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Reps Introduce Parity Bill with MBL Cap Relief
Wednesday, January 11, 2017 6:45 AM

A bipartisan group of four representatives introduced a bill Wednesday that would grant credit unions and banks parity on certain types of residential loans. The Credit Union Residential Loan Parity Act (HR 389) was introduced by Reps. Ed Royce, (R-Calif.), Jared Huffman (D-Calif.), Don Young (R-Alaska), and Peter DeFazio (D-Ore.).

Specifically, the bill removes loans made for the purchase of non-owner occupied, 1-4 unit dwellings from the calculation of the 12.25 percent member business lending cap currently imposed on credit unions. Such loans are classified as a residential real estate loan for banks, but business loans for credit unions, making credit union loans subject to the cap.

HR 389, supported by Credit Union National Association, also maintains the ability of the NCUA to apply stringent underwriting and servicing requirements to these loans, which often depend on rent as a chief contributor towards repayment.

If enacted, the bill would allow credit unions to lend an additional $11 billion to small businesses, allowing additional private sector financing for commercial businesses and rental housing.

CUNA President/CEO Jim Nussle wrote a letter of support for HR 389 Wednesday. “This CUNA-backed bipartisan legislation would enable credit unions to better serve their members who purchase rental properties and will benefit consumers at large by increasing the availability of affordable rental housing,” said CUNA President/CEO Jim Nussle. “We thank the representatives for their help to bring parity to credit unions and look forward to working with members of Congress to advance this legislation.”