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New Senate Bill for Residential Loan Parity
Friday, May 29, 2015 6:30 AM

A bill introduced by Sen. Ron Wyden (D-OR) would provide credit unions with regulatory relief, help small businesses, and has CUNA’s support. The bill, S. 1440, would exempt loans to purchase a one- to four-unit, non-owner occupied residential dwelling from credit unions’ member business loan cap.

Currently those types of loans at credit unions are classified as business loans and are therefore subject to the cap of 12.25 percent of assets. However, when banks make the same loans, they are classified as residential real estate loans.

Wyden said in a statement that the bill would increase opportunities for small businesses to receive loans from credit unions by eliminating an “unfair hurdle” to much-needed capital.

CUNA believes enactment of this legislation would enable credit unions to extend credit to borrowers seeking to purchase residential units, including low-income rental units, thereby better meeting the needs of their members. It would also contribute to the availability of affordable rental housing.

The modification would also be consistent with the treatment of these loans by the National Credit Union Administration’s revised risk-based capital proposal, which would assign the loans a lower risk weight compared with other business loans.

“Sen. Wyden’s bill would be a huge relief to our members who very much want to provide capital for small business,” said Troy Stang, president/CEO of the Northwest Credit Union Association (Anthem May 26). “We strongly support this legislation and will work side-by-side with Sen. Wyden to pass this essential measure.”

Reps. Ed Royce (R-CA) and Jared Huffman (D-CA) introduced the House equivalent to the bill (HR 1422) in March. According to Royce, the bill would allow credit unions to lend an additional $11 billion to small businesses.

CUNA President/CEO Jim Nussle praised HR 1422, saying the legislation would enable credit unions to better meet the needs of their members and contribute to the availability of affordable rental housing.