DFI-CU 72.06(10)(e)
(e) A schedule as to how often the credit union will reevaluate the value and marketability of collateral.
DFI-CU 72.06(13)
(13) Identification of those individuals prohibited from receiving member business loans.
DFI-CU 72.06(14)
(14) Guidelines for purchase and sale of member business loans and loan participations, if the credit union intends to engage in these activities.
DFI-CU 72.06 Note
Note: The Office of Credit Unions recognizes that all of the provisions of the policy may not apply to every loan.
DFI-CU 72.06 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.07
DFI-CU 72.07
Collateral and security requirements. Unless granted a waiver by the director, all of the following shall apply:
DFI-CU 72.07(1)
(1) All member business loans shall be secured by collateral in accordance with this section, except for the following:
DFI-CU 72.07(1)(a)
(a) A credit card line of credit granted to nonnatural persons that is limited to routine purposes normally made available under such lines of credit.
DFI-CU 72.07(1)(b)
(b) A loan made by a credit union where the loan and the credit union meet all of the following:
DFI-CU 72.07(1)(b)1.
1. The amount of the loan or loans to any one individual does not exceed 1% of the credit union's net worth.
DFI-CU 72.07(1)(b)2.
2. The aggregate of the unsecured business loans under this paragraph does not exceed 10% of the credit union's net worth.
DFI-CU 72.07(1)(b)4.
4. The credit union submits reports to the Office of Credit Unions with its NCUA call reports providing numbers and such other details as may be required by the director to demonstrate compliance with this paragraph.
DFI-CU 72.07(2)
(2) For a member business loan secured by collateral on which the credit union will have a first lien, a credit union may grant the loan with an LTV ratio in excess of 80% only where the value in excess of 80% is as follows:
DFI-CU 72.07(2)(a)
(a) Covered through acquisition of private mortgage or equivalent type insurance provided by an insurer acceptable to the credit union, and the LTV ratio does not exceed 95%; or
DFI-CU 72.07(2)(b)
(b) Insured or guaranteed, or subject to advance commitment to purchase, by an agency of the federal government, state, or any of its political subdivisions, and the LTV ratio does not exceed 95%.
DFI-CU 72.07(3)
(3) For a member business loan secured by collateral on which the credit union will have a second or lesser priority lien, the credit union shall not grant the loan with an LTV ratio in excess of 80%.
DFI-CU 72.07(4)
(4) For a member business loan secured by the same collateral on which the credit union will have a first lien as well as other lesser priority liens, the credit union may grant the loan with an LTV ratio in excess of 80% only if
sub. (2) (a) or
(b) is satisfied. In no case shall the LTV ratio exceed 95%.
DFI-CU 72.07(5)
(5) For a member business loan secured by the collateral on which the credit union will have lesser priority liens but no first lien, the credit union shall not grant the loan with an LTV ratio in excess of 80%.
DFI-CU 72.07 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.08
DFI-CU 72.08
Amount of loan. Unless the director grants a waiver for a higher amount, the aggregate amount of business loans to a member or associated members shall not exceed 15% of the credit union's net worth or $100,000.00, whichever is greater.
DFI-CU 72.08 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.09
DFI-CU 72.09
Calculating the aggregate 15% limit. To calculate the aggregate 15% limitation, the credit union shall do the following:
DFI-CU 72.09(1)
(1) Calculate the numerator by adding together the amount of the member business loans to a member and associated members, if any. From this amount, the credit union shall subtract each of the following:
DFI-CU 72.09(1)(a)
(a) Any portion secured by shares or deposits in the credit union making the extension of credit or in other credit unions, or deposits in other financial institutions.
DFI-CU 72.09(1)(b)
(b) Any portion insured or guaranteed by any agency or subdivision of the state or federal government.
DFI-CU 72.09(1)(c)
(c) Any portion subject to an advance commitment to purchase by any agency or subdivision of the state or federal government.
DFI-CU 72.09(2)
(2) After completing the calculation in
sub. (1), divide the numerator by the credit union's net worth.
DFI-CU 72.09 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.10
DFI-CU 72.10
Available waivers. A credit union may seek a waiver for any of the following:
DFI-CU 72.10(4)
(4) Appraisal requirements under section 722.3 of NCUA rules.
DFI-CU 72.10 Note
Note: A copy of NCUA rules may be obtained by writing to the Office of Credit Unions, P.O. Box 14137, Madison, WI 53714-0137.
DFI-CU 72.10 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.11(1)(1) To obtain a waiver under
s. DFI-CU 72.10, a credit union shall submit a request to the director. The request shall contain all of the following:
DFI-CU 72.11(1)(d)
(d) Documentation supporting the credit union's ability to manage this activity.
DFI-CU 72.11(1)(e)
(e) An analysis of the credit union's prior experience making member business loans, including each of the following:
DFI-CU 72.11(1)(e)4.
4. Concentrations of credit to a member and associated members in excess of 15% of net worth.
DFI-CU 72.11(1)(e)7.
7. The qualifications of personnel responsible for underwriting and administering member business loans.
DFI-CU 72.11(2)
(2) Upon receipt of the request for waiver, the director shall do all of the following:
DFI-CU 72.11(2)(c)
(c) Consider the credit union's historical capital, asset, quality, management, earnings and liquidity ("CAMEL") composite and component ratings.
DFI-CU 72.11(2)(d)
(d) Notify the credit union when the waiver request is deemed complete.
DFI-CU 72.11(2)(e)
(e) Notify the credit union of the action taken within 45 calendar days of receiving a complete request.
DFI-CU 72.11(3)(a)
(a) The director shall provide a copy of the waiver request to the applicable regional director of the NCUA, and shall consult and seek to work cooperatively with the applicable regional director in deciding upon the request.
DFI-CU 72.11(3)(c)
(c) If the credit union requesting the waiver does not receive notification within 45 calendar days of the date the complete request was received by the director, the waiver request shall be deemed approved by the director.
DFI-CU 72.11(3)(d)
(d) The director shall promptly notify the applicable regional director of NCUA of his or her decision on the request.
DFI-CU 72.11(4)(a)
(a) If the director approves the request, the director shall promptly forward the request to the applicable regional director of the NCUA for decision under
12 CFR 723.12.
DFI-CU 72.11 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.12
DFI-CU 72.12
Classifying non-delinquent member business loans to reserve for potential loss. Non-delinquent member business loans shall be classified based on factors such as the adequacy of analysis and supporting documentation. A credit union shall classify potential loss loans as either substandard, doubtful or loss. The criteria for determining the classification of loans shall be as follows:
DFI-CU 72.12(1)
(1) Substandard. A loan classified substandard is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. The loan must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. The loan is characterized by the distinct possibility that the credit union will sustain some loss if the deficiency is not corrected. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual loans classified substandard.
DFI-CU 72.12(2)
(2) Doubtful. A loan classified as doubtful has all the weaknesses inherent in one classified substandard, with the added characteristic that the weakness or weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors which may work to the advantage and strengthening of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition or liquidation actions; capital injection; perfecting liens on collateral; and refinancing plans.
DFI-CU 72.12(3)
(3) Loss. A loan classified loss is considered uncollectible and of such little value that its continuance as a loan is not warranted. This classification does not necessarily mean that the loan has absolutely no recovery or salvage value, but rather, that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may occur in the future.
DFI-CU 72.12 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
DFI-CU 72.13
DFI-CU 72.13
Schedule of reserves. The following schedule sets the minimum amount a credit union shall reserve for classified member business loans:
-
See PDF for table 
DFI-CU 72.13 History
History: CR 02-034: cr.
Register August 2002 No. 560, eff. 9-1-02.
