Texas Administrative Code › Title 7 - BANKING AND SECURITIES › Part 6 - CREDIT UNION DEPARTMENT › Chapter 91 - CHARTERING, OPERATIONS, MERGERS, LIQUIDATIONS › Subchapter G - LENDING POWERS › Section 91.709 - Member Business and Commercial Loans

Current through Reg. 49, No. 28; July 12, 2024
(a) Definitions. Definitions in Tex. Fin.
				  Code §121.002, are incorporated herein by reference. As used in this
				  section, the following words and terms shall have the following meanings,
				  unless the context clearly indicates otherwise.
(1) "Borrower" means a member or any other
				  person named as a borrower, obligor, or debtor in a loan or extension of
				  credit; or any other person, including, but not limited to, a comaker, drawer,
				  endorser, guarantor or surety who is considered to be a borrower under the
				  requirements of subsection (i) of this section concerning aggregation and
				  attribution for commercial loans.
(2) "Commercial loan" means a loan or an
				  extension of credit to an individual, sole proprietorship, partnership,
				  corporation, or business enterprise for commercial, industrial, agricultural,
				  or professional purposes, including construction and development loans, any
				  unfunded commitments, and any interest a credit union obtains in such loans
				  made by another lender. A commercial loan does not include a loan made for
				  personal expenditure purposes; a loan made by a corporate credit union; a loan
				  made by a credit union to a federally insured credit union; a loan made by a
				  credit union to a credit union service organization; a loan secured by a 1- to
				  4-family residential property (whether or not the residential property is the
				  borrower's primary residence); a loan fully secured by shares in the credit
				  union making the extension of credit or deposits in another financial
				  institution; a loan secured by a vehicle manufactured for household use; and a
				  loan that would otherwise meet the definition of commercial loan and which,
				  when the aggregate outstanding balance plus unfunded commitments less any
				  portion secured by shares in the credit union to a borrower, is equal to less
				  than $50,000.
(3) "Control" means a
				  person directly or indirectly, or acting through or together with one or more
				  persons who:
(A) own, control, or have the
				  power to vote twenty-five (25) percent or more of any class of voting
				  securities of another person;
(B)
				  control, in any manner, the election of a majority of the directors, trustees,
				  or other persons exercising similar functions of another person; or
(C) have the power to exercise a controlling
				  influence over the management or policies of another person.
(4) "Immediate family member"
				  means a spouse or other family member living in the same household.
(5) "Loan secured by a lien on a 1- to
				  4-family residential property" means a loan that, at origination, is secured
				  wholly or substantially by a lien on a 1- to 4-family residential property for
				  which the lien is central to the extension of the credit; that is the borrower
				  would not have been extended credit in the same amount or on terms as favorable
				  without the lien. A loan is wholly or substantially secured by a lien on a 1-
				  to 4-family residential property if the estimated value of the real estate
				  collateral at origination (after deducting any senior liens held by others) is
				  greater than fifty (50) percent of the principal amount of the loan.
(6) "Loan secured by a lien on a vehicle
				  manufactured for household use" means a loan that, at origination, is secured
				  wholly or substantially by a lien on a new and used passenger car or other
				  vehicle such as a minivan, sport-utility vehicle, pickup truck, and similar
				  light truck or heavy-duty truck generally manufactured for personal, family, or
				  household use and not used as a fleet vehicle or to carry fare-paying
				  passengers, for which the lien is central to the extension of credit. A lien is
				  central to the extension of credit if the borrower would not have been extended
				  credit in the same amount or on terms as favorable without the lien. A loan
				  wholly or substantially secured by a lien on a vehicle manufactured for
				  household use if the estimated value of the collateral at origination (after
				  deducting any senior liens held by others) is greater than fifty (50) percent
				  of the principal amount of the loan.
(7) "Loan-to-value ratio for collateral"
				  means the aggregate amount of all sums borrowed and secured by the collateral,
				  including outstanding balances plus any unfunded commitment or line of credit
				  from another lender that is senior to the credit union's lien, divided by the
				  current collateral value. The current collateral value must be established by
				  prudent and accepted commercial loan practices and comply with all regulatory
				  requirements.
(8) "Member business
				  loan" has the meaning assigned by 12 C.F.R. Part 723.
(9) "Net worth" has the meaning assigned by
				  12 C.F.R. Part 702.2.
(10) "Readily
				  marketable collateral" means financial instruments and bullion that are salable
				  under ordinary market conditions with reasonable promptness at a fair market
				  value determined by quotations based upon actual transactions on an auction or
				  similarly available daily bid and ask price market.
(11) "Residential property" means a house,
				  townhouse, condominium unit, cooperative unit, manufactured home, a combination
				  of a home or dwelling unit and a business property that involves only minor or
				  incidental business use, real property to be improved by the construction of
				  such structures, or unimproved land zoned for 1- to 4-family residential use
				  but does not include a boat, motor home, or timeshare property, even if used as
				  a primary residence. This applies to such structure whether under construction
				  or completed.