Chapter DFI-CU 72
MEMBER BUSINESS LOANS
DFI-CU 72.01 Definitions. DFI-CU 72.02 Member business loan. DFI-CU 72.03 Prohibited member business loans. DFI-CU 72.04 Construction and development loans. DFI-CU 72.05 Implementation of a member business loan program. DFI-CU 72.06 Member business loan policy requirements. DFI-CU 72.07 Collateral and security requirements. DFI-CU 72.08 Amount of loan. DFI-CU 72.09 Calculating the aggregate 15% limit. DFI-CU 72.10 Available waivers. DFI-CU 72.11 Obtaining a waiver. DFI-CU 72.14 Aggregate member business loan limit. DFI-CU 72.15 Exceptions to the aggregate business loan limit. DFI-CU 72.16 Obtaining an exception. DFI-CU 72.17 Record keeping requirements. DFI-CU 72.01(2)(2) “Associated member” means a person who is associated with another by means of a shared ownership, investment or other pecuniary interest in a business or commercial endeavor. DFI-CU 72.01(3)(3) “Business purpose loan” means a loan where the borrower intends to use the proceeds for any of the purposes listed in s. DFI-CU 72.02 (1). DFI-CU 72.01(4)(4) “Construction or development loan” means a financing arrangement for acquiring real property or rights to real property, including land or structures, with the intent to develop or improve it for any of the following: DFI-CU 72.01(5)(5) “Director” means the director of the office of credit unions or an authorized representative of the director. DFI-CU 72.01(6)(6) “Loan-to-value ratio” or “LTV ratio” means the amount of all loans by the credit union secured by an item of collateral added to the amount of all outstanding loans by other lenders secured by that item of collateral, that total amount then being divided by the market value of that item of collateral. DFI-CU 72.01(9)(9) “Net worth” means the retained earnings as defined under Generally Accepted Accounting Principles. Retained earnings include undivided earnings, regular reserves and any other appropriations designated by management or regulatory authorities. DFI-CU 72.01 HistoryHistory: CR 02-034: cr. Register August 2002 No. 560, eff. 9-1-02. DFI-CU 72.02(1)(1) “Member business loan” means any loan, line of credit, letter of credit or any unfunded commitment to make a loan, where the borrower intends to use the proceeds for any of the following purposes: DFI-CU 72.02(2)(2) “Member business loan” shall not include any of the following: DFI-CU 72.02(2)(a)(a) A business purpose loan fully secured by a lien on a 1 to 4 family dwelling that is the member’s primary residence. DFI-CU 72.02(2)(b)(b) A business purpose loan fully secured by shares or deposits in the credit union making the extension of credit or in other credit unions, or by deposits in other financial institutions. DFI-CU 72.02(2)(c)(c) One or more business purpose loans to a member or an associated member that, in the aggregate, are less than $50,000. The entire amount of such a loan or loans that equals or exceeds this amount, or that causes the aggregate to exceed this amount is a business loan. DFI-CU 72.02(2)(d)(d) A business purpose loan where a federal or state agency or any of their political subdivisions fully insures repayment, or fully guarantees repayment, or provides an advance commitment to purchase in full. DFI-CU 72.02 HistoryHistory: CR 02-034: cr. Register August 2002 No. 560, eff. 9-1-02. DFI-CU 72.03(1)(1) Officers. A credit union shall not grant a member business loan to any of its following: DFI-CU 72.03 NoteExample: President, Treasurer or Manager.
DFI-CU 72.03 NoteExample: Assistant President, Vice President, Assistant Treasurer or Assistant Manager.
DFI-CU 72.03 NoteExample: Comptroller.
DFI-CU 72.03(1)(d)(d) Any associated member or immediate family member of anyone listed in this subsection. DFI-CU 72.03(2)(2) Equity agreements or joint ventures. A credit union shall not grant a member business loan if any additional income received by the credit union or its senior management employees is tied to the profit or sale of the business or commercial endeavor for which the loan is made. DFI-CU 72.03(3)(3) Directors. A credit union shall not grant a member business loan to one of its directors unless the board of directors approves granting the loan and the director is recused from the decision-making process. DFI-CU 72.03 HistoryHistory: CR 02-034: cr. Register August 2002 No. 560, eff. 9-1-02. DFI-CU 72.04DFI-CU 72.04 Construction and development loans. Unless the director grants a waiver, a credit union that makes construction or development loans shall be subject to all of the following: DFI-CU 72.04(1)(1) The aggregate of all construction and development loans shall not exceed 15% of the credit union’s net worth. In determining the aggregate, the credit union may exclude any portion of a loan that is any of the following: DFI-CU 72.04(1)(a)(a) Secured by shares or deposits in the credit union making the extension of credit or in other credit unions, or by deposits in other financial institutions. DFI-CU 72.04(1)(b)(b) Insured or guaranteed by any agency or subdivision of the state or the federal government. DFI-CU 72.04(1)(c)(c) Subject to an advance commitment to purchase by any agency of the federal government, the state, or any of their political subdivisions. DFI-CU 72.04(2)(a)(a) 30% equity interest in the project being financed if the loan is for land development. DFI-CU 72.04(2)(b)(b) 25% equity interest in the project being financed if the loan is for construction or for a combination of development and construction. DFI-CU 72.04(3)(3) The funds shall be released only after on-site inspections, documented in writing, by qualified personnel and according to a preapproved draw schedule and any other conditions as set forth in the loan documentation.
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Chs. DFI-CU 51-75; Department of Financial Institutions-Credit Unions
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