
				by each loan type, not to exceed a specified percentage of the credit union's
				net worth;
f. The board establish a
				limit on the aggregate amount of loan participations that may be purchased with
				respect to a single borrower, or group of associated borrowers, not to exceed
				fifteen percent of the credit union's net worth, unless this amount is waived
				by the state credit union board and the national credit union administration;
				and
g. A state-chartered credit
				union may sell to or purchase from any participant the servicing of any loan in
				which it owns a participation interest.